Forged Steel Fittings From Italy: Preliminary Affirmative Determination of Sales at Less Than Fair Value, Postponement of Final Determination and Extension of Provisional Measures

AGENCY:

Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (Commerce) preliminarily determines that forged steel fittings from Italy are being, or are likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is October 1, 2016, through September 30, 2017. Interested parties are invited to comment on this preliminary determination.

DATES:

Applicable May 17, 2018.

FOR FURTHER INFORMATION CONTACT:

Denisa Ursu or Michael Bowen, AD/CVD Operations, Office VIII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-2285 or (202) 482-0768, respectively.

SUPPLEMENTARY INFORMATION:

Background

This preliminary determination is made in accordance with section 733(b) of the Tariff Act of 1930, as Amended (the Act). Commerce initiated this investigation on October 25, 2017. On February 2, 2018, Commerce postponed the preliminary determination of this investigation.

Commerce exercised its discretion to toll all deadlines affected by the closure of the Federal Government from January 20 through 22, 2018. If the new deadline falls on a non-business day, in accordance with Commerce's practice, the deadline will become the next business day. The revised deadline for the preliminary determination of this investigation is now May 7, 2018.

For a complete description of the events that followed the initiation of this investigation, see the Preliminary Decision Memorandum. A list of topics included in the Preliminary Decision Memorandum is included as Appendix II to this notice. The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov,, and to all parties in the Central Records Unit, Room B8024 of the main Department of Commerce building. In addition, a complete version of the Preliminary Decision Memorandum can be accessed directly at http://enforcement.trade.gov/frn/. The signed and the electronic versions of the Preliminary Decision Memorandum are identical in content.

Scope of the Investigation

The products covered by this investigation are forged steel fittings from Italy. For a complete description of the scope of this investigation, see the “Scope of the Investigation,” in Appendix I.

Scope Comments

In accordance with the Preamble to Commerce's regulations, the Initiation Notice set aside a period of time for parties to raise issues regarding product coverage (i.e., scope). Certain interested parties commented on the scope of the investigation as it appeared in the Initiation Notice. On March 7, 2018, Commerce issued a Preliminary Scope Decision Memorandum making certain preliminary revisions to the scope based on the comments received. Commerce received additional scope comments following the issuance of the Preliminary Scope Decision Memorandum, and based on those comments, made certain additional preliminary revisions to the scope. For a summary of the additional comments received, and Commerce's preliminary analysis and decision with respect to them, see the Second Preliminary Scope Decision Memorandum. See also the revised scope in Appendix I to this notice.

Methodology

Commerce is conducting this investigation in accordance with section 731 of the Act. Pursuant to sections 776(a) and (b) of the Act and 19 CFR 351.308, Commerce preliminarily relied upon facts otherwise available with an adverse inference (adverse facts available or AFA) for the two mandatory respondents, M.E.G.A. S.p.A (MEGA) and I.M.L. Industria Meccanica Ligure S.p.A. (IML), which failed to cooperate to the best of their ability in their responses to Commerce's requests for information. See Preliminary Decision Memorandum for a complete explanation of the methodology and analysis underlying our preliminary application of adverse facts available. As AFA, Commerce is preliminarily assigning to MEGA and IML the highest margin alleged in the petition, 80.20 percent.

All-Others Rate

Sections 733(d)(1)(ii) and 735(c)(5)(A) of the Act provide that in the preliminary determination, Commerce shall determine an estimated weighted-average dumping margin for all other exporters and producers not individually examined. Section 735(c)(5)(A) of the Act states that, in calculating this rate, it shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually examined, excluding rates that are zero, de minimis, or determined entirely under section 776 of the Act.

In cases where no weighted-average dumping margins other than zero, de minimis, or those determined entirely under section 776 of the Act have been established for individually examined entities, in accordance with section 735(c)(5)(B) of the Act, Commerce may use “any reasonable method to establish the estimated all-others rate for exporters and producers not individually investigated, including averaging the estimated weighted average dumping margins determined for the exporters and producers individually investigated.” Our recent practice in these circumstances is to average the dumping margins alleged in the Petition and apply the result to “all-other” entities not individually examined. In this investigation, Commerce has preliminarily determined the estimated weighted-average dumping margin for MEGA and IML entirely under section 776 of the Act. Therefore, as the “all-others”' rate, we are assigning the simple average of the dumping margins alleged in the Petition, which is 49.43 percent. For a full description of the methodology underlying Commerce's analysis, see the Preliminary Decision Memorandum.

Preliminary Determination

Commerce preliminarily determines that the following estimated weighted-average dumping margins exist:

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, Commerce will direct U.S. Customs and Border Protection (CBP) to suspend liquidation of subject merchandise, as described in the scope of the investigation section entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register as discussed below.

Pursuant to section 733(d)(1)(B) of the Act and 19 CFR 351.205(d), Commerce will instruct CBP to require a cash deposit equal to the estimated weighted-average dumping margin, as follows: (1) The cash deposit rate for the respondents listed above will be equal to the company-specific estimated weighted-average dumping margins determined in this preliminary determination; (2) if the exporter is not a respondent identified above, but the producer is, then the cash deposit rate will be equal to the company-specific estimated weighted-average dumping margin established for that producer of the subject merchandise; and (3) the cash deposit rate for all other producers and exporters will be equal to the all-others estimated weighted-average dumping margin. These suspension of liquidation instructions will remain in effect until further notice.

Disclosure

Normally, Commerce discloses to interested parties the calculations performed in connection with a preliminary determination within five days of any public announcement or, if there is no public announcement, within five days of the date of publication of the notice of preliminary determination in the Federal Register, in accordance with 19 CFR 351.224(b). However, because Commerce preliminarily applied total AFA to the individually examined companies (MEGA and IML) in this investigation in accordance with section 776 of the Act, and the applied AFA rate is based solely on the Petition, there are no calculations to disclose.

Verification

As explained in the Preliminary Decision Memorandum, we will afford MEGA the opportunity to remedy a deficiency in its reported cost reconciliation after issuing this preliminary determination. Should we find MEGA's response satisfactory, then, as provided in section 782(i)(1) of the Act, we intend to verify this respondent's information for purposes of relying upon it in making our final determination. IML did not provide sections B, C, D, or supplemental section A questionnaire responses and, therefore, Commerce will not conduct verification of IML. As further explained in the Preliminary Decision Memorandum, the companies, Officine Nicola Galperti & Figlio (Galperti) and Pegasus S.R.L. (Pegasus), contend that they are not producers or exporters of forged steel fittings from Italy. As provided in section 782(i)(1) of the Act, we intend to verify Galperti's and Pegasus's claims that they did not produce or sell the subject merchandise during the POI.

Public Comment

Case briefs regarding non-scope issues may be submitted to the Assistant Secretary for Enforcement and Compliance no later than seven days after the date on which the last verification report is issued in this investigation, or on a date established by Commerce, as appropriate. Rebuttal briefs, limited to issues raised in case briefs, may be submitted no later than five days after the deadline date for case briefs.

Additionally, case briefs regarding scope issues may be submitted within 10 days after the date of publication of this notice in the Federal Register. Rebuttal briefs regarding scope issues, limited to those issues which are raised in the scope case briefs, may be submitted no later than five days after the deadline date for scope case briefs. All scope case and rebuttal briefs must be filed identically on the records of this investigation and the concurrent AD and CVD investigations of forged steel fittings. Pursuant to 19 CFR 351.309(c)(2) and (d)(2), parties who submit case briefs or rebuttal briefs on any issues raised in this proceeding are encouraged to submit with each argument: (1) A statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities.

Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, limited to issues raised in the non-scope case and rebuttal briefs and/or scope case and rebuttal briefs, must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce. Any hearing request for scope issues must be filed identically on the records of this investigation and the concurrent AD and CVD investigations of forged steel fittings. All documents must be filed electronically using ACCESS. An electronically-filed request must be received successfully in its entirety by ACCESS by 5:00 p.m. Eastern Time, within 30 days after the date of publication of this notice. Requests should contain the party's name, address, and telephone number, the number of participants, and a list of the issues to be discussed. If a request for a hearing is made, Commerce intends to hold the hearing at the U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, at a time and date to be determined. Parties should confirm by telephone the date, time, and location of the hearing two days before the scheduled date.

Postponement of Final Determination and Extension of Provisional Measures

Section 735(a)(2) of the Act provides that a final determination may be postponed until not later than 135 days after the date of the publication of the preliminary determination if, in the event of an affirmative preliminary determination, a request for such postponement is made by exporters who account for a significant proportion of exports of the subject merchandise, or in the event of a negative preliminary determination, a request for such postponement is made by the petitioner. Pursuant to 19 CFR 351.210(e)(2), Commerce requires that a request by exporters for postponement of the final determination be accompanied by a request for extension of provisional measures from a four-month period to a period not more than six months in duration.

On April 18, 2018, pursuant to 19 CFR 351.210(e), MEGA requested that Commerce postpone the final determination and that provisional measures be extended to a period not to exceed six months. On April 18, 2018, Bonney Forge Corporation and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW) (the petitioners) requested, in the event of a negative preliminary determination in this investigation, that Commerce postpone the final determination up to 135 days after the date of the publication of the preliminary determination. In accordance with section 735(a)(2)(A) of the Act and 19 CFR 351.210(b)(2)(ii), because: (1) The preliminary determination is affirmative; (2) the requesting exporter accounts for a significant proportion of exports of the subject merchandise; and (3) no compelling reasons for denial exist, Commerce is postponing the final determination and extending the provisional measures from a four-month period to a period not greater than six months. Accordingly, Commerce will make its final determination no later than 135 days after the date of publication of this preliminary determination.

U.S. International Trade Commission Notification

In accordance with section 733(f) of the Act, Commerce will notify the U.S. International Trade Commission (ITC) of its affirmative preliminary determination of sales at LTFV. If the final determination is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after the final determination whether these imports are materially injuring, or threaten material injury to, the U.S. industry.

Notification to Interested Parties

This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act and 19 CFR 351.205(c).

Appendix I

Scope of the Investigation

The merchandise covered by this investigation is carbon and alloy forged steel fittings, whether unfinished (commonly known as blanks or rough forgings) or finished. Such fittings are made in a variety of shapes including, but not limited to, elbows, tees, crosses, laterals, couplings, reducers, caps, plugs, bushings, unions, and outlets. Forged steel fittings are covered regardless of end finish, whether threaded, socket-weld or other end connections.

While these fittings are generally manufactured to specifications ASME B16.11, MSS SP-79, MSS SP-83, MSS SP-97, ASTM A105, ASTM A350, and ASTM A182, the scope is not limited to fittings made to these specifications.

The term forged is an industry term used to describe a class of products included in applicable standards, and does not reference an exclusive manufacturing process. Forged steel fittings are not manufactured from casting. Pursuant to the applicable specifications, subject fittings may also be machined from bar stock or machined from seamless pipe and tube.

All types of fittings are included in the scope regardless of nominal pipe size (which may or may not be expressed in inches of nominal pipe size), pressure rating (usually, but not necessarily expressed in pounds of pressure/PSI, e.g., 2,000 or 2M; 3,000 or 3M; 6,000 or 6M; 9,000 or 9M), wall thickness, and whether or not heat treated.

Excluded from this scope are all fittings entirely made of stainless steel. Also excluded are flanges, butt weld fittings, butt weld outlets, nipples, and all fittings that have a maximum pressure rating of 300 pounds of pressure/PSI or less.

Also excluded are fittings certified or made to the following standards, so long as the fittings are not also manufactured to the specifications of ASME B16.11, MSS SP-79, MSS SP-83, MSS SP-97, ASTM A105, ASTM A350, and ASTM A182:

• American Petroleum Institute (API) API 5CT, API 5L, or API 11B
• Society of Automotive Engineering (SAE) SAE J476, SAE J514, SAE J516, SAE J517, SAE J518, SAE J1026, SAE J1231, SAE J1453, SAE J1926, J2044 or SAE AS 35411
• Underwriter's Laboratories (UL) certified electrical conduit fittings
• ASTM A153, A536, A576, or A865
• Casing Conductor Connectors 16-42 inches in diameter made to proprietary specifications
• Military Specification (MIL) MIL-C-4109F and MIL-F-3541
• International Organization for Standardization (ISO) ISO6150-B

To be excluded from the scope, products must have the appropriate standard or pressure markings and/or accompanied by documentation showing product compliance to the applicable standard or pressure, e.g., “API 5CT” mark and/or a mill certification report.

Subject carbon and alloy forged steel fittings are normally entered under Harmonized Tariff Schedule of the United States (HTSUS) 7307.99.1000, 7307.99.3000, 7307.99.5045, and 7307.99.5060. They also may be entered under HTSUS 7307.92.3010, 7307.92.3030, 7307.92.9000, and 7326.19.0010. The HTSUS subheadings and specifications are provided for convenience and customs purposes; the written description of the scope is dispositive.

Appendix II

List of Topics Discussed in the Preliminary Decision Memorandum

I. Summary

II. Background

III. Period of Investigation

IV. Treatment of Galperti and Pegasus

V. Scope Comments

VI. Scope of the Investigation

VII. Application of Facts Available and Use of Adverse Inference

A. Application of Facts Available

B. Application of Facts Available with an Adverse Inference

C. Preliminary Estimated Weighted-Average Dumping Margin Based on Adverse Facts Available

D. Corroboration of Secondary Information

VIII. All-Others Rate

IX. Conclusion