Notice of Preliminary Determination of Sales at Less Than Fair Value: Circular Seamless Stainless Steel Hollow Products From Japan

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

May 1, 2000.

FOR FURTHER INFORMATION CONTACT:

Charles Riggle at (202) 482-0650 or Constance Handley at (202) 482-0631, Import Administration, Room 1870, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230.

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to Department of Commerce (Department) regulations refer to the regulations codified at 19 CFR part 351 (April 1999).

Preliminary Determination

We preliminarily determine that circular seamless stainless steel hollow products (SSHP) from Japan are being sold, or are likely to be sold, in the United States at less than fair value (LTFV), as provided in section 733 of the Act. The estimated margins of sales at LTFV are shown in the Suspension of Liquidation section of this notice.

Case History

On October 26, 1999, the Department received a petition on SSHP from Japan filed in proper form by Altx, Inc., American Extruded Products, PMAC Ltd, DMV Stainless USA, Inc., Salem Tube Inc., Sandvik Steel Co., International Extruded Products LLC and the United Steel Workers of America, AFL-CIO/CLC. On November 9, 1999, Pennsylvania Extruded Company (Pexco) joined as a co-petitioner in the case.

This investigation was initiated on November 15, 1999. See Initiation of Antidumping Duty Investigation: Circular Seamless Stainless Steel Hollow Products from Japan (Initiation Notice), 64 FR 63285 (November 19, 1999). Since the initiation of the investigation, the following events have occurred:

On December 22, 1999, the Department selected the following companies as mandatory respondents in the investigation: Sanyo Special Tube Company Ltd. (Sanyo) and Sumitomo Metal Industries Ltd. (SMI). See Selection of Respondents, below. On December 29, 1999, the Department issued the antidumping questionnaires to each of the selected respondents. On February 28, March 3, March 8, and March 15, 2000, the Department issued supplemental questionnaires to SMI. SMI responded to the section A supplemental questionnaire on March 6, 2000, however, it did not respond to any of the other supplemental questionnaires.

On December 10, 1999, the United States International Trade Commission (ITC) preliminarily determined that there is a reasonable indication that imports of the products subject to this antidumping investigation are materially injuring the U.S. industry. See Circular Seamless Stainless Steel Hollow Products from Japan, 64 FR 71496 (December 21, 1999).

Period of Investigation

The period of investigation (POI) is October 1, 1998, through September 30, 1999. This period corresponds to the four most recent fiscal quarters prior to the month of the filing of the petition (i.e., October 1999).

Scope of Investigation ¹

The scope of this investigation covers seamless stainless hollow products, including pipes, tubes, redraw hollows, and hollow bars, of circular cross section, containing 10.5 percent or more by weight chromium, regardless of production process, outside diameter, wall thickness, length, industry specification (domestic, foreign or proprietary), grade or intended use. Common specifications for the subject seamless stainless steel hollow products include, but are not limited to, ASTM-A-213, ASTM-A-268, ASTM-A-269, ASTM-A-270, ASTM-A-271, ASTM-A-312, ASTM-A-376, ASTM-A-498, ASTM-A-511, ASTM-A-632, ASTM-A-731, ASTM-A-771, ASTM-A-789, ASTM-A-790, ASTM-A-826 and their proprietary or foreign equivalents.

The merchandise covered by this petition is found in the Harmonized Tariff Schedule of the United States (HTSUS) subheadings 7304.10.50.20, 7304.10.50.50, 7304.10.50.80, 7304.41.30.05, 7304.41.30.15,7304.41.30.45, 7304.41.60.05, 7304.41.60.15, 7304.41.60.45, 7304.49.00.05, 7304.49.00.15, 7304.49.00.45, 7304.49.00.60. Although HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise is dispositive.

Excluded from the scope of the investigation are finished oil country tubular goods certified to American Petroleum Institute (API) standard 5CT or 5D or to a proprietary OCTG specification if such OCTG products are (1) not certified, marked or otherwise warranted or qualified for use as a non-OCTG product; (2) produced to a common OCTG casing, tubing or drill pipe size as found in the standard size tables of API specifications 5CT and 5D, or produced to standard VIT sizes for deep-water temperature-controlled tubing; (3) rated for a minimum yield strength of not less than 85,000 psi and a minimum tensile strength of not less than 100,000 psi, as noted on the mill certificate or other relevant sales documentation; (4) continuously stenciled with the appropriate API and/or proprietary OCTG specification, size (e.g., outside diameter and weight), minimum yield and tensile strength, and the phrase “OCTG,” “oil country tubular goods” or a similar phrase, with such information also written on the entry documents; (5) not marked or otherwise certified as meeting a specification other than an API or proprietary OCTG specification whether or not also marked, warranted or certified to an OCTG specification; and (6) not used in any application other than a down-hole, OCTG application. Any OCTG products marked, certified or otherwise warranted for non-OCTG use, or actually used in a non-OCTG application, are within the scope of this investigation.

Also excluded from the scope of this investigation is OCTG coupling stock that (1) is entered within the same entry as matching (complimentary) sizes and matching grades of exempted OCTG, or (2) is entered with documentation linking the entered OCTG coupling stock products to another entry of matching sizes and grades of OCTG, and (3) is actually used in the production of OCTG couplings or other OCTG accessories. All coupling stock that does not have such “Mother-Child Traceability” remains within the scope of the investigation, and coupling stock that is traceable remains within the scope if used in an application other than the production of OCTG couplings or accessories.

Line pipe marked, produced, warranted, or certified only to API or proprietary line pipe specifications and used in a pipeline application is excluded from the scope of the investigation. Line pipe products are included in the scope if (1) marked, produced, warranted, or certified to one of the covered seamless stainless steel hollow products specifications listed above (or their proprietary or foreign equivalents), whether or not also certified to an API, proprietary, or foreign line pipe specification, or (2) are used in an application other than in an oil or gas pipeline.

Also excluded are hollow drill bars and rods, classifiable under item number 7228.80 of the HTSUS.

With regard to the excluded OCTG products, OCTG coupling stock, and line pipe used in oil or gas pipeline applications, the Department will not instruct Customs to require end-use certification until such time as petitioner or other interested parties provide a reasonable basis to believe or suspect that imports of these products are not being used for their intended purpose of OCTG or oil or gas line pipe is occurring. If such information is provided, we will require end-use certification only for the product(s) (or specification(s)) for which the evidence demonstrates such new use. For example, if, based on evidence provided by petitioner, the Department finds a reasonable basis to believe or suspect that seamless pipe produced to a proprietary specification is being used in a non-OCTG application, we will require end-use certifications for imports of that specification. Normally we will require only the importer of record to certify to the end use of the imported merchandise. If it later proves necessary for adequate implementation, we may also require producers who export such products to the United States to provide such certification on invoices accompanying shipments to the United States.

Selection of Respondents

Section 777A(c)(1) of the Act directs the Department to calculate individual dumping margins for each known exporter and producer of the subject merchandise. However, section 777A(c)(2) of the Act gives the Department discretion, when faced with a large number of exporters/producers, to limit its examination to a reasonable number of such companies if it is not practicable to examine all companies. Where it is not practicable to examine all known producers/exporters of subject merchandise, this provision permits the Department to investigate either: (1) a sample of exporters, producers, or types of products that is statistically valid based on the information available at the time of selection, or (2) exporters and producers accounting for the largest volume of the subject merchandise that can be reasonably examined.

Upon consideration of the resources available to the Department, we determined that it was not practicable to examine all known producers/exporters of the subject merchandise. Instead, because there were numerous producers/exporters of the subject merchandise during the POI, we selected as mandatory respondents the two with the greatest export volume, Sanyo and SMI. Together, they accounted for more than 50 percent of all known exports of the subject merchandise during the POI from Japan. For a more detailed discussion of respondent selection in this investigation, see Respondent Selection Memorandum, dated December 22, 1999.

Facts Available

Sanyo did not respond to the Department's questionnaire. Section 776(a)(2) of the Act provides that, if an interested party (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, subject to sections 782(c)(1) and (e) of the Act; (C) significantly impedes a proceeding under the antidumping statute; or (D) provides such information but the information cannot be verified, the Department shall, subject to subsection 782(d) of the Act, use facts otherwise available in reaching the applicable determination. Because Sanyo failed to respond to our questionnaire, pursuant to section 776(a)(2)(A) of the Act, we resorted to facts otherwise available to determine the dumping margins for this company.

SMI responded to sections A through D of the Department's questionnaire, but did not respond to the Department's requests for information necessary to correct the deficiencies in its responses. For a detailed discussion of this issue, see Memorandum from Constance Handley to Holly Kuga, Re: Use of Facts Available, dated April 13, 2000.

Because SMI did not fully respond to our requests for information, without which we are unable to perform an analysis of its pricing practices or costs, we preliminarily determine that the use of facts available is appropriate, in accordance with section 776(a)(2)(A) of the Act.

Section 776(b) of the Act provides that the Department may use an inference adverse to the interests of a party that has failed to cooperate by not acting to the best of its ability to comply with the Department's requests for information. See also Statement of Administrative Action accompanying the URAA, H.R. Rep. No. 103-316 at 870 (1994) (SAA). Failure by Sanyo to respond to the Department's antidumping questionnaire constitutes a failure to act to the best of its ability to comply with a request for information, within the meaning of section 776 of the Act. Because Sanyo failed to act to the best of its ability to respond to the Department's request for information, the Department has preliminarily determined that, in selecting from among the facts otherwise available, an adverse inference is warranted for Sanyo.

Likewise, SMI's failure to respond to the preponderance of the requests for information, constitutes a failure to act to the best of its ability. SMI did not provide the requested information even after being granted additional time when it failed to make a timely response. Therefore, the Department has preliminarily determined that, in selecting from among the facts otherwise available, an adverse inference is warranted for SMI.

Because we were unable to calculate margins for the respondents, consistent with Department practice, we assigned to Sanyo and SMI the highest margin from the proceeding, which is the highest margin alleged in the petition. See, e.g., Notice of Preliminary Determinations of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products From Argentina, Japan and Thailand, 64 FR 60410, 60414 (November 5, 1999). See Initiation Notice.

Section 776(b) states that an adverse inference may include reliance on information derived from the petition. See also SAA at 829-831. Section 776(c) of the Act provides that, when the Department relies on secondary information (such as the petition) in using the facts otherwise available, it must, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal.

The SAA clarifies that “corroborate” means that the Department will satisfy itself that the secondary information to be used has probative value (see SAA at 870). The SAA also states that independent sources used to corroborate such evidence may include, for example, published price lists, official import statistics and customs data, and information obtained from interested parties during the particular investigation (see SAA at 870).

We reviewed the adequacy and accuracy of the information in the petition during our pre-initiation analysis of the petition, to the extent appropriate information was available for this purpose. See Import Administration AD Investigation Initiation Checklist, dated November 15, 1999, for a discussion of the margin calculations in the petition. In addition, in order to determine the probative value of the margins in the petition for use as adverse facts available for purposes of this determination, we examined evidence supporting the calculations in the petition. In accordance with section 776(c) of the Act, to the extent practicable, we examined the key elements of the export price (EP) and normal value (NV) calculations on which the margins in the petition were based.

Our review of the EP and NV calculations indicated that the information in the petition has probative value, as certain information included in the margin calculations in the petition is from public sources concurrent, for the most part, with the POI (e.g., international freight and insurance, customs duty, interest rates). However, with respect to certain other data included in the margin calculations of the petition (e.g., gross United States and home market unit prices), neither the respondents nor other interested parties provided the Department with further relevant information, and the Department is aware of no other independent source of information that would enable it to further corroborate the remaining components of the margin calculation in the petition. The implementing regulation for section 776 of the Act, codified at 19 CFR 351.308(c) states, “[t]he fact that corroboration may not be practicable in a given circumstance will not prevent the Secretary from applying an adverse inference as appropriate and using the secondary information in question.” Additionally, we note that the SAA at 870 specifically states that, where “corroboration may not be practicable in a given circumstance,” the Department may nevertheless apply an adverse inference. Accordingly, we find, for purposes of this preliminary determination, that this information is corroborated to the extent practicable.

All Others Rate

Section 735(c)(5)(B) of the Act provides that, where the estimated weighted-averaged dumping margins established for all exporters and producers individually investigated are zero or de minimis or are determined entirely under section 776 of the Act, the Department may use any reasonable method to establish the estimated all-others rate for exporters and producers not individually investigated. Our recent practice under these circumstances has been to assign, as the “all others” rate, the simple average of the margins in the petition. We have done so in this case. See, e.g., Notice of Final Determinations of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products From Argentina, Japan and Thailand, 65 FR 5520, 5528 (February 4, 2000).

Suspension of Liquidation

For entries of SSHP from Japan, we are directing the U.S. Customs Service to suspend liquidation of those entries that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We are also instructing the Customs Service to require a cash deposit or the posting of a bond equal to the dumping margin, as indicated in the chart below. These instructions suspending liquidation will remain in effect until further notice.

ITC Notification

In accordance with section 733(f) of the Act, we have notified the ITC of our determination. If our final antidumping determination is affirmative, the ITC will determine whether these imports are materially injuring, or threaten material injury to, the U.S. industry. The deadline for that ITC determination would be the later of 120 days after the date of the preliminary determination or 45 days after the date of our final determination.

Public Comment

Case briefs must be submitted no later than 30 days after the publication of this notice in the Federal Register. Rebuttal briefs must be filed within five business days after the deadline for submission of case briefs. A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. Executive summaries should be limited to five pages total, including footnotes.

Section 774 of the Act provides that the Department will hold a hearing to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs, provided that such a hearing is requested by any interested party. If a request for a hearing is made in an investigation, the hearing will tentatively be held two days after the deadline for submission of the rebuttal briefs, at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time.

Interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request within 10 days of the publication of this notice. Requests should specify the number of participants and provide a list of the issues to be discussed. Oral presentations will be limited to issues raised in the briefs. If this investigation proceeds normally, we will make our final determination no later than 75 days after the date of issuance of this preliminary determination.

This determination is published pursuant to sections 733(f) and 777(i)(1) of the Act.