67 FR 20739, April 26, 2002

DEPARTMENT OF COMMERCE

International Trade Administration

[C-433-810]
 
Oil Country Tubular Goods from Austria: Notice of Initiation of 
Countervailing Duty Investigation

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: April 26, 2002.

FOR FURTHER INFORMATION CONTACT: Mark Hoadley (202-482-0666), AD/CVD 
Enforcement Group III, Office 7, Import Administration, U.S. Department 
of Commerce, Room 1870, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230.

SUPPLEMENTARY INFORMATION:

INITIATION OF INVESTIGATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are to the 
Tariff Act of 1930, as amended. In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
regulations codified at 19 CFR Part 351 (2001).

The Petition

    On March 29, 2002, the Department of Commerce (the Department) 
received a petition filed in proper form on behalf of IPSCO Tubulars 
Inc., Koppel Steel Corporation, a division of NS Group, Lone Star Steel 
Company, Maverick Tube Corporation, Newport Steel Corporation, a 
division of NS Group, and the United States Steel Corporation of 
America (hereinafter, the petitioners). The Department received from 
the petitioners information supplementing the petition on April 12, 
2002. On April 15, 2002, the Department received comments from the 
Government of Austria (GOA) and the Delegation of the European 
Commission (EC) regarding the petition. We placed these comments on the 
record on April 17, 2002.
    In accordance with section 702(b)(1) of the Act, the petitioners 
allege that Voest-Alpine Tubulars GmbH & Co KG (``Voest-Alpine 
Tubulars''), a producer/exporter of oil country tubular goods (OCTG) in 
Austria, received countervailable subsidies within the meaning of 
section 701 of the Act. The petitioners simultaneously filed 
antidumping petitions on a number of countries, including Austria. The 
initiation of these antidumping investigations is addressed in a 
separate Federal Register notice, which is published concurrently with 
this notice.
    The Department finds that the petitioners filed the petition on 
behalf of the domestic industry because they are interested parties as 
defined in sections 771(9)(C) and (D) of the Act. The petitioners have 
demonstrated sufficient industry support with respect to the 
countervailing duty investigation which they are requesting the 
Department to initiate (see Determination of Industry Support for the 
Petition, below).

Scope of the Investigation

    For purposes of this investigation, the products covered are 
certain OCTGs. OCTGs are hollow steel products of circular cross-
section, including oil well casing, tubing, and drill pipe, of iron 
(other than cast iron) or steel (both carbon and alloy), whether 
seamless or welded, whether or not conforming to American Petroleum 
Institute (API) or non-API specifications, whether finished or 
unfinished (including green tubes and limited service OCTG products). 
The scope for this investigation does not cover casing, tubing, or 
drill pipe containing 10.5 percent or more of chromium or finished 
drill pipe with tool joint attached. The merchandise subject to this 
investigation is typically classified in the following Harmonized 
Tariff

[[Page 20740]]

Schedule of the United States (HTSUS) subheadings:
    7304.21.30.00, 7304.21.60.30, 7304.21.60.45, 7304.21.60.60, 
7304.29.10.10, 7304.29.10.20, 7304.29.10.30, 7304.29.10.40, 
7304.29.10.50, 7304.29.10.60, 7304.29.10.80, 7304.29.20.10, 
7304.29.20.20, 7304.29.20.30, 7304.29.20.40, 7304.29.20.50, 
7304.29.20.60, 7304.29.20.80, 7304.29.30.10, 7304.29.30.20, 
7304.29.30.30, 7304.29.30.40, 7304.29.30.50, 7304.29.30.60, 
7304.29.30.80, 7304.29.40.10, 7304.29.40.20, 7304.29.40.30, 
7304.29.40.40, 7304.29.40.50, 7304.29.40.60, 7304.29.40.80, 
7304.29.50.15, 7304.29.50.30, 7304.29.50.45, 7304.29.50.60, 
7304.29.50.75, 7304.29.60.15, 7304.29.60.30, 7304.29.60.45, 
7304.29.60.60, 7304.29.60.75, 7305.20.20.00, 7305.20.40.00, 
7305.20.60.00, 7305.20.80.00, 7306.20.10.30, 7306.20.10.90, 
7306.20.20.00, 7306.20.30.00, 7306.20.40.00, 7306.20.60.10, 
7306.20.60.50, 7306.20.80.10, and 7306.20.80.50.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
proceeding is dispositive.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the GOA and the EC for consultations with 
respect to the petition filed. The Department held consultations with 
representatives of the GOA and the EC on April 12, 2002. See Memorandum 
to the File from Mark Hoadley through Barbara Tillman; Regarding 
Consultations on Austrian OCTGs CVD Petition (April 16, 2002) (public 
document on file in the Central Records Unit of the Department of 
Commerce, Room B-099).

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that the Department's industry support determination, which is 
to be made before the initiation of the investigation, be based on 
whether a minimum percentage of the relevant industry supports the 
petition. A petition meets this requirement if the domestic producers 
or workers who support the petition account for: (1) at least 25 
percent of the total production of the domestic like product; and (2) 
more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Moreover, section 702(c)(4)(D) of the Act 
provides that, if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the Department shall either 
poll the industry or rely on other information in order to determine if 
there is support for the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether a 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The International Trade Commission (ITC), which is 
responsible for determining whether ``the domestic industry'' has been 
injured, must also determine what constitutes a domestic like product 
in order to define the industry. While both the Department and the ITC 
must apply the same statutory definition regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to separate and distinct authority. In addition, the 
Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
like product, such differences do not render the decision of either 
agency contrary to the law.\1\
---------------------------------------------------------------------------

    \1\ See Algoma Steel Corp. Ltd., v. United States, 688 F. 
Supp.639, 642-44 (CIT 1988); High Information Content Flat Panel 
Displays and Display Glass from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991)
---------------------------------------------------------------------------

    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this subtitle.'' Thus, the reference point from which the 
domestic like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    We reviewed the description of the domestic like product presented 
in the petition. Based upon our review of the petitioners' claims, we 
concur that there is a single domestic like product, which is defined 
in the ``Scope of Investigations'' section above. This is consistent 
with the Department's determinations in past investigations to treat 
all OCTG products as a single class or kind of merchandise. See, e.g., 
Oil Country Tubular Goods From Argentina, 60 FR 41055 (Aug. 11, 1995). 
We note that the ITC has previously determined that drill pipe was a 
separate like product from tubing and casing. Oil Country Tubular Goods 
From Argentina, Italy, Japan, Korea, and Mexico, at I-9 (Inv. Nos. 701-
TA-363-364 (Final) and 731-TA-711-717 (Final) (Publication 2911; August 
1995)). However, in previous investigations, the Department has 
considered casing, tubing and drill pipe to be one class or kind of 
merchandise. See, e.g., Oil Country Tubular Goods From Argentina, 60 FR 
41055 (Aug. 11, 1995).
    The ITC's 1995 determination that drill pipe was a separate like 
product was based on a scope that included both unfinished drill pipe 
and finished drill pipe with attached tool joints. Id. at I-10. In that 
case, the ITC focused on the lack of interchangeability between 
finished drill pipe with attached tool joints and finished casing and 
tubing as a major determinant in its decision. This issue is not 
present in this investigation because only unfinished drill pipe is 
included in the scope. The ITC did state in its 1995 determination that 
there are ``certain distinctions between [unfinished] drill pipe and 
other OCTG products'' that also support including unfinished drill pipe 
in the same like product category as finished drill pipe with attached 
tool joints. Id. The ITC noted that drill pipe tends to be shorter and 
heavier than casing and tubing, drill pipe tends to be of low alloy 
steel, whereas casing and tubing are primarily of carbon steel, and the 
tensile strength of drill pipe is generally higher than that in casing 
and tubing. Id. However, the ITC report acknowledges that there is 
overlap between unfinished drill pipe and casing and tubing with 
respect to diameter, wall thickness, and length. Id. at I-11, fn. 17. 
Regarding the issue of alloy, various grades of casing and tubing are 
also low alloy steels, as evidenced by specific alloy designations in 
the Harmonized Tariff Schedules for these products. Finally, the 
strength requirements on many of the grades of casing and tubing can be 
higher than those for unfinished drill pipe. In fact, the final 
strength characteristics of all products will not be determined until 
the product has been subjected to certain heat treating operations. See 
e.g., American Petroleum Institute, Specifications For High-Strength 
Casing, Tubing, and Drill Pipe. Consequently, for purposes of this 
investigation, we conclude that casing, tubing, and unfinished drill 
pipe constitute one like product.
    Finally, the Department has determined that the petition contains

[[Page 20741]]

adequate evidence of industry support and, therefore, polling is 
unnecessary. See Import Administration Countervailing Duty 
Investigation Initiation Checklist for Austria, Industry Support 
section and Attachment II, April 18, 2002 (collectively, the Initiation 
Checklist), on file in the Central Records Unit, Room B-099 of the main 
Department of Commerce building.
    Grant Prideco, Inc., which is a domestic producer of the like 
product and is the majority owner of the Austrian OCTG producer, 
asserted that the petitioners had failed to demonstrate that they 
account for a majority of the domestic industry. We determined that the 
petitioners have demonstrated industry support representing over 50 
percent of total production of the domestic like product. The 
Department also determined that it will disregard Grant Prideco's 
opposition to the petition because it is related to a foreign producer. 
See Attachment II to the Initiation Checklist for further explanation. 
Accordingly, we determine that this petition is filed on behalf of the 
domestic industry within the meaning of section 702(b)(1) of the Act.

Injury Test

    Because Austria is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) of the Act 
applies to this investigation. Accordingly, the ITC must determine 
whether imports of the subject merchandise from Austria materially 
injure, or threaten material injury to, an industry in the United 
States.

Allegations and Evidence of Material Injury and Causation

    The petitioners allege that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of imports of the subject merchandise. 
The petitioners contend that the industry's injured condition is 
evident in the declining trends in net operating profits, net sales 
volumes, profit-to-sales ratios, production employment, and capacity 
utilization. The allegations of injury and causation are supported by 
relevant evidence including U.S. Customs import data, lost sales, and 
pricing information. We have assessed the allegations and supporting 
evidence regarding material injury and causation, and have determined 
that these allegations are properly supported by accurate and adequate 
evidence and meet the statutory requirements for initiation. See 
Initiation Checklist. With respect to the countervailing duty petition 
on Austria, since Austria is not a developing country, imports from 
Austria cannot be less than 3 percent for purposes of the injury 
analysis. See Sections 771(24)(A) and (B) of the Act. Imports from 
Austria are greater than 3 percent.

Allegations of Subsidies

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition, on behalf of an industry, that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a), and (2) is 
accompanied by information reasonably available to petitioners 
supporting the allegations.

Initiation of Countervailing Duty Investigation

    The Department has examined the countervailing duty petition on 
OCTG from Austria and found that it complies with the requirements of 
section 702(b) of the Act. Therefore, in accordance with section 702(b) 
of the Act, we are initiating a countervailing duty investigation to 
determine whether the producers/exporters of subject merchandise in 
Austria received subsidies. See Initiation Checklist.
    We are including in our investigation the following programs 
alleged in the petition to have provided countervailable subsidies to 
Voest Alpine Tubulars in Austria:
1. 1987 Equity Infusions
2. 1987 Assumption of Losses by Osterreichische Industrieholding-
Aktiengesellschaft (OIAG)
3. 1993 Grant from OIAG to Voest-Alpine Stahl AG
4. 1993 Assumption of Liabilities by OIAG
5. 1993 OIAG Subordinated Shareholder's Loan
    We will also be investigating whether subsidies were conferred 
under these programs on suppliers of Voest-Alpine Tubulars that can be 
attributed to Voest-Alpine Tubulars under the cross-ownership 
provisions of section 351.525(b)(5) of the Department's regulations. 
See Initiation Checklist.

Distribution of Copies of the Petitions

    In accordance with section 702(b)(4)(A)(i) of the Act, copies of 
the public version of the petition have been provided to the 
representatives of the GOA and the EC. We will attempt to provide 
copies of the public version of the petition to all the exporters named 
in the petition, as provided for under section 351.203(c)(2) of the 
Department's regulations.

ITC Notification

    Pursuant to section 702(d) of the Act, we have notified the ITC of 
this initiation.

Preliminary Determination by the ITC

    The ITC will determine no later than May 13, 2002, whether there is 
a reasonable indication that imports of OCTG from Austria are causing 
material injury, or threatening to cause material injury, to a U.S. 
industry. A negative ITC determination will result in the investigation 
being terminated with respect to Austria; otherwise, the investigation 
will proceed according to statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: April 18, 2002
Bernard T. Carreau,
Acting Assistant Secretaryfor Import Administration.
[FR Doc. 02-10348 Filed 4-25-02; 8:45 am]
BILLING CODE 3510-DS-S