65 FR 30071, May 10, 2000 A-580-810 ARP: 12/1/97-11/30/98 Public Document G307: MEH MEMORANDUM TO: Troy H. Cribb Acting Assistant Secretary for Import Administration FROM: Joseph A. Spetrini Deputy Assistant Secretary AD/CVD Enforcement Group III SUBJECT: Issues and Decision Memo for the Administrative Review of Certain Welded ASTM-312 Stainless Steel Pipe From the Republic of Korea - December 1,1997 through November 30, 1998 Summary We have analyzed the comments and rebuttals of interested parties in the 1997-1998 administrative review of the antidumping duty order covering certain welded ASTM-312 stainless steel pipe (WSSP) from the Republic of Korea. As a result of our analysis, we have made changes, including corrections of certain inadvertent programming and clerical errors, in the margin calculations. We recommend that you approve the positions we have developed in the Discussion of the Issues section of this memorandum. Below is the complete list of the issues in this administrative review for which we received comments and rebuttals by parties. 1. Cost of Production 2. Model Matching 3. Programming and Clerical Errors Background On December 28, 1999, the Department of Commerce (the Department) published the preliminary results of administrative review of the antidumping duty order on WSSP from the Republic of Korea (64 FR 72645). The merchandise covered by this order is austenitic stainless steel pipe that meets the standards and specifications set forth by the American Society for Testing and Materials (ASTM) for the welded form of chromium-nickel pipe designated ASTM A-312. The period of review (POR) is December 1, 1997 through November 30, 1998. We invited parties to comment on our preliminary results of review. Discussion of the Issues 1. Cost of Production Comment 1: SeAH Steel Corporation (SeAH) provided the Department with cost data calculated, in accordance with its normal cost accounting system, on an actual weight basis. SeAH also provided us with conversion rates to convert these actual weight numbers into theoretical weight numbers. SeAH argues that we should have used these theoretical numbers in calculating cost of production (COP) and constructed value (CV). SeAH bases its argument on our use of theoretical numbers in the original investigation. It cites the Final Determination of Sales at Less Than Fair Value: Certain Welded Stainless Steel Pipe from the Republic of Korea, 57 FR 53,693, 53,698 (Nov. 12, 1992), where we said "Given the Department's general preference for making sales comparisons on the basis on which U.S. sales were made, we made comparisons on the basis of theoretical weight." SeAH claims that we required it to convert actual weight based costs to theoretical weight based costs in the investigation. Department's Position: We agree with SeAH. Because sales were made and reported on a theoretical-weight basis, we convert cost data which was calculated based on actual weight to cost data based on theoretical weight for use in the sales-below-cost test and for CV. To convert the actual-weight cost data to theoretical-weight cost data, we used the conversion rates supplied by SeAH in its response. 2. Model Matching Comment 2: SeAH alleges that we incorrectly limited the values it reported for SIZE2H/U (outside diameter) and THK2H/U (wall thickness) to three digits in our calculations, when the values reported can include as many as 6 digits.(1) Because of this truncation, it argues, the last digits of a substantial portion of its reported observations were ignored by our calculations. SeAH argues that the Department should have used all reported digits for these two variables because the reported values (i.e., dimensions) match the values set forth in the product brochure and in its invoices, and the Department has not asked that these values be limited by range. SeAH notes that the Department did not find error with its reported dimensions in our verification report. Department's Position: We agree with SeAH. If no products are sold in the home market that are identical in physical characteristics to a product sold in the United States, section 771(16) directs the Department to chose as foreign like merchandise home market products that are like the U.S. product in terms of materials, use, and value. It does not specifically direct the Department on how to determine when two products are alike in terms of material. For example, in this case, there is nothing in the Act, the Department's regulations, or the Department's policy, which requires us to consider each decimal place of the dimensions significant for matching purposes. We might ignore what we consider to be minor differences between products' dimensions by, for example, rounding reported values. Nevertheless, the Department verified the use of these dimensions, as reported, in SeAH's sales documentation and product catalogs. On page 10 of verification exhibit 12 (a product catalog), for example, SeAH provides a chart of possible diameter and wall thickness combinations. The dimensions listed in this chart are equal, in terms of the number of decimal places used, to those reported in SeAH's sales databases. On pages 7 and 8 of verification exhibit 8 (SeAH's invoice to its U.S. affiliate), dimensions are also reported in a manner identical to that of the sales databases. Judging by how SeAH records dimensions in its own sales documentation and product catalogs provided to customers, we believe SeAH is correct in asserting that the manner in which these dimensions were reported to the Department is significant. Thus, we agree that we should not have truncated them for purposes of model matching. We have adjusted our model matching program for these final results. Comment 3: SeAH argues that the Department should not have used length as a model matching criterion in our preliminary results. It asserts that it only reported the length of its products as a reference field, to be matched against its invoices. Department's Position: We agree. We mistakenly included length in the set of physical criteria used for matching purposes, although we did not request that it be reported and did not mention it in Appendix IV of our questionnaire, where we establish the model match criteria for the review. We removed this field from our calculations for our final results. Comment 4: SeAH argues that the Department did not take product specification into consideration in its model matching. It argues that specification should be taken into account because the Department required it to report specification and because the validity and significance of specification was verified by the Department. Furthermore, argues SeAH, the Department at verification noted that home and U.S. products "are not interchangeable" due to differences in specification. Department's Position: We agree with SeAH. Specification defines product qualities such as the acceptable tolerance levels in product characteristics, and how product quality is tested; these vary according to whether the merchandise is Japanese specification, Korean specification, or U.S. specification. See page 12 of verification exhibit 12 and page 24 of verification exhibit 5. Moreover, SeAH accurately points out that the Department noted during verification that, for example, products produced according to Japanese standard specifications would not be acceptable to buyers wanting products conforming to Korean or U.S. standard specifications. Therefore, we have altered our model match program to account for whether each product conforms to Japanese, Korean, or U.S. specifications. 3. Programming and Clerical Errors Comment 5: SeAH alleges that we failed to provide for a constructed export price (CEP) offset in our calculations despite the fact that we clearly indicated our intention to do so in both our preliminary results notice and analysis memo. Department's Position: We agree with SeAH. We intended to include a CEP offset in our programs but failed to do so. We have included the offset in the calculations for the final results. Recommendation Based on our analysis of the comments received, we recommend adopting all of the above positions and adjusting all related margin calculations accordingly. If these recommendations are accepted, we will publish the final results of review and the final weighted-average dumping margin for the reviewed firm in the Federal Register. AGREE_________ DISAGREE_________ ________________________________ Troy H. Cribb Acting Assistant Secretary for Import Administration ________________________________ (Date) ___________________________________________________________________________ footnote: 1. SIZE2H/U (diameter) is the second most important matching criterion out of the five used in these final results. THK2H/U (wall thickness) is the fourth. Products with identical values for higher criteria will be selected as matches over products with even slightly different values, no matter how large any differences might be for lower criteria.