Notice of Preliminary Results of Antidumping Duty New Shipper Review and Extension of Time Limit for Final Results of New Shipper Review: Oil Country Tubular Goods From Canada

DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-506]

Notice of Preliminary Results of Antidumping Duty New Shipper

Review and Extension of Time Limit for Final Results of New Shipper

Review: Oil Country Tubular Goods From Canada

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty new shipper

review and extension of time limit for final results of new shipper

review.

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SUMMARY: In response to a request from the respondent, Atlas Tube, Inc.

(``Atlas''), the Department of Commerce (the ``Department'') is

conducting a new shipper review of the antidumping duty order on oil

country tubular goods (``OCTG'') from Canada. This review covers one

manufacturer/exporter, Atlas, and the period June 1, 1998 through

November 30, 1998.

We have preliminarily determined the dumping margin for Atlas to be

0.86 percent during the period June 1, 1998, through November 30, 1998.

Interested

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parties are invited to comment on these preliminary results. Parties

who submit argument in this proceeding are requested to submit with the

argument: (1) a statement of the issue; and (2) a brief summary of the

argument.

EFFECTIVE DATE: November 30, 1999.

FOR FURTHER INFORMATION CONTACT: Mark Manning or Nithya Nagarajan, AD/

CVD Enforcement Group II, Office IV, Import Administration,

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

Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone

(202) 482-3936 or (202) 482-5253 respectively.

SUPPLEMENTARY INFORMATION:

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 Rounds Agreements Act (``URAA''). In addition, unless otherwise

indicated, all citations to the Department's regulations are to the

current regulations at 19 CFR part 351 (1998).

Background

The Department published an antidumping duty order on OCTG from

Canada on June 16, 1986 (51 FR 21782) and an amended order on August

19, 1986 (51 FR 29579). On December 30, 1998, Atlas Tube Inc.,

requested the Department to initiate a new shipper review pursuant to

section 751(a)(2)(B) of the Act, and 19 CFR 351.214(b). We initiated

this new shipper review on February 3, 1999, (64 FR 5265) for the

period June 1, 1998 through November 30, 1998.

The Department issued its questionnaire on February 24, 1999, and

received Atlas' response to Section A on March 15, 1999, Sections B and

C on April 2, 1999, and supplemental responses on August 30, 1999.

Subsequently, on June 23, 1999, (64 FR 33475) due to the complexity of

the issues raised in this review, the Department extended the time

limit for the completion of preliminary results of the new shipper

review. After an analysis of Atlas' Section A, B, and C responses, the

Department initiated on August 6, 1999, an investigation to determine

whether Atlas made sales below the cost of production. Respondent

submitted its Section D response on August 30, 1999, and supplemental

Section D response on October 29, 1999.

The Department is conducting this new shipper review in accordance

with section 751(a)(2)(B) of the Act. Concurrent with the instant new

shipper review, the Department is also conducting an administrative

review of Atlas under section 751(a)(1) of the Act. Pursuant to

respondent's request, due to the fact that the new shipper review

covers shipments through November 30, 1999, the administrative review

of Atlas (which would normally cover the period June 1, 1998 through

May 31, 1999) is limited to the examination of shipments during the

period December 1, 1998 through May 31, 1999. See 19 CFR 351.214(j).

The preliminary results of administrative review are currently

scheduled for February 29, 2000.

Extension of Final Results of Review

Section 751(a)(2)(B)(iv) of the Act permits the Department to

extend the deadlines for the final results of review if the review is

extraordinarily complicated. We have determined that this review is

extraordinarily complicated and that we are unable to complete this

review in the time frame provided by the statute. The Department is

hereby extending the time limit for issuing the final results to 120

days after the publication of this preliminary results of review in the

Federal Register.

Scope of the Review

The products covered by this review include shipments of OCTG from

Canada. This includes American Petroleum Institute (``API'')

specification OCTG and all other pipe with the following

characteristics except entries which the Department determined through

its end-use certification procedure were not used in OCTG applications:

Length of at least 16 feet; outside diameter of standard sizes

published in the API or proprietary specifications for OCTG with

tolerances of plus \1/8\ inch for diameters less than or equal to 8\5/

8\ inches and plus \1/4\ inch for diameters greater than 8\5/8\ inches,

minimum wall thickness as identified for a given outer diameter as

published in the API or proprietary specifications for OCTG; a minimum

of 40,000 PSI yield strength and a minimum 60,000 PSI tensile strength;

and if with seams, must be electric resistance welded. Furthermore,

imports covered by this review include OCTG with non-standard size wall

thickness greater than the minimum identified for a given outer

diameter as published in the API or proprietary specifications for

OCTG, with surface scabs or slivers, irregularly cut ends, ID or OD

weld flash, or open seams; OCTG may be bent, flattened or oval, and may

lack certification because the pipe has not been mechanically tested or

has failed those tests. This merchandise is currently classifiable

under the Harmonized Tariff Schedules (HTS) item numbers 7304.20,

7305.20, and 7306.20. The HTS item numbers are provided for convenience

and U.S. Customs purposes. The written description remains dispositive.

Fictitious Market

On April 22, 1999, petitioners alleged that Atlas had created a

fictitious home market sale for comparison purposes. Petitioners based

their allegation on the fact that all of the subject merchandise sold

in the United States during the POR was of one outside diameter size

and that there was only a single sale of subject merchandise with the

same outside diameter in the home market. Furthermore, they allege that

the Department does not have sufficient information to make a

determination, pursuant to section 773(a)(2) of the Act, whether there

have been different movements in the prices at which different forms of

subject merchandise have been sold in the home market and whether any

such movement appears to reduce the amount by which foreign market

value exceeds the U.S. price of the merchandise. Petitioners cite the

Department's findings in Porcelain-on-Steel Cookware from Mexico, 58 FR

32095, 32096 (June 8, 1993), as support for their argument.

In our August 6, 1999, Section B supplemental questionnaire, we

requested Atlas to demonstrate that the single home market sale of

subject merchandise of the same outside diameter as the merchandise

sold in the United States was made in the normal course of trade. In

its August 30, 1999 response, Atlas stated that the circumstances

surrounding this sale involved a shipping error where its customer

inadvertently received merchandise of the wrong outside diameter size.

Although the customer did not order the size of material delivered,

Atlas stated that the customer kept the merchandise after it negotiated

certain adjustments to the terms of the sale. Upon reviewing the

information on the record, we note the following: (1) the sale in

question accounts for a small percentage of total home market sales,

(2) Atlas sold subject merchandise with the same outside diameter as

the merchandise sold in the United States to only one customer while

its home market sales of subject merchandise with other diameters were

to multiple customers, and (3) Atlas was forced to negotiate certain

adjustments to the terms of the sale in order to persuade its

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customer to accept the delivery. Based upon these facts, the Department

concludes that the sale at issue is most appropriately considered in

the context of the ordinary course of trade provision of the statute

rather than the fictitious market context. The Department preliminarily

finds that the circumstances surrounding this sale are unusual enough

to determine that this sale was made outside the ordinary course of

trade. See Decision Memorandum: Oil Country Tubular Goods from Canada--

Petitioners' Allegation That Atlas Tube Inc.'s Matching Home Market

Sale Is Outside the Ordinary Course of Trade, November 24, 1999.

Therefore, consistent with section 773(a)(1)(B) of the Act, we have

excluded this sale from our calculations for the preliminary results

because it is outside the ordinary course of trade. For this reason, we

need not address whether to exclude this sale pursuant to section

773(a)(2) of the Act. However, we will continue to examine this issue

in the final results of this review.

United States Price

Atlas reported as export price (``EP'') transactions sales of

subject merchandise to unaffiliated U.S. customers prior to

importation.

We calculated EP, in accordance with section 772(a) of the Act,

because the merchandise was sold to the first unaffiliated purchaser in

the United States prior to importation and constructed export price

(``CEP'') methodology was not otherwise warranted, based on the facts

of record. We based EP on the delivered price to unaffiliated

purchasers in the United States. We adjusted the starting price by the

amount Atlas reported for billing adjustments and made deductions to

the starting price for discounts. We also made deductions for movement

expenses in accordance with section 772(c)(2)(A) of the Act; these

included foreign inland freight, U.S. inland freight, and U.S.

brokerage and handling charges.

Normal Value

After testing (1) home market viability and (2) whether home market

sales were at below-cost prices, we calculated NV as noted in the

``Price-to-Price Comparisons'' section of this notice.

1. Home Market Viability

In order to determine whether there is a sufficient volume of sales

in the home market to serve as a viable basis for calculating NV (i.e.,

the aggregate volume of home market sales of the foreign like product

is equal to or greater than five percent of the aggregate volume of

U.S. sales), we compared Atlas' volume of home market sales of the

foreign like product to the volume of U.S. sales of the subject

merchandise, in accordance with section 773(a)(1)(C) of the Act.

Because Atlas' aggregate volume of home market sales of the foreign

like product was greater than five percent of its aggregate volume of

U.S. sales for the subject merchandise, we determined that the home

market was viable for Atlas.

2. Cost of Production Analysis

On April 22, 1999, petitioners filed an allegation that Atlas made

home market sales at prices that were below the cost of production

(``COP''). Our analysis of the allegation indicated that there were

reasonable grounds to believe or suspect that Atlas had sold OCTG in

the home market at prices less than the COP. Accordingly, on August 30,

1999, pursuant to section 773(b) of the Act, we initiated a COP

investigation with respect to Atlas to determine whether sales were

made at prices less than the COP.

We conducted the COP analysis described below.

A. Calculation of COP

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

based on the sum of Atlas' cost of materials and fabrication for the

foreign like product, direct and indirect selling expenses, plus an

amount for home market SG&A, interest expenses, and packing costs.

B. Test of Home Market Sales Prices

We compared the weighted-average COP figures to home market sales

of the foreign like product as required under section 773(b) of the

Act, in order to determine whether these sales had been made at prices

below COP. In determining whether to disregard home market sales made

at prices less than the COP, we examined whether (1) within an extended

period of time, such sales were made in substantial quantities, and (2)

such sales were made at prices which permitted the recovery of all

costs within a reasonable period of time. On a product-specific basis,

we compared the COP to the home market prices, less any applicable

movement charges and rebates.

C. Results of the COP Test

Pursuant to section 773(b)(2)(C), where less than 20 percent of

respondent's sales of a given product were at prices less than the COP,

we did not disregard any below-cost sales of that product because we

determined that the below-cost sales were not made in ``substantial

quantities.'' Where 20 percent or more of respondent's sales of a given

product during the POI were at prices less than the COP, we determined

such sales to be made in ``substantial quantities'' within an extended

period of time in accordance with section 773(b)(2)(B) of the Act. In

such cases, because we compare prices to weighted-average COPs for the

POI, we also determined that such sales were not made at prices which

would permit recovery of all costs within a reasonable period of time,

in accordance with section 773(b)(2)(D) of the Act. Therefore, we

disregarded such below-cost sales.

Level of Trade

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

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

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

LOT is that of the starting-price sales in the comparison market or,

when NV is based on constructed value (``CV''), that of the sales from

which we derive selling, general and administrative (``SG&A'') expenses

and profit. With respect to U.S. price for EP transactions, the LOT is

also the level of the starting-price sale, which is usually from the

exporter to the importer. For CEP, the LOT is the level of the

constructed sale from the exporter to the importer.

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

CEP, we examined stages in the marketing process and selling functions

along the chain of distribution between the producer and the

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

different LOT and the difference affects price comparability, as

manifested in a pattern of consistent price differences between the

sales on which NV is based and home market sales at the LOT of the

export transaction, we make a LOT adjustment under section 773(a)(7)(A)

of the Act. Finally, for CEP sales, if the NV level is more remote from

the factory than the CEP level and there is no basis for determining

whether the difference in the levels between NV and CEP affects price

comparability, we adjust NV under section 773(a)(7)(B) of the Act (the

CEP-offset provision). See Notice of Final Determination of Sales at

Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from

South Africa, 62 FR 61731 (November 19, 1997).

Atlas reported one customer category and one channel of

distribution (i.e., sales to unaffiliated distributors) for its home

market sales. Atlas reported EP sales in the U.S. market. For EP sales,

Atlas also reported one customer

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category and one channel of distribution (i.e., direct sales to

unaffiliated distributors). Atlas claimed in its response that its EP

sales were made at the same LOT as home market sales to unaffiliated

distributors. For this reason, Atlas has not asked for a LOT adjustment

to NV for comparison to its EP sales.

In determining whether separate LOTs actually existed in the home

market and U.S. market, we examined whether Atlas' sales involved

different marketing stages (or their equivalent) based on the channel

of distribution, customer categories and selling functions. Atlas

reported that its selling functions for home market sales are arranging

for freight, warehousing, and warranty service; however, we noted that

Atlas did not report any warehouse or warranty expenses for home market

sales during the POR. After reviewing the record evidence, we agree

with Atlas that its home market sales comprise a single LOT.

In analyzing Atlas' selling activities for its EP sales, we noted

that the sales generally involved the same selling functions associated

with the home market LOT described above. Atlas reported that these

selling activities are arranging for freight, warehousing, and warranty

services; however, we noted that Atlas did not report any warehouse or

warranty expenses for U.S. market sales during the POR. Based upon the

record evidence, we have determined that there is one LOT for all EP

sales and that it is the same LOT as that in the home market.

Accordingly, because we find the U.S. sales and home market sales to be

at the same LOT, no LOT adjustment under section 773(a)(7)(A) is

warranted.

Price-to-Price Comparisons

We calculated NV based on delivered prices to unaffiliated

customers, where appropriate. The NV price was reported on a Goods and

Services Tax-exclusive basis. We adjusted the starting price by the

amount Atlas reported for billing adjustments. We made deductions from

the starting price for rebates, inland freight, and inland freight

insurance. We made adjustments for differences in the merchandise in

accordance with section 773(a)(6)(C)(ii) of the Act. We made

adjustments under section 773(a)(6)(C)(iii) of the Act for differences

in circumstances of sale for imputed credit expenses. Finally, we

deducted home market packing costs and added U.S. packing costs in

accordance with section 773(a)(6)(A) and (B) of the Act.

Currency Conversion

Pursuant to section 773A(a) of the Act, we made currency

conversions into U.S. dollars based on the exchange rates in effect on

the dates of the U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results

As a result of this review, we preliminarily determine that a 0.86

percent dumping margin exists for Atlas for the period June 1, 1998,

through November 30, 1998.

The Department will disclose calculations performed within five

days of the date of publication of this notice in accordance with 19

CFR 351.224(b). A party may request a hearing within thirty days of

publication. See 19 CFR 351.310(c). Any hearing, if requested, will be

held 44 days after the date of publication, or the first working day

thereafter. Interested parties may submit case briefs and/or written

comments no later than 30 days after the date of publication. Rebuttal

briefs and rebuttals to written comments, limited to issues raised in

such briefs or comments, may be filed no later than 37 days after the

date of publication. The Department will issue the final results of

this new shipper review, which will include the results of its analysis

of issues raised in any such comments, within 120 days of publication

of these preliminary results.

Upon completion of this new shipper review, the Department shall

determine, and Customs shall assess, antidumping duties on all

appropriate entries. There was only one importer during the POR. We

have calculated an importer-specific duty assessment rate based on the

ratio of the total amount of antidumping duties calculated for the

examined sales to the total entered value of examined sales. Atlas

reported entered value on an actual basis by subtracting discounts,

freight, and brokerage and handling costs from the its reported U.S.

price. This rate will be assessed uniformly on all entries made during

the POR. The Department will issue appraisement instructions directly

to Customs.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of this administrative review for

all shipments of OCTG from Canada entered, or withdrawn from warehouse,

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

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

Act: (1) The cash deposit rate for Atlas will be the rate established

in the final results of this administrative review; (2) for merchandise

exported by manufacturers or exporters not covered in this review but

covered in the original less-than-fair-value (LTFV) investigation or a

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

specific rate published for the most recent period; (3) if the exporter

is not a firm covered in this review, or the original investigation,

but the manufacturer is, the cash deposit rate will be the rate

established for the most recent period for the manufacturer of the

merchandise; and (4) if neither the exporter nor the manufacturer is a

firm covered in this or any previous review, the cash deposit rate will

be 16.65 percent, the ``all-others'' rate established in the LTFV

investigation.

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of administrative review for a

subsequent review period.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 351.402 to file a certificate

regarding the reimbursement of antidumping duties prior to liquidation

of the relevant entries during this review period. Failure to comply

with this requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 351.213

and 351.214.

Dated: November 19, 1999.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-30963 Filed 11-29-99; 8:45 am]

BILLING CODE 3510-DS-P