Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Circular Welded Carbon Quality Line Pipe From the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (“the Department”) has preliminarily determined that imports of certain circular welded carbon quality line pipe from the People's Republic of China (“PRC”) are being, or are likely to be, sold in the United States at less than fair value (“LTFV”). The estimated margin of sales at LTFV is shown in the “Suspension of Liquidation” section of this notice.

Interested parties are invited to comment on this preliminary determination. We will make our final determination not later than 75 days after the date of this preliminary determination.

EFFECTIVE DATE:

October 8, 2004.

FOR FURTHER INFORMATION CONTACT:

Brian Smith at 202-482-1766, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

On March 3, 2004, the Department received an antidumping duty petition filed in proper form by American Steel Pipe Division of American Cast Iron Pipe Company, IPSCO Tubulars Inc., Lone Star Steel Company, Maverick Tube Corporation, Northwest Pipe Company, and Stupp Corporation (collectively “the petitioners”). On March 30, 2004, this investigation was initiated. See Notice of Initiation of Antidumping Duty Investigation: Certain Circular Welded Carbon Quality Line Pipe from Mexico, the Republic of Korea, and the People's Republic of China, 69 FR 16521 (March 30, 2004).

On April 6, 2004, the Department requested from the Embassy of the People's Republic of China, Baoji Oil Country Tubular Goods Plant, Fanyu Zhujiang Steel Pipe Co Ltd., Jiling Jiyuan Steel Pipe Co., Ltd., Shanghai Alison Steel Pipe Co., Ltd. (“Shanghai Alison”), and Shengli Petroleum Administrative Bureau Steel Pipe Plant, the quantity and value (“Q&V”) of subject merchandise exported to the United States during the period July 1, 2003, through December 31, 2003. The Department received a response sent by regular (non-express) delivery on May 10, 2004, from Shanghai Alison, dated April 23, 2004. Due to several filing format or service deficiencies, and because the questionnaire response was submitted past the April 21 deadline, the submission from Shanghai Alison was rejected in accordance with § 351.302(d) of the Department's regulations. See Letter to Shanghai Alison from Edward Yang Re: Quantity and Value (Q&V) Questionnaire, dated June 4, 2004. The Department received no other responses to the Q&V questionnaire.

On April 19, 2004, the Department received comments related to the scope of the proceeding from the petitioners and Central Plastics Company (“CPC”), an interested party. CPC requested that line pipe of nominal pipe size outer diameters of 11/4 inch and less be excluded from the scope of the investigation. According to CPC, line pipe of 11/4 inch nominal pipe size outer diameter and less has different physical characteristics and can be used in very unique and specific applications. CPC uses this line pipe to distribute natural gas for household and business uses. CPC states that its ability to use pipe greater than 2 inches nominal pipe size outer diameter is not feasible given the specialized production processes used. Since this line pipe is more specialized, it is differentiated from the more common industrialized types of line pipe the investigation seeks to cover.

In support of the exclusion, CPC also contends that the quantities of line pipe it imports are 0.1 percent of the market. CPC also notes that it uses domestic line pipe when possible, but there are certain quality and quantity constraints. Therefore, CPC must rely to some extent on imports. Finally, CPC states that a loss of jobs would most likely result from any coverage of line pipe in question by an antidumping duty finding.

On April 21, 2004, petitioners submitted comments confirming that they do not oppose this request. Therefore, we have amended the scope of this investigation to exclude line pipe in nominal pipe size outer diameter of 11/4 inch and less.

On April 27, 2004, the International Trade Commission (“ITC”) issued its determination that there is a reasonable indication that an industry in the United States is materially injured or threatened with material injury by reason of imports of circular welded carbon quality line pipe from the PRC. See Certain Welded Carbon Quality Line Pipe from China, Korea, and Mexico: Investigations Nos. 731-TA-1073-1075 (Preliminary).

On April 30, 2004, the Department issued its Section A antidumping questionnaire to the Government of the PRC and provided courtesy copies to the four exporters/producers identified in the petition and one exporter/producer identified through the Department's research. The Department received no responses to this antidumping questionnaire from any of the respondents.

On August 5, 2004, the petitioners requested an extension of the preliminary determination with respect to line pipe from the PRC. See Letter from Petitioners Requesting an Extension of the Preliminary Determination on Certain Circular Welded Carbon Quality Line Pipe from China, dated August 5, 2004 (“Extension Request”). Accordingly, on August 6, 2004, the Department postponed the preliminary determination under section 733(c)(1)(A) of the Act by 50 days, to no later than September 29, 2004. See Postponement of Preliminary Determination of Antidumping Duty Investigation: Certain Circular Welded Carbon Quality Line Pipe from the People's Republic of China, 69 FR 49862 (August 12, 2004) (“Notice of Postponement”).

On September 16, 2004, the petitioners requested an extension of the final determination. 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 petitioners. Because we have made an affirmative preliminary determination and have not received a request for postponement by exporters who account for a significant proportion of exports of the subject merchandise, we have not postponed the final determination.

Scope of Investigation

This investigation covers circular welded carbon quality steel pipe of a kind used for oil and gas pipelines, not more that 406.4 mm (16 inches) in outside diameter, regardless of wall thickness, surface finish (black, or coated with any coatings compatible with line pipe), and regardless of end finish (plain end, beveled ends for welding, threaded ends or threaded and coupled, as well as any other special end finishes), and regardless of stenciling. Excluded from this proceeding are line pipe in nominal pipe size outer diameter of 11/4 inch and less.

The merchandise subject to this investigation may be classified in the Harmonized Tariff Schedule of the United States (“HTSUS”) at heading 7306 and subheadings 7306.10.10.10, 7306.10.1013, 7306.10.1014, 7306.10.1015, 7306.10.1019, 7306.10.1050, 7306.10.1053, 7306.10.1054, 7306.10.1055, 7306.10.1059, 7306.10.5010, 7306.10.5013, 7306.10.5014, 7306.10.5015, 7306.10.5019, 7306.10.5050, 7306.10.5053, 7306.10.5054, 7306.10.5055, and 7306.10.5059. The tariff classifications are provided for convenience and customs purposes; however, the written description of the scope of the investigation is dispositive.

Period of Investigation

The period of investigation (“POI”) corresponds to the two most recent fiscal quarters prior to the filing of the petition, i.e., July 1, 2003, through December 31, 2003.

Nonmarket Economy Country Status

The Department has treated the PRC as a nonmarket economy (“NME”) country in all past antidumping investigations. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Bulk Aspirin From the People's Republic of China, 65 FR 33805 (May 25, 2000); Notice of Final Determination of Sales at Less Than Fair Value: Certain Non-Frozen Apple Juice Concentrate from the People's Republic of China, 65 FR 19873 (April 13, 2000); Notice of Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products from the People's Republic of China, 66 FR 49632 (September 28, 2001) (“Hot-Rolled Steel from the PRC”). This NME designation remains in effect until it is revoked by the Department. See section 771(18)(C) of the Act. No party has sought revocation of the NME status in this investigation. Therefore, in accordance with section 771(18)(C) of the Act, we will continue to treat the PRC as an NME country.

When the Department is investigating imports from an NME, section 773(c)(1) of the Act directs us to base the normal value (“NV”) on the NME producer's factors of production (“FOPs”), valued in a comparable market economy that is a significant producer of comparable merchandise. The sources of individual factor prices are discussed under the “Normal Value” section, below. Furthermore, no interested party has requested that we treat the circular welded carbon quality line pipe industry in the PRC as a market-oriented industry and no information has been provided that would lead to such a determination. Therefore, we preliminarily have continued to treat the PRC as an NME.

Selection of Surrogate Country

In accordance with section 773(c)(4) of the Act, the Department, in valuing the FOPs, shall utilize, to the extent possible, the prices or costs of FOPs in one or more market-economy countries that are at a level of economic development comparable to that of the NME country and are significant producers of comparable merchandise. The Department has determined that India, Pakistan, Indonesia, Sri Lanka and the Philippines are countries comparable to that of the PRC in terms of economic development. See Memorandum from Ron Lorentzen to Edward Yang Re: Request for a List of Surrogate Countries, dated July 2, 2004. Customarily, we select an appropriate surrogate based on the availability and reliability of data from these countries. For PRC cases, the primary surrogate has often been India if it is a significant producer of comparable merchandise. In this case, we have found that India is a significant producer of comparable merchandise. See Memorandum to File from Salim Bhabhrawala Re: Selection of Surrogate Country, dated September 29, 2004. We used India as the primary surrogate country and, accordingly, we have corroborated petitioner's calculations of NV using Indian prices to value the PRC producer's FOPs, when available and appropriate. We have obtained and relied upon publicly available information wherever possible.

In accordance with 19 CFR 351.301(c)(3)(i), for the final determination in this antidumping investigation, interested parties may submit publicly available information to value the FOPs within 40 days after the date of the publication of the preliminary determination.

The PRC-Wide Rate

In NME cases, it is the Department's policy to assume that all exporters located in the NME comprise a single exporter under common control, the “NME entity.” This presumption can be rebutted. The Department assigns a single NME rate to the NME entity unless an exporter can demonstrate eligibility for a separate rate. All exporters were given the opportunity to respond to the Department's questionnaires. As explained above, we did not receive timely responses from any PRC respondent. For this reason, we preliminarily determine that the PRC exporters of circular welded carbon quality line pipe from the PRC failed to respond to our questionnaire. Consequently, we are applying adverse facts available (see below) to determine the single antidumping duty rate—the PRC—wide rate—applicable to exporters in the PRC based on the fact that no respondent demonstrated entitlement to a separate rate; thus, all exporters of circular welded carbon quality line pipe are treated as a single enterprise under common control by the PRC government. See, e.g., Final Determination of Sales at Less Than Fair Value: Synthetic Indigo from the People's Republic of China, 65 FR 25706, 25707 (May 3, 2000). The PRC-wide rate applies to all entries of subject merchandise.

Use of Facts Otherwise Available

Section 776(a)(2) of the Act provides that if an interested party or any other person: (A) Withholds information that has been requested by the Department; (B) fails to provide such information in a timely manner or in the form or manner requested under the antidumping statute; (C) significantly impedes an antidumping investigation; or (D) provides such information, but the information cannot be verified, the Department shall use the facts otherwise available in reaching the applicable determination as provided in section 782(d) of the Act. See Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea: Preliminary Results of Antidumping Duty Administrative Review and Notice of Intent Not To Revoke Order in Part, 64 FR 30481 (June 8, 1999); Silicon Metal From The People's Republic of China: Final Results of Antidumping Duty Administrative Review, 63 FR 37850 (July 14, 1998). Apart from an untimely and improperly filed Q&V response from Shanghai Alison, no party responded to our questionnaires. Therefore, they have impeded the Department's best efforts to conduct this investigation. For these reasons, the Department finds that use of facts otherwise available is appropriate for this preliminary determination.

Use of Adverse Facts Available

Section 776(b) of the Act provides that, if the Department finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information, the Department may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available. In addition, the Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H. Doc. 316, Vol. 1, 103d Cong. (1994) (“SAA”), establishes that the Department may employ an adverse inference “* * * to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See SAA at 870. It also instructs the Department, in employing adverse inferences, to consider “* * * the extent to which a party may benefit from its own lack of cooperation.” See id.

In this particular case, the PRC entity failed to respond to several of the Department's requests for information. Moreover, the PRC entity did not provide an explanation or documentation for its failure to respond to the questionnaire. See Memorandum to the File, from Steve Williams, Case Analyst, through Jim Nunno, Team Leader, Re: Responses to the Quantity and Value and Section A Questionnaires, dated June 10, 2004. Therefore, the Department finds that, by not providing the necessary responses to the questionnaires issued by the Department, the PRC entity has failed to cooperate to the best of its ability and therefore the use of adverse facts available is appropriate.

Corroboration

Section 776(c) of the Act provides that, when the Department relies on secondary information rather than on information obtained in the course of a review, the Department shall, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. In corroborating the petition margin, the Department must rely on surrogate values. Prior to using surrogate values, the Department must select a primary surrogate country. As explained above, we selected India as a primary surrogate country. See Memorandum to the File from Salim Bhabhrawala, Case Analyst, Re: Selection of Surrogate Country, dated September 29, 2004.

The Department attempted to find surrogate values contemporaneous with the POI from a comparable market economy to corroborate properly the secondary information to be used as the basis of the margin for the PRC entity. The Department conducted a search of the surrogate company's (Surya Roshni) financial statements by using web search engines, but could not identify detailed financial statements that would be contemporaneous with the POI and therefore appropriate for updating the surrogate values provided in the petition. Therefore, the Department has continued using the surrogate values provided in the petition, adjusted by the Department by a factor for estimated inflation within the POI, and subsequently corroborated through the Department's review. Based on information contained in the petition and our corroboration, the Department calculated a dumping margin of 73.17 percent. See Memorandum to File from Steve Williams, Case Analyst, through Jim Doyle, Office Director, Total Adverse Facts Available Corroboration Memorandum, dated September 29, 2004.

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, the Department will direct U.S. Customs and Border Protection (CBP) to suspend liquidation of all imports of subject merchandise, that are entered or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We will instruct CBP to require a cash deposit or posting of a bond equal to the estimated preliminary dumping margin indicated in the chart below. This suspension of liquidation will remain in effect until further notice.

We preliminarily determine that the following margin exists for the POI:

The PRC-wide rate applies to all entries of the subject merchandise.

ITC Notification

In accordance with section 733(f) of the Act, we have notified the ITC of our preliminary determination. If our 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 our final determination whether imports of circular welded carbon quality line pipe from the PRC are materially injuring, or threaten material injury to, the U.S. industry.

Public Comment

Case briefs or other written comments must be submitted to the Assistant Secretary for Import Administration no later than 30 days after the date of publication of this notice, and rebuttal briefs no later than 35 days after the date of publication of this notice. Rebuttal briefs must be limited to the issues raised in the case briefs. A list of authorities used and an executive summary of issues should accompany any briefs submitted to the Department. Such summary should be limited to five pages total, including footnotes. In accordance with section 774 of the Act, we will hold a public hearing, if requested, to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs.

Interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, within 30 days of the date of publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. At the hearing, oral presentations will be limited to issues raised in the briefs. See 19 CFR 351.310(c). We will make our final determination no later than 75 days after the date of this preliminary determination.

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