Certain Welded ASTM A-312 Stainless Steel Pipe from Korea: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-810]

Certain Welded ASTM A-312 Stainless Steel Pipe from Korea:

Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review.

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SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on certain welded

ASTM A-312 stainless steel pipe (WSSP) from Korea in response to a

request by Avesta Sheffield Pipe Co.; Damascus Tube Division, Damascus-

Bishop Tube Co.; and the United Steelworkers of America (AFL-CIO/CLC),

herein referred to as ``the domestic industry.'' This review covers

exports of subject merchandise to the United States during the period

December 1, 1997, through November 30, 1998.

We have preliminarily determined that SeAH Steel Corporation Ltd.

(SeAH) has made sales below normal value (NV). 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

based on the difference between the constructed export price (CEP) and

the NV.

Interested parties are invited to comment on these preliminary

results. Parties who submit comments are requested to submit with each

comment a statement of the issue and a brief summary of the comment.

EFFECTIVE DATE: December 28, 1999.

FOR FURTHER INFORMATION CONTACT: Thomas Gilgunn, Mark Hoadley, or

Maureen Flannery, AD/CVD Enforcement, Import Administration,

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

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

(202) 482-0648, (202) 482-0666, and (202) 482-3020, respectively.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise stated, 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. In

addition, unless otherwise stated, all

[[Page 72646]]

citations to the Department's regulations are references to the

regulations as codified at 19 CFR Part 351 (1999).

SUPPLEMENTARY INFORMATION:

Background

The Department published in the Federal Register the antidumping

duty order on WSSP from Korea on December 30, 1992 (57 FR 62301). On

December 8, 1998, we published in the Federal Register (63 FR 67646) a

notice of opportunity to request an administrative review of the

antidumping duty order on WSSP from Korea covering the period December

1, 1998 through November 30, 1999.

In accordance with 19 CFR 351.213(b)(1), the domestic parties

requested that we conduct an administrative review of SeAH's sales. We

published a notice of initiation of this antidumping duty

administrative review on January 25, 1999 (64 FR 36821).

During this review, the Department conducted a verification of the

information provided by SeAH from November 11, 1999 through November

13, 1999. We used standard verification procedures, including the

examination of relevant sales and financial records. Our verification

results for SeAH are outlined in business proprietary and public

versions of the verification reports on file with the Central Records

Unit, in Room B-099 of the Herbert C. Hoover Building.

Scope of the Review

The merchandise subject to this administrative review, WSSP, is

austenitic stainless steel pipe 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. 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

these products are currently classifiable under the following United

States Harmonized Tariff Schedule (HTS) subheadings: 7306.40.5005,

7306.40.5015, 7306.40.5045, 7306.40.5060 and 7306.40.5075. Although

these subheadings include both pipes and tubes, the scope of this order

is limited to welded austenitic stainless steel pipes.

Although HTS subheadings are provided for convenience and Customs

purposes, the written description of the scope of this order remains

dispositive.

Product Comparisons

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

products produced by SeAH covered by the description in the ``Scope of

Review'' section, above, and sold in the home market during the period

of review (POR) to be foreign like products for the purposes of

determining appropriate product comparisons with U.S. sales. In the

Product Characteristics section (B3.1-B3.n and C3.1-C3.n) of our

questionnaire, we provided the following hierarchy of product

characteristics to be used for reporting identical and most similar

comparisons of merchandise: (1) Specification/Alloy; (2) Size; (3) Hot

or Cold Finish; (4) Wall Thickness; (5) End Finish; (6) Pipe Length;

and (7) Other Characteristics.

Comparisons to Normal Value

To determine whether sales of subject merchandise to the United

States were made at less than NV, we compared the CEP to NV, as

described in the ``United States Price'' and ``Normal Value'' sections

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

calculated monthly weighted-average home market prices for NV and

compared these to individual U.S. transaction prices.

United States Price

Because SeAH and Pusan Pipe of America (PPA) are affiliated, and

the subject merchandise was not sold to an unaffiliated purchaser until

after its importation into the United States, we used CEP as United

States Price. The starting price for CEP is the price from PPA to

unaffiliated customers in the United States.

The Department calculated CEP for SeAH based on the ``ex port duty

paid'' (net of discounts) price to PPA's customer in the United States.

In accordance with section 772(c)(2) of the Act, we reduced CEP by

movement expenses (foreign inland freight, foreign brokerage, ocean

freight, marine insurance, U.S. brokerage, and U.S. duties). In

accordance with section 772(d)(1) of the Act, we deducted direct

selling expenses (credit and warranty expenses) and indirect selling

expenses, including inventory carrying costs. Finally, we added Korean

duty drawback and made an adjustment for an amount of profit allocated

to selling expenses incurred in the United States, in accordance with

section 772(c) and (d) of the Act.

Date of Sale

Under the Department's current practice, the invoice date is

normally the date of sale. We may, however, use a date other than the

invoice date if we are satisfied that a different date better reflects

the date on which the exporter or producer establishes the material

terms of sale. See 19 CFR 351.401(i); Preamble to the Antidumping Duty

Regs., 62 FR at 27411.

SeAH reported PPA's date of invoice as its U.S. date of sale. The

domestic industry argued that the Department should deny SeAH's

reported date of sale. The domestic industry asserts that both price

and quantity are established before the date that PPA issues its

invoice and that PPA is ``not responsible for the establishment of the

terms of sale.''

After examination of SeAH's and PPA's respective roles in sales

process, we determined that one of the material terms (i.e. quantity)

of SeAH's sales to unaffiliated customers are not fixed until PPA's

invoice date. Thus, we used the date of PPA's invoice to its

unaffiliated customer as the date of sale.

Because most of the information on which we relied to perform our

analysis is proprietary, it cannot be discussed in this notice.

However, a memorandum detailing our analysis has been prepared. (See

the proprietary version of the Memo from Thomas Gilgunn to Barbara E.

Tillman regarding ``Date of Sale for SeAH Steel Corporation and Pusan

Pipe America'' (Decision Memo), dated December 17, 1999.)

Normal Value

The Department determines the viability of the home market as the

comparison market by comparing the aggregate quantity of home market

and U.S. sales. We found that SeAH's quantity of sales in its home

market exceeded five percent of its sales to the United States. We

therefore have determined that SeAH's home market sales are viable for

purposes of comparison with sales of the subject merchandise to the

United States, pursuant to section 773(a)(1)(C) of the Act and section

351.404 of our regulations. Therefore, in accordance with section

773(a)(1)(B)(i) of the Act, we based NV on the price, net of discounts,

at which the foreign like product was first sold for consumption in the

home market, in the usual commercial quantities and in the ordinary

course of trade and, to the extent practicable, at the same level of

trade as the CEP sales. See the ``Level of

[[Page 72647]]

Trade section'' below. We determined what home market merchandise was

most similar to the merchandise sold in the United States on the basis

of product characteristics set forth in sections B and C of the

Department's questionnaire.

For comparisons to CEP, we made COS adjustments by deducting home

market direct selling expenses (credit expenses) pursuant to section

773(a)(6)(C)(iii) of the Act. We also made adjustments, where

applicable, for movement expenses, in accordance with sections

773(a)(6)(A) and (a)(6)(B) of the Act. We also made adjustments for

differences in the costs of manufacture for subject merchandise and

matching foreign like products, attributable to their differing

physical characteristics, pursuant to section 773(a)(6)(C)(ii) of the

Act, and, based upon our level of trade analysis, discussed below, for

home market indirect selling expenses up to the amount of U.S. indirect

selling expenses, in accordance with section 773(a)(7)(B) of the Act

and section 351.412(f) of the Department's regulations. See Analysis

Memorandum (December 17, 1999).

Cost of Production

In the last completed segment of this proceeding, the Department

disregarded sales below the cost of production (COP). See Final

Determination of Sales at Less Than Fair Value: Certain Welded

Stainless Steel Pipe From The Republic of Korea, 57 FR 53693, (November

12, 1992). We therefore have reasonable grounds to believe or suspect,

pursuant to section 773(b)(2)(A)(ii) of the Act, that sales of the

foreign like product under consideration for the determination of NV in

this review may have been made at prices below COP. Pursuant to section

773(b)(1) of the Act, we initiated a COP investigation of sales in the

home market. Using market sales and COP information provided by the

respondent, we compared sales of the foreign like product in the

comparison market with the model-specific COP figure for the POR. In

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

based on the sum of the costs of materials and fabrication employed in

producing the foreign like product, plus selling, general and

administrative (SG&A) expenses, including all costs and expenses

incidental to placing the foreign like product in condition packed and

ready for shipment.

After calculating COP, we tested whether comparison market sales of

the foreign like product were made at prices below COP and, if so,

whether the below-cost sales were made within an extended period of

time in substantial quantities, and at prices that did not permit

recovery of all costs within a reasonable period of time. Because each

individual price was compared to the POR-long average COP, any sales

that were below cost were also determined not to be at prices which

permitted cost recovery within a reasonable period of time. We compared

model-specific COPs to the reported comparison market prices less any

applicable movement charges, discounts, and rebates.

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

percent of a respondent's sales of a given model were at prices less

than COP, we did not disregard any below-cost sales of that model

because the below-cost sales were not made in substantial quantities

within an extended period of time. Where 20 percent or more of a

respondent's sales of a given model during the POR were at prices less

than the weighted-average COPs for the POR, we disregarded the below-

cost sales because they were made over an extended period of time in

substantial quantities in accordance with sections 773(b)(2) (B) and

(C) of the Act, and were at prices which would not permit recovery of

all costs within a reasonable period of time in accordance with section

773(b)(2)(D) of the Act.

Constructed Value

In accordance with section 773(a)(4) of the Act, we used

constructed value (CV) as the basis for NV when there were no above-

cost contemporaneous sales of identical or similar merchandise in the

comparison market. We calculated CV in accordance with section 773(e)

of the Act. We included the cost of materials and fabrication, selling,

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

with section 773(e)(2)(A) of the Act, we based SG&A expenses and profit

on the amounts incurred and realized by the respondents 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 weighted-average home market 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 home market at the

same level of trade (LOT) as U.S. sales. The NV LOT is the level of the

starting-price sale in the home market or, when NV is based on

constructed value, the level of the sales from which we derive selling,

general, and administrative expenses (SG&A) and profit. For export

price, 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 export price 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 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).

For merchandise sold in the home market during this POR, SeAH

claimed two distribution channels and one LOT. Regardless of the

distribution channel, the selling functions performed by SeAH were

substantially the same. Therefore, we concluded all sales in the home

market were made at one LOT. Further, because all U.S. sales were CEP

sales made in the same distribution channel and SeAH performed the same

selling functions for all customers, we concluded that all sales in the

U.S. market were made at one LOT.

We then compared the selling functions in the U.S. and home

markets. At the level of CEP sales to the United States, i.e., after

eliminating from consideration the selling functions associated with

deductions made under section 772 of the Act, we found that the CEP

sales were made at a different and less advanced level of trade than

home market sales.

Because there are no sales in the home market made at the same LOT

as sales in the United States, we were not able to determine whether

the difference in LOT affects price comparability. Therefore, we made a

CEP offset adjustment. In accordance with 19 CFR 351.412(f)(2), we

deducted indirect selling expenses from NV to the extent of U.S.

indirect selling expenses deducted in calculating CEP. For a further

discussion of the Department's

[[Page 72648]]

LOT analysis with respect to SeAH, see Analysis Memorandum (December

17, 1999).

Currency Conversion

We made currency conversions in accordance with section 773A of the

Act. Section 773A(a) of the Act directs the Department to use a daily

exchange rate to convert foreign currencies into U.S. dollars unless

the daily rate involves a fluctuation. The Department considers a

``fluctuation'' to exist when the daily exchange rate differs from the

benchmark rate by 2.25 percent or more. 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 generally substitute the

benchmark rate for the daily rate, in accordance with established

practice. (An exception to this rule is described below.) (For an

explanation of this method, see Policy Bulletin 96-1: Currency

Conversions (61 FR 9434, March 8, 1996).)

Our analysis of the U.S. dollar/Korean won exchange rates

demonstrates that the Korean won declined rapidly in November and

December 1997. Specifically, the won declined more than 40 percent over

this two-month period. The decline was, in both speed and magnitude,

many times more severe than any change in the dollar-won exchange rate

during recent years, and it did not rebound significantly in a short

time. As such, we determine that the decline in the won during November

and December 1997 was of such magnitude that the dollar-won 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. Accordingly, the Department used

actual daily exchange rates exclusively in November and December 1997.

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

Stainless Steel Sheet and Strip from the Republic of Korea, 64 FR

30664, 30670 (June 8, 1999) (``SSSS from Korea''). We note, however,

that we have refined our methodology somewhat from that applied in SSSS

from Korea. We recognize that, following a large and precipitous

decline in the value of a currency, a period may exist wherein 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 in November and December 1997. Thus, we devised a

methodology for identifying the point following a precipitous drop at

which it is reasonable to presume that rates, more than 2.25 percent

from the benchmark, were merely fluctuating. Following the precipitous

drop in November and December 1997, we continued to use 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. See Notice of Final Results of Antidumping

Duty Administrative Review: Certain Welded Carbon Steel Pipes and Tubes

from Thailand, 64 FR 56759, 56763 (October 21, 1999). See also

Polyethylene Terephthalate Film, Sheet and Strip From Korea: Final

Results of Antidumping Duty Administrative Review and Notice of Intent

Not To Revoke in Part, 64 FR 62648, 62649 (November 17, 1999).

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

from November 3, 1997, through January 13, 1998. We then resumed the

use of our normal methodology, starting with a benchmark based on the

average of the 20 reported daily rates from January 14, 1998. We used

the normal 40-day benchmark from February 12, 1998 to the close of the

review period.

Preliminary Results of Review

As a result of our review, we preliminarily determine the weighted-

average dumping margin for the period December 1, 1997 through November

30, 1998 to be as follows:

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

Margin

Manufacturer/exporter percentage

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

SeAH....................................................... 2.44

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

The Department will disclose to the parties to the proceeding

calculations performed in connection with these preliminary results of

review within five days after the date of publication of these

preliminary results of review.

Any interested party may request a hearing within 30 days of

publication. Any hearing, if requested, will be held 2 days after the

date of filing of rebuttal briefs or the first business day thereafter.

Case briefs from interested parties may be submitted not later than 30

days after publication. Rebuttal briefs, limited to issues raised in

case briefs, may be filed not later than five days after the date of

filing of case briefs. The Department will publish the final results of

this administrative review, including its analysis of issues raised in

the case and rebuttal briefs, not later than 120 days after the date of

publication of this notice.

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

determine, and the U.S. Customs Service shall assess, antidumping

duties on all appropriate entries. In accordance with 19 CFR

351.202(b), we calculated an importer-specific ad valorem duty

assessment rate based on the ratio of the total amount of antidumping

duties calculated for the examined sales to the total customs value of

the sales used to calculate those duties. This rate will be assessed

uniformly on all entries of that particular importer made during the

POR.

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the publication date, as

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

each reviewed company will be that established in the final results of

review (except that no deposit will be required for firms with de

minimis margins, i.e., margins less than 0.5 percent); (2) for

exporters not covered in this review, but covered in the 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, a previous review, or the 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; (4) the

cash deposit rate for all other manufacturers or exporters will

continue to be the ``all others'' rate established in the LTFV

investigation, which was 6.83 percent. These requirements, when

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

of the next administrative review.

This notice serves as a preliminary reminder to importers of their

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

the

[[Page 72649]]

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 issued in accordance with

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

19 U.S.C 1677f(i)(1)).

Dated: December 17, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-33654 Filed 12-27-99; 8:45 am]

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