Certain Welded Stainless Steel Pipe From Taiwan: Preliminary Results of Antidumping Administrative Review and Intent To Revoke in Part

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-815]

Certain Welded Stainless Steel Pipe From Taiwan: Preliminary

Results of Antidumping Administrative Review and Intent To Revoke in

Part

AGENCY: Import Administration, International Trade Administration, U.S.

Department of Commerce.

ACTION: Notice of preliminary results in the antidumping duty

administrative review of certain welded stainless steel pipe from

Taiwan.

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SUMMARY: In response to requests from Ta Chen Stainless Pipe Co., Ltd.

(``Ta Chen'') and the domestic industry, the U.S. Department of

Commerce (``Department'') is conducting an administrative review of the

antidumping duty order on certain welded stainless steel pipe

(``WSSP'') from Taiwan for the period December 1, 1997 through November

30, 1998. The Department preliminarily determines that a de minimis

dumping margin exists for Ta Chen's sales of WSSP in the United States.

If these preliminary results are adopted in our final results of this

administrative review, we will instruct the U.S. Customs Service to

assess antidumping duties on entries of Ta Chen's merchandise during

the period of review, in accordance with the Department's regulations

(19 CFR 351.106). The preliminary results are listed in the section

titled ``Preliminary Results of Review,'' infra.

EFFECTIVE DATE: December 22, 1999.

[[Page 71729]]

FOR FURTHER INFORMATION CONTACT: Juanita H. Chen or Robert Bolling,

Enforcement Group III, Import Administration, International Trade

Administration, U.S. Department of Commerce, 1401 Constitution Avenue,

NW., Washington, DC 20230; telephone: 202-482-0409, or 202-482-3434,

respectively.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (``Act''), are references to the provisions effective

January 1, 1995, the effective date of the amendments made to the Act

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

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

to the regulations codified at 19 CFR part 351 (1999).

Background

On December 30, 1992, the Department published in the Federal

Register (57 FR 62300) the amended antidumping duty order on WSSP from

Taiwan. On December 8, 1998, the Department published in the Federal

Register (63 FR 67646) a notice of opportunity to request

administrative review of this order for the period December 1, 1997

through November 30, 1998. On December 29, 1998, Ta Chen, a Taiwan

producer and exporter of subject merchandise, requested that the

Department conduct a review of its sales and also requested revocation

of the Department's antidumping duty order on WSSP from Taiwan. On

December 30, 1998, Avesta Sheffield Pipe Co., Damascus Tube Division,

Damascus-Bishop Tube Co., and the United Steelworkers of America, AFL-

CIO/CLC (collectively ``Petitioners''), on behalf of the domestic

industry, requested that the Department conduct an administrative

review with respect to Ta Chen. On January 25, 1999, in accordance with

section 751(a) of the Act, the Department published in the Federal

Register a notice of initiation of this antidumping duty administrative

review for the period December 1, 1997 through November 30, 1998 (64 FR

3682).

On March 12, 1999, Ta Chen reported that it made sales of subject

merchandise to the United States during the period of review in its

response to Section A of the Department's questionnaire. On April 5,

1999, Ta Chen submitted its responses to Sections B, C and D of the

Department's questionnaire. On July 27, 1999, Petitioners requested

that the Department reject Ta Chen's request for revocation. Ta Chen

submitted a response on August 3, 1999 to the Department's supplemental

questionnaire. On September 22, 1999, Ta Chen requested an extension of

time in which to respond to the Department's second supplemental

questionnaire due to the earthquake in Taiwan on September 21, 1999. On

October 5, 1999, Ta Chen submitted its response to the Department's

second supplemental questionnaire. On December 8, 1999, the Department

issued a third supplemental questionnaire to Ta Chen, the response to

which is due December 23, 1999.

Scope of Review

The merchandise subject to this administrative review is certain

welded austenitic stainless steel pipe (``WSSP'') that meets the

standards and specifications set forth by the American Society for

Testing and Materials (``ASTM'') for the welded form of chromium-nickel

pipe designated ASTM A-312. The merchandise covered by the scope of the

order also includes austenitic welded stainless steel pipes made

according to the standards of other nations which are comparable to

ASTM A-312.

WSSP is produced by forming stainless steel flat-rolled products

into a tubular configuration and welding along the seam. WSSP is a

commodity product generally used as a conduit to transmit liquids or

gases. Major applications for WSSP include, but are not limited to,

digester lines, blow lines, pharmaceutical lines, petrochemical stock

lines, brewery process and transport lines, general food processing

lines, automotive paint lines, and paper process machines.

Imports of WSSP are currently classifiable under the following

Harmonized Tariff Schedule of the United States (``HTSUS'')

subheadings: 7306.40.5005, 7306.40.5015, 7306.40.5040, 7306.40.5062,

7306.40.5064, 7306.40.5085. Although these subheadings include both

pipes and tubes, the scope of this investigation is limited to welded

austenitic stainless steel pipes. Although the HTSUS subheadings are

provided for convenience and Customs purposes, our written description

of the scope of this order is dispositive.

Period of Review

The period of review (``POR'') for this administrative review is

December 1, 1997 through November 30, 1998.

Verification

Due to administrative constraints, verification prior to the

issuance of this notice of preliminary results was not conducted. The

Department's regulations stipulate, at section 351.307, that the

Department will verify factual information upon which it relies in the

final results of an administrative review or in a revocation under

section 751(d) of the Act, prior to issuing final results in an

administrative review. Accordingly, the Department will verify the

information to be used in the final results, after these preliminary

results.

Product Comparison

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

WSSP products produced by Ta Chen, covered by the description in the

``Scope of Review'' section of this notice, supra, and sold in the home

market during the POR to be foreign like products for the purpose of

determining appropriate product comparisons to WSSP products sold in

the United States. In making the product comparisons, we matched

foreign like products based on the physical characteristics reported by

Ta Chen as follows (listed in order of preference): specification,

grade, size, schedule, and hot/cold rolled. Where there were no sales

of identical merchandise in the home market to compare to U.S. sales,

we compared U.S. sales to the next most similar foreign like product on

the basis of the characteristics listed in the February 12, 1999

antidumping duty questionnaire and instructions, or to constructed

value (``CV''), as appropriate.

Date of Sale

In the home market and U.S. market, Ta Chen has reported the

invoice date as the date of sale. However, the record is unclear as

certain information reported in Ta Chen's questionnaire response

appears to support the date of the order confirmation as the

appropriate date of sale. For instance, for home market sales, Ta Chen

reported that between the date of order confirmation and the date of

invoice, ``it is rare for the terms to change in that short a period,

but sometimes the order quantity changes.'' See Ta Chen's Supplemental

Response, at 20 (August 3, 1999). Further, Ta Chen reported that, for

its export price (``EP'') sales, it would not expect prices to change

much between the time of the order and invoicing, and changes did not

often occur. For constructed export price (``CEP'') sales, Ta Chen

reported that price usually does not change during this short period

but that quantity might change, though that too is rare. As a result of

the unclear record and the nature of marketing of these made-to-order

products, on December 8, 1999, the Department requested Ta Chen to

[[Page 71730]]

provide additional data on its date of sale.

Section 351.401(i) of the Department's regulations states that the

Department will normally use the date of invoice, as recorded in the

exporter's or producer's records kept in the ordinary course of

business, as the date of sale. The preamble to the Final Rules

(``Preamble'') provides an explanation of this policy, as well as

examples of when the Department may choose to base the date of sale on

a date other than the date of invoice. See Antidumping Duties;

Countervailing Duties, 62 FR 27296, 27348-49 (May 19, 1997). Ta Chen

has reported invoice date, as it understands it to be the Department's

preferred approach toward date of sale. See Ta Chen's Section A

Response at 8 (March 12, 1999). In accordance with 19 CFR 351.401(i),

where appropriate, we based date of sale on invoice dates recorded in

the ordinary course of business by the involved sellers and resellers

of the subject merchandise. However, we intend to fully verify

information concerning Ta Chen's claims that invoice date is the

appropriate date of sale. Based on the outcome of our verification, we

will determine whether it is appropriate to continue to use the date of

invoice as the date of sale. We will consider, among other things,

whether, in fact, there were any changes to the material contract terms

between the original order confirmation and the date of invoice and, if

so, their frequency and relative affected volumes of subject

merchandise. See e.g., Notice of Final Results of Antidumping Duty

Administrative Review: Canned Pineapple Fruit from Thailand, 63 FR 7392

at 7394-95 (February 13, 1998). However, we note that in past reviews,

we have used Ta Chen's date of invoice as the date of sale. In adopting

the date of sale regulation, we noted that, because of the risk of

double-counting, or of omitting sales from our analysis, we would

exercise particular care before switching date of sale methodologies

between reviews. See 62 FR at 27351.

Export Price/Constructed Export Price

Ta Chen reported both EP and CEP sales of subject merchandise for

the POR. See Ta Chen's Section A Response, at 3 (March 12, 1999). We

analyzed Ta Chen's sales made to the United States and preliminarily

determine that, as reported by Ta Chen, there are both EP and CEP sales

in the United States during the POR, as there appears to be a

distinction in the level of sales activity which Ta Chen's U.S.

affiliate performs between the two types of sales, as described below.

We will carefully scrutinize each of the claimed differences at

verification.

For certain sales to the United States, we calculated EP in

accordance with section 772(a) of the Act, because the subject

merchandise was sold directly to the first unaffiliated purchaser in

the United States prior to importation. We based EP on packed prices to

unaffiliated customers in the United States. Where appropriate, we made

deductions from the starting price for foreign inland freight, U.S.

inland freight, foreign brokerage and handling, U.S. brokerage and

handling, containerization expenses, marine insurance, harbor

construction tax, international freight, U.S. customs duties, and

warehousing expenses.

We preliminarily determined that the remaining sales were CEP in

accordance with section 772(b) of the Act, because the subject

merchandise was first sold by Ta Chen's U.S. affiliate, Ta Chen

International (``TCI''), after having been imported into the United

States. We based CEP on packed prices to unaffiliated purchasers in the

United States. Where appropriate, we made deductions from the starting

price for foreign inland freight, U.S. inland freight, foreign

brokerage and handling, U.S. brokerage and handling, containerization

expenses, marine insurance, harbor construction tax, international

freight, U.S. customs duties, and warehousing expenses. In accordance

with section 772(d)(1) of the Act, we deducted those selling expenses

associated with economic activities occurring in the United States,

including direct selling expenses (credit expenses), and indirect

selling expenses. For CEP sales, we also made an adjustment for profit

in accordance with section 772(d)(3) of the Act. We recalculated credit

expenses because the Department has determined that Ta Chen's submitted

U.S. short-term interest rate was not based solely on short-term debt.

For a further explanation, see Analysis Memo from Juanita Chen to The

File, dated December 14, 1999.

With respect to its reported EP sales, Ta Chen states that it

considers these sales as EP sales because: (1) The price and quantity

are determined before the pipe is imported into the United States; (2)

Ta Chen's U.S. subsidiary, TCI, performs no function with respect to

the sales other than processing the paperwork and the pipe is shipped

direct from Ta Chen to the U.S. customer, without entering a TCI

warehouse; and (3) this has been Ta Chen's normal course of business

for such sales and the Department has always treated such sales as EP

sales. Id.; see also, Ta Chen's Second Supplemental Response, at 6-8

(October 5, 1999). Petitioners argue that Ta Chen's EP sales should

properly be classified as CEP sales due to TCI's various

responsibilities, involvement and activities related to the sales. See

Petitioners' letter to the Department, at 5-6 (August 12, 1999).

Where a U.S. affiliate is involved in making a sale, we consider

the sale to be CEP unless the record demonstrates that the affiliate's

involvement in making the sale is incidental or ancillary. See Certain

Welded Stainless Steel Pipe From Taiwan; Final Results of Review

(``1995-1996 WSSP Final Results''), 63 FR 38382, 38385 (July 16, 1998),

citing Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat

Products from Korea (``Steel Flat Product from Korea''), 63 FR 13170,

13177 (March 18, 1998). However, whenever sales are made prior to

importation through an affiliated entity in the United States, the

Department applies the following three-pronged test in order to

determine whether to treat such sales at EP: (1) Whether the

merchandise was shipped directly to the unaffiliated buyer, without

first being introduced into the affiliated selling agent's inventory;

(2) whether direct shipment from the manufacturer to the unaffiliated

buyer was the customary channel for sales of this merchandise between

the parties involved; and (3) whether the affiliated selling agent

located in the United States acts only as a processor of sales-related

documentation and communication link between the foreign producer and

the unaffiliated purchaser. See Steel Flat Products from Korea, 63 FR

at 13177; see also PQ Corp. v. U.S., 652 F. Supp. 724, 731 (CIT 1987);

Outokumpu Copper Rolled Products v. U.S., 829 F. Supp. 1371, 1379 (CIT

1993). Where the requirements for all three prongs are met, the sales

are treated as EP.

The first prong is whether the merchandise was shipped directly to

the unaffiliated buyer, without first being introduced into the

affiliated selling agent's inventory. As in the previous review, for

the 1995-1996 administrative review period, no evidence has been

presented on the record that contradicts Ta Chen's representation that,

in this review, Ta Chen shipped the subject merchandise directly to the

unaffiliated U.S. customer without subject merchandise entering a TCI

warehouse in the United States. While we note that the verification for

the previous review found no evidence to suggest that the merchandise

was shipped in any other fashion, we shall nevertheless subject

[[Page 71731]]

this statement to verification for this review. Accordingly, the first

prong of the EP test is met.

The second prong is whether direct shipment from the manufacturer

to the unaffiliated buyer was the customary channel for sales of this

merchandise between the parties involved. As with the first prong of

the EP test, no evidence has been presented on the record to contradict

Ta Chen's representation in this review that direct shipment to the

U.S. customer has been its normal course of business with respect to

its sales since before this dumping matter began. Accordingly, the

second prong of the EP test is met.

The third prong is whether the affiliated selling agent located in

the United States acts only as a processor of sales-related

documentation and communication link between the foreign producer and

the unaffiliated purchaser. The information submitted to the record

suggests that TCI's involvement in the sales process remains largely

unchanged from the previous administrative review. For the 1995-1996

review period, Ta Chen reported all of its U.S. sales as EP and we

determined that ``the evidence on record does not support a

reclassification of Ta Chen's U.S. sales from EP to CEP transactions.

Nothing in the statute, however, precludes the Department from doing

so, where appropriate.'' See 1995-1996 WSSP Final Results, 63 FR at

38385 (July 16, 1998). Ta Chen reports that, for its reported EP sales,

TCI merely processes paperwork and serves as a communication link

between Ta Chen and the U.S. customer, relaying U.S. customers' price

requests to Ta Chen, and relaying the negotiations, acceptances or

rejections that follow between the entities. See Ta Chen's Section A

Response at 5, 9 (March 12, 1999); Ta Chen's Supplemental Response at

10 (August 3, 1999). Petitioners' argue that TCI issues acceptance or

alternative pricing to the U.S. customer. See Petitioners' letter to

the Department, at 5 (August 12, 1999). However, Ta Chen has indicated

that TCI is merely communicating acceptance or alternative pricing as

instructed by Ta Chen. Ta Chen continues to set the base, minimum

acceptable price for subject merchandise. See Ta Chen's Supplemental

Response at 10, 11 (August 3, 1999). Accordingly, the third prong of

the EP test appears to be met for purposes of this preliminary

determination, and subject to verification.

The Department takes note that TCI engages in various other

functions in the selling process, such as, among others, taking title

to subject merchandise, clearing shipment through customs, invoicing

the U.S. customer, receiving payment from the U.S. customer (after

which TCI pays Ta Chen), paying for ocean shipping, U.S. customs broker

charges, and international freight, and issuing credit for returns and

errors. In the previous review, we found that three of these activities

``were performed by TCI, but that these activities alone were not

sufficient to warrant treatment of such sales as CEP transactions.''

See 1995-1996 WSSP Final Results, 63 FR at 38386 (July 16, 1998). In

this review, there is some record evidence that TCI may be performing

additional activities. Accordingly, the Department intends to verify

closely Ta Chen's description of TCI's activities with respect to its

EP sales to evaluate whether TCI's activities rise to the level where

they can no longer be considered merely ancillary or incidental to the

sale, whereupon such sales should be considered CEP. For our

preliminary results, however, the data on the record to date suggests

that TCI's involvement in U.S. sales of subject merchandise continues

to be minimal, and that the EP sales identified by Ta Chen should

remain as such.

Normal Value

After testing home market viability, as discussed below, we

calculated normal value (``NV'') as noted in the ``Price-to-CV

Comparisons'' and ``Price-to-Price Comparisons'' sections of this

notice.

1. Home Market Viability

In accordance with section 773(a)(1)(C) of the Act, to determine

whether there was 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 greater than or

equal to five percent of the aggregate volume of U.S. sales), we

compared Ta Chen's volume of home market sales of the foreign like

product to the volume of U.S. sales of the subject merchandise. Because

Ta Chen's 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. We therefore based NV on home market sales.

Price-to-Price Comparisons

For those product comparisons for which there were sales at prices

above the cost of production (``COP''), we based NV on prices to home

market customers. We calculated NV based on prices to unaffiliated home

market customers. Where appropriate, we deducted early payment

discounts, credit expenses, and inland freight. We also made

adjustments, where applicable, for home market indirect selling

expenses to offset U.S. commissions in CEP comparisons. We made

adjustments, where appropriate, for physical differences in the

merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.

Additionally, in accordance with section 773(a)(6), we deducted home

market packing costs and added U.S. packing costs. In accordance with

the Department's practice, where all contemporaneous matches to a U.S.

sale observation resulted in difference-in-merchandise adjustments

exceeding 20 percent of the cost of manufacturing (``COM'') of the U.S.

product, we based NV on CV.

Price-to-CV Comparisons

In accordance with section 773(a)(4) of the Act, we based NV on CV

if we were unable to find a home market match of identical or similar

merchandise. We calculated CV based on the costs of materials and

fabrication employed in producing the subject merchandise, selling,

general and administrative expenses (``SG&A''), and profit. In

accordance with section 773(e)(2)(A) of the Act, we based SG&A expense

and profit on the amounts incurred and realized by the respondent in

connection with the production and sale of the foreign like product in

the ordinary course of trade for consumption in Taiwan. For selling

expenses, we used the weighted-average home market selling expenses.

Where appropriate, we made adjustments to CV in accordance with section

773(a)(8) of the Act. We deducted from CV the weighted-average home

market direct selling expenses.

2. Cost of Production Analysis

Because we disregarded sales below the cost of production in our

last administrative review, the most-recently completed segment of

these proceedings, we have reasonable grounds to believe or suspect

that sales by Ta Chen in its home market were made at prices below the

COP, pursuant to section 773(b)(1) of the Act. See 1995-1996 WSSP Final

Results, 63 FR 38382; see also section 773(b)(2)(A)(ii) of the Act.

Therefore, pursuant to section 773(b)(1) of the Act, we conducted a COP

analysis of home market sales by Ta Chen.

A. Calculation of COP

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

weighted-average COP based on the sum of Ta Chen's cost of materials

and fabrication

[[Page 71732]]

for the foreign like product, plus amounts for general and

administrative expenses (``G&A''), interest expenses, and packing

costs. We relied on the COP data submitted by Ta Chen in its original

and supplemental cost questionnaire responses. For these preliminary

results, we did not make any adjustments to Ta Chen's submitted costs.

B. Test of Home Market Prices

We compared the weighted-average COP for Ta Chen 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 the COP. In determining whether to disregard home market

sales made at prices below the COP, we examined whether such sales were

made (1) within an extended period of time in substantial quantities,

and (2) at prices which permitted the recovery of all costs within a

reasonable period of time in the normal course of trade, in accordance

with section 773(b)(1)(A) and (B) of the Act. On a product-specific

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

billing adjustments, movement charges, discounts, and direct and

indirect selling expenses.

C. Results of the COP Test

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

percent of Ta Chen'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 Ta Chen's sales

of a given product during the POI were at prices less than the COP, we

determined that such sales have been 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 use POR average

costs, 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 the below-cost sales.

D. Calculation of Constructed Value

In accordance with section 773(e)(1) of the Act, we calculated CV

based on the sum of Ta Chen's cost of materials, fabrication, G&A

(including interest expenses), U.S. packing costs, direct and indirect

selling expenses, and profit. In accordance with section 773(e)(2)(A)

of the Act, we based SG&A and profit on the amounts incurred and

realized by Ta Chen in connection with the production and sale of the

foreign like product in the ordinary course of trade, for consumption

in the foreign country. For selling expenses, we used the actual

weighted-average home market direct and indirect selling expenses.

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 CV, that of the sales from which we derive SG&A

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

starting-price sale, which is usually from exporter to importer. For

CEP, it 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 examine stages in the marketing process and selling functions

along the chain of distribution between the producer and the

unaffiliated customer. If the comparison market sales are at a

different LOT, and the difference affects price comparability as

manifested in a pattern of consistent price differences between the

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

the export transaction, we make an LOT adjustment under section

773(a)(7)(A) of the Act. 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 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, 61732 (November 19, 1997).

In reviewing the selling functions reported by the respondent, we

examined all types of selling functions and activities reported in

respondent's questionnaire response on LOT. In analyzing whether

separate LOTs existed in this review, we found that no single selling

function was sufficient to warrant a separate LOT in the home market.

See Antidumping Duties; Countervailing Duties, Final Rule, 62 FR 27296,

27371 (May 19, 1997).

In the home market, Ta Chen reported that it sold to distributors

and end users. Ta Chen claimed that its two customer categories

constituted a single LOT. Based upon our examination of information

supplied by Ta Chen in its original and supplemental questionnaire

responses, we agree that only one LOT existed for Ta Chen in the home

market. According to Ta Chen, it provided no strategic or economic

planning services, market research, business system development

assistance, personnel-training, engineering, advertising, procurement

services, inventory maintenance, or post-sale warehousing for customers

in either category. However, end-user customers did receive slightly

higher levels of research and development and technical assistance than

did distributors, but this one slight difference is not sufficient to

establish discrete LOTs.

In order to determine whether there were different LOTs among sales

in the U.S. market, we reviewed the selling activities associated with

each channel of distribution. Ta Chen reported both EP and CEP sales in

the U.S. market. However, Ta Chen reported for all of its U.S. sales a

single customer category (i.e., distributor). Thus, according to Ta

Chen, because all of Ta Chen's sales in the U.S. market were made

through a distributor there was only one LOT. In determining whether,

in fact, a single stage of marketing existed, we examined the selling

functions as reflected in the EP and the CEP. In its questionnaire

responses, Ta Chen reported it performed only two selling functions for

both EP and CEP sales (i.e., packing, and freight and delivery). Ta

Chen reported that it performed a small amount of packing for its U.S.

sales and a moderate level of freight and delivery for its U.S. sales.

We find preliminarily that there are no differences in selling

activities for EP and CEP sales and, as a result, we preliminarily

agree with Ta Chen that its EP and CEP sales constitute a single LOT.

Once again, these issues will be subject to verification.

When we compared the LOT of Ta Chen's U.S. sales to its home market

LOT, we found that Ta Chen provided no strategic or economic planning,

market research, business system development assistance, personnel-

training, engineering, advertising, procurement services, inventory

maintenance, or post-sale warehousing at the EP, CEP, or home market

LOT. Ta Chen reported that it provided moderate-to-low technical

assistance at its home market LOT, while providing none at its EP or

CEP level. Additionally, Ta Chen reported that it provided low after

sales services at its home market LOT, while providing none at its EP

or CEP level. The majority of packing activity at the home market LOT

and EP or CEP level was performed by Ta Chen; however, some repacking

occurred at the TCI Los Angeles

[[Page 71733]]

warehouse. Freight and delivery arrangements varied between the two

markets in that U.S. movement expenses on certain U.S. sales were

incurred by TCI, while other sales were made on an ``F.O.B.'' basis.

Our analysis of the selling functions performed by Ta Chen in both

markets leads us to conclude that any differences in selling activities

are not significant. Accordingly, we preliminarily find that all sales

in the home market and the U.S. market were made at the same LOT.

Therefore, we have not made a LOT adjustment because all price

comparisons are at the same LOT and an adjustment pursuant to section

773(a)(7)(A) of the Act is not appropriate. Additionally, because we

found that the LOT in the home market matched the LOT of the CEP

transactions, we did not provide a CEP offset by adjusting normal value

under section 773(a)(7)(B) of the Act.

Revocation

The Department's regulations provide for revocation of antidumping

orders under section 351.222. On December 29, 1998, Ta Chen, in its

capacity as a Taiwan producer and exporter of subject merchandise,

requested that the Department revoke the antidumping duty order on WSSP

from Taiwan with respect to Ta Chen. Ta Chen stated that it sold the

subject merchandise at not less than normal value for a period of at

least three consecutive years, including the current period under

administrative review, and that it sold the subject merchandise in

commercially significant quantities to the United States during each of

these three years.\1\ Ta Chen also stated that it would not sell the

subject merchandise at less than normal value to the United States in

the future and agreed to reinstatement of the order against Ta Chen, as

long as any exporter or producer is subject to the order, if the

Department concludes that Ta Chen sold the subject merchandise at less

than normal value, subsequent to the revocation.

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\1\ On October 12, 1999, the Department requested that Ta Chen

provide volume and value data on its exports and sales of subject

merchandise for the three consecutive years. Ta Chen provided this

data in an October 19, 1999 submission, which supported Ta Chen's

statement that it sold subject merchandise in commercially

significant quantities to the United States during these three

years.

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The three review periods on which Ta Chen is basing its request for

revocation consist of: (1) The period for 12/1/95 through 11/30/96, for

which the Department found a de minimis margin of 0.10 percent; (2) the

period for 12/1/96 through 11/30/97, for which no administrative review

was conducted; and (3) the period for 12/1/97 through 11/30/98, for

which the Department is currently conducting an administrative review.

On July 27, 1999, Petitioners requested that the Department reject Ta

Chen's request for revocation, arguing that: (1) The 12/1/96 through

11/30/97 period should not count towards the three successive years of

no significant dumping necessary for revocation; and (2) public

information indicates that Ta Chen will continue its dumping practices

if granted revocation, and thus, the years of no dumping

notwithstanding, application of the order to Ta Chen continues to be

necessary to offset dumping.

First, Petitioners argue that while they did not request an

administrative review for the 1996-1997 period, such lack of request

was not meant to indicate an opinion that Ta Chen did not dump during

that period. See also Petitioners' letter to the Department (March 4,

1998). Petitioners state that Ta Chen's past and current behavior

indicates its willingness to sell below normal value. Petitioners

provide as examples the results in the 1992-1993 and 1993-1994

administrative reviews of WSSP (wherein the Department found that Ta

Chen impeded the reviews), as well as the results in administrative

reviews of other Ta Chen products for which the Department issued

margins ranging from 10.2-34.95 percent, such as stainless steel plate,

and stainless steel sheet and strip (wherein Ta Chen provided

incomplete information). Petitioners also assert that Ta Chen has

continually restructured its selling practices of WSSP, effectively

preventing Petitioners from obtaining the necessary information to

estimate the extent of Ta Chen's dumping for the period. Accordingly,

Petitioners assert that the Department cannot presume that there was no

significant dumping during the unreviewed period.

Under Sec. 351.222(d) of our regulations, the Department may revoke

a company from an antidumping order based on three years of no dumping

even if the middle year was not subject to administrative review. As

noted, supra, Ta Chen has provided information indicating that it had

sales in commercial quantities during the intervening year. Regarding

Petitioners' citation of the margins issued for Ta Chen in stainless

steel plate and in stainless steel sheet and strip, these

determinations have little to do with the case at hand. Not only do

those administrative reviews involve margins for products other than

WSSP, they also involve review periods other than the 1996-1997 period.

The Department cannot presume that Ta Chen engaged in dumping of WSSP

during the 1996-1997 period merely because it was found to have engaged

in dumping for other products in other periods. In the immediately

preceding review period of 1995-1996, the Department issued a de

minimis margin of 0.10 percent. This margin has greater relevance

because it is based on more recent data, and in this case there is no

basis to consider older margins as being more relevant. The fact that

the margin is subject to change from year to year is why the Department

provides the opportunity to request administrative reviews. See

Antidumping Duties; Countervailing Duties; Final Rule, 62 FR at 27325.

Because no administrative review was conducted for the 1996-1997

period, the Department cannot presume a margin exists for that review

period. To do so would result in unfairly penalizing the respondent

where no review is requested or conducted. As for Petitioners' argument

that Ta Chen has restructured its selling practices, Petitioners offer

no evidence of how this restructuring has occurred, nor how such

restructuring precluded Petitioners from learning about Ta Chen's

activities. This is an insufficient basis for the Department to presume

that Ta Chen engaged in dumping practices for the 1996-1997 period.

Second, Petitioners argue that trends in pricing, imports and

economic factors, as well as Ta Chen's aggressive search for facilities

in the United States, indicate that Ta Chen will continue to engage in

significant dumping in the future if granted revocation. Petitioners

provide three articles discussing the Asian financial crisis in

relation to the steel industry. See Petitioners' letter to the

Department, at Exhibit 2a (July 27, 1999). However, there is no direct

discussion in these articles on the effect the crisis had on Ta Chen

and its exports of WSSP. While the first article does discuss the

impact of the Asian financial crisis on the Asia-Pacific area, the

article focuses only on Japan and Korea; the impact on Taiwan is not

discussed. The second article mentions Ta Chen only in the single

statement that Ta Chen carries a 6.06 percent margin from the 1992

dumping orders. The third article states that U.S. prices for stainless

steel pipe and tube are down after imports to the United States soared

from a year earlier. The article Petitioners provide on Ta Chen's

alleged search for facilities in the United States (see Petitioners'

letter to the Department, at Exhibit 2b (July 27, 1999)) discusses

talks between SouthStar Steel Corp. (``SouthStar''), a North Carolina

company which imports

[[Page 71734]]

and distributes stainless steel bars, and an undisclosed company

identified by industry sources as Ta Chen. The article focuses on

SouthStar and how such a partnership would move SouthStar into the coil

and sheet business. The article also quotes SouthStar's chairman and

chief executive officer as stating that it could be from three weeks to

three years before a deal is announced. Thus, the article is both

remote and speculative. The remaining reasons Petitioners give to

indicate a likelihood that Ta Chen will engage in future dumping are

that: (1) The decline of the New Taiwan dollar demonstrates how dumping

margins for Ta Chen have been masked due to fluctuations in the

exchange rates (see Petitioners' letter to the Department, at Exhibit

2c (July 27, 1999)); and, (2) the pricing of WSSP has declined since

1996 (see Petitioners' letter to the Department, at Exhibit 1

(September 21, 1999)).

Based on the information submitted by Petitioners, there is

insufficient support for Petitioners' argument that the Department

should reject Ta Chen's request for revocation. The information

provided by Petitioners does not indicate a sufficient link between the

Asian economic crisis, SouthStar's actions, the decline of the New

Taiwan dollar, and/or the pricing of WSSP, and potential future dumping

by Ta Chen. We note that the Asian economic crisis reached its peak,

and the New Taiwan dollar began its decline during the period covered

by the instant review, a period during which our preliminary analysis

shows de minimis dumping margins for Ta Chen. Accordingly, a finding by

the Department that continued application of the order to Ta Chen is

necessary to offset future dumping is too speculative (and effectively

presumes dumping by all Asian exporters of stainless steel products),

based on the information provided. Accordingly, the Department shall

continue to consider Ta Chen's request for revocation, and review the

relevant information. Since we preliminarily conclude that all criteria

for revocation have been satisfied, we intend to revoke the order as to

Ta Chen, subject to verification after this preliminary determination.

Currency Conversion

For purposes of the preliminary results, we made currency

conversions in accordance with section 773A of the Act, based on the

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

certified by the Federal Reserve Bank of New York. Section 773A(a) of

the Act directs the Department to use the daily exchange rate in effect

on the date of sale in order to convert foreign currencies into U.S.

dollars, unless the daily rate involves a ``fluctuation.'' In

accordance with the Department's practice, we have determined as a

general matter that a fluctuation exists when the daily exchange rate

differs from a benchmark by 2.25 percent. See, e.g., Certain Stainless

Steel Wire Rods from France; Preliminary Results of Antidumping Duty

Administrative Review, 61 FR 8915, 8918 (March 6, 1998), and Policy

Bulletin 96-1: Currency Conversions, 61 FR 9434 (March 8, 1996). The

benchmark is defined as the rolling average of rates for the past 40

business days. When we determine a fluctuation exists, we substitute

the benchmark for the daily rate.

Preliminary Results of Review

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

following weighted-average dumping margin exists:

Certain Welded Stainless Steel Pipe

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

Weighted-

average

Producer/manufacturer/exporter margin

(percent)

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

Ta Chen.................................................... 0.04

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

The Department will disclose to any party to the proceeding, within

ten days of publication of this notice, the calculations performed (19

CFR 351.224). Any interested party may request a hearing within 30 days

of publication. Any hearing, if requested, will be held 37 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 35 days after the date of

publication. The Department will publish the final results of this

administrative review, which will include the results of its analysis

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

120 days after the publication of this notice.

Upon issuance of the final results of review, the Department shall

determine, and Customs shall assess, antidumping duties on all

appropriate entries. The Department will issue appraisement

instructions directly to Customs. The final results of this review

shall be the basis for the assessment of antidumping duties on entries

of merchandise covered by the results and for future deposits of

estimated duties. For duty assessment purposes, we calculated an

importer-specific assessment rate by dividing the total dumping margins

calculated for the U.S. sales to the importer by the total entered

value of these sales. This rate will be used for the assessment of

antidumping duties on all entries of the subject merchandise by that

importer during the POR.

If the revocation is made final for Ta Chen, it will apply to all

unliquidated entries of subject merchandise produced by Ta Chen,

exported to the United States and entered, or withdrawn from warehouse,

for consumption on or after December 1, 1998, the first day after the

period under review.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of this administrative review for

all shipments of the subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the publication of the final

results of this administrative review, as provided in section 751(a)(1)

of the Act: (1) The cash deposit rate for Ta Chen, the only reviewed

company, will be that established in the final results of this review;

(2) For previously reviewed or investigated companies not covered in

this 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, a prior review, or the original

LTFV investigation, but the manufacturer is, the cash deposit rate will

be the rate established in 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 conducted

by the Department, the cash deposit rate will continue to be the ``all

other'' rate established in the LTFV investigation, which was 19.84

percent. See Amended Final Determination and Antidumping Duty Order;

Certain Welded Stainless Steel Pipe From Taiwan, 57 FR 62300 (December

30, 1992).

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 351.402(f) to file a certificate regarding

the reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice is published in accordance

with

[[Page 71735]]

sections 751(a)(1) and 777(i)(1) of the Act.

Dated: December 15, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-33220 Filed 12-21-99; 8:45 am]

BILLING CODE 3510-DS-P