69 FR 60353, October 8, 2004

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-897]

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.\1\ 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 Sec.  
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.
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    \1\ The Department identified these companies through Internet 
research and Customs information as being large producers of subject 
merchandise.
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    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 1\1/4\ inch and less be excluded 
from the scope of the investigation. According to CPC, line pipe of 
1\1/4\ 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

[[Page 60354]]

of this investigation to exclude line pipe in nominal pipe size outer 
diameter of 1\1/4\ 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 \2\ 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.
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    \2\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under this investigation that it sells, and the 
manner in which it sells that merchandise in all of its markets. 
Section C requests a complete listing of U.S. sales. Section D 
requests information on the factors of producation of the 
merchandise under investigation. Section E requests information on 
further manufacturing.
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    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 1\1/4\ 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

[[Page 60355]]

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.\3\ 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.
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    \3\ Because no entity, including the PRC entity, provided a 
response to the questionnaire, no party qualifies for a separate 
rate.
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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:

[[Page 60356]]



          Circular Welded Carbon Quality Line Pipe From the PRC
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                                                       Weighted-average
           Producer/manufacturer/exporter                   margin
------------------------------------------------------------------------
PRC-wide rate......................................              73.17%
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    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.

    Dated: September 29, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
 [FR Doc. E4-2566 Filed 10-7-04; 8:45 am]