(Cite as: 53 FR 9791)

NOTICES

DEPARTMENT OF COMMERCE

[C-489-502]

Certain Welded Carbon Steel Pipe and Tube Products From Turkey; Final Results

of Countervailing Duty Administrative Review

Friday, March 25, 1988

*9791 AGENCY: International Trade Administration, Import Administration, Commerce.

ACTION: Notice of final results of countervailing duty administrative review.

SUMMARY: On December 15, 1987, the Department of Commerce published the preliminary results of its administrative review of the countervailing duty order on certain welded carbon steel pipe and tube products from Turkey. We have now completed that review and determine the net subsidy to be 1.43 percent ad valorem for Bant Boru and 12.67 percent ad valorem for all other firms during the period October 28, 1985 through December 31, 1986.

EFFECTIVE DATE: March 25, 1988.

FOR FURTHER INFORMATION CONTACT:Susan Silver or Paul McGarr, Office of Compliance, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230; telephone: (202) 377-3337.

SUPPLEMENTARY INFORMATION:

Background

On December 15, 1987, the Department of Commerce ("the Department") published in the Federal Register (52 FR 47621) the preliminary results of its administrative review of the countervailing duty order on certain welded carbon steel pipe and tube products from Turkey (51 FR 7984; March 7, 1986). The Department has now completed that administrative review in accordance with section 751 of the Tariff Act of 1930 ("the Tariff Act").

Imports covered by the review are shipments of certain Turkish welded carbon steel pipe and tube products ("pipe and tube") having an outside diameter of 0.375 inch but not over 16 inches, currently classifiable under TSUSA items 610.3208, 610.3209, 610.3231, 610.3234, 610.3241, 610.3242, 610.3243, 610.3252, 610.3254, 610.3256, 610.3258, and 620.4925. TSUSA items 610.3208 and 610.3209 are commonly referred to by the industry as line pipe meeting American petroleum Institute (API) specifications for 5L. TSUSA items 610.3231, 610.3234, 610.3241, 610.3242, 610.3243, 610.3252, 610.3254, 610.3256, 610.3258 and 620.4925 are commonly referred to by the industry as standard pipe or tube or structural tubing. Standard pipe or tube is produced to various American Society for Testing Materials (ASTM) specifications, most notably A-53, A-120 or A-135. Structural tubing is produced to various specifications most notably ASTM specifications A-500 and A-501.

Line pipe and standard pipe and tube are currently classifiable under item numbers 7306.10.10.10, 7306.10.10.50, 7306.30.10.00, 7306.30.50.25, 7306.30.50.30, 7306.30.50.40, 7306.30.50.45, 7306.30.50.50, 7306.30.50.60, 7306.30.50.65, 7306.30.50.70 and 7306.30.50.75 of the Harmonized System.

The review covers the period October 28, 1985 through December 31, 1986 and seven programs: (1) Export and supplemental tax rebates; (2) the Resource Utilization Support Fund ("RUSF"); (3) export revenue tax deductions; (4) the General Incentives Program; (5) the Support Price Stability Fund; (6) preferential export financing under Decree 84/8861; and (7) export credits under Communique No. 1.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the preliminary results. We received timely written comments from the standard line pipe subcommittees of the Committee on Pipe and Tube Imports and the individual members of these subcommittees ("the petitioners"), the Government of Turkey ("the Government"), and three respondents: Bant Boru Sanayi ve Ticaret A.S. ("Bant Boru"), the Borusan Group ("Borusan"), and Erkboru Profil Sanayi ve Ticaret A.S. ("Erkboru").

Comment 1: The Government claims that the Department overstated that weighted- average country-wide assessment rate by mistakenly including in its calculations export tax rebates and RUSF payments that Yucel Boru applied for in 1986 but received in 1987.

Department's Position: We agree. Accordingly, we have revised our calculations and have determined the weighted-average country-wide assessment rate to be 12.67 percent ad valorem.

Comment 2: Borusan claims the variance between company rates in the preliminary results is so substantial that the Department should establish company-specific assessment rates rather than a weighted-average country-wide assessment rate.

Bant Boru also requests a company-specific assessment rate because the difference between its company rate and the weighted-average country-wide rate is greater than 10 percentage points and is, thus, significantly different according to the Department's proposed regulations.

Department's Position: The Department's policy is to treat as a significant differential between a company rate and the weighted-average country-wide rate a difference of 10 percentage points or 25 percent, whichever is greater. In this case, a significant differential does exist between the weighted-average country-wide rate and Bant Boru's company rate, and we have established a company-specific assessment rate of 1.43 perecent ad valorem. There is no significant differential between the weighted-average country-wide rate and any other company rates.

Comment 3: Bant Boru, Borusan, Erkboru and the Government argue that the Department should establish company-specific duty deposit rates. The proposed countervailing duty regulations of June 12, 1985 (50 FR 24207) provide that a company-specific rate is appropriate where there is a significant differential between the greater of at least 10 percentage points or 25 percent from the weighted-average net subsidy calculated on a country-wide basis.

The duty deposit rate is based on only one program, the export revenue tax deduction, where company benefits during the review period ranged from 0.45 to 9.76 percent ad valorem. With a weighted-average country-wide rate in the preliminary results of 6.78 percent ad valorem, the differential between this weighted-average rate and the rates for Bant Boru, Borusan, and Erkboru is more than 25 percent. Therefore, these companies argue that their company rates fit the circumstances described in the proposed regulations. They further argue that, with only five companies involved in this review, establishing company- specific deposit rates imposes no administrative burden on the Department.

Department's Position: Section 607 of the Tariff and Trade Act of 1984 established a statutory presumption in favor of country-wide countervailing duty rates without requiring any company-specific justification for the use of such rates. The statute provides for the possibility of company-specific rates if the Department determines that a significant differential exists. The Department's policy is to use a single *9792 weighted-average country-wide rate unless there is a significant differential between a company-specific rate and the weighted-average country-wide rate, i.e., 10 percentage points or 25 percent, whichever is greater. The Department considers Erkboru's benefit of 0.45 percent ad valorem to be de minimis and, by definition, significantly different.

Although the company rates for Bant Boru and Borusan are more than 25 percent different from the weighted-average country-wide rate, their rates are less than 10 percentage points different from that rate. Therefore, there is no significant differential between the company rates for Bant Boru and Borusan and the weighted-average country-wide rate. After excluding Erkboru from the calculation of the weighted-average, we have revised the duty deposit rate for all other firms to 7.26 percent ad valorem.

Comment 4: The petitioners claim that despite the elimination of the export tax rebate program on exports of iron and steel products to the United States, effective January 1, 1987, the program may still provide an incentive for Turkish pipe and tube exporters to export to the United States. The petitioners contend that an incentive to export to the United States would exist if the Turkish government determines the amount of the rebates based on total exports (including exports to the U.S.), even if rebates paid on a shipment-specific basis have been eliminated on pipe and tube exports to the United States. The Department should not adjust the duty deposit rate for this program to zero until it can be certain that pipe and tube exports to the United States are not receiving benefits through a change in the method of granting the rebate.

The Turkish government states that export tax rebates are always paid on a shipment-specific basis, not on total exports. In order to be eligible for benefits, exporters must present documentation showing the product to be exported and the country of destination. Since rebates were eliminated on pipe and tube exports to the United States, there is no benefit conferred on these exports. Borusan adds that the petitioners' allegation is based upon pure speculation and that the Turkish government is phasing out the program on all exports, as evidenced by the decline in nominal rebate rates on third country exports during 1987 as compared with 1986 rebate rates.

Department's Position: Whenever possible, we calculate the benefit from export subsidies based on shipments only to the United States. Where export subsidies are not shipment-specific, or cannot otherwise be segregated according to country of destination, we calculate the benefit based on shipments to all markets. See, Final Results of Countervailing Duty Administrative Review on Roses and Other Cut Flowers from Colombia (52 FR 48847, December 28, 1987).

We verified that export tax rebates are shipment-specific and that they are paid as a percentage of the value of each shipment; total exports never were and are not now a factor in calculating the amount of the export tax rebate received. These rebates would provide an incentive to export pipe and tube to the United States only if they were paid on such shipments, and we verified that they have been eliminated.

Comment 5: The petitioners claim that the Department does not know whether pipe and tube exports to the United States are included in the export revenue levels used to calculate supplemental export tax rebates. If these exports are included, this may allow exporters to receive a higher rate of supplemental rebate and provide an incentive to export to the United States. The Department should be certain that the exporters are not including pipe and tube exports to the United States in the calculation of supplemental export tax rebates before setting the duty deposit rate for the supplemental export tax rebate at zero.

The Government states that, under Article 4 of Decree No. 86/11237, a supplemental tax rebate is given on the export of an eligible product only when annual export revenue from all eligible products exceeds U.S. $2 million. Pipe and tube exports to the United States are not eligible to receive supplemental tax rebates and are not included when determining eligibility for receipt of supplemental rebates on other products. The Government further points out that, as a matter of practice, the basic and supplemental export tax rebates are applied for together. Consequently, if an export shipment is not eligible for the basic rebate, it will not be eligible for the supplemental rebate, nor will it be aggregated with other eligible exports when determining supplemental rebate levels.

Department's Position: We verified that pipe and tube exports to the United States are no longer eligible for basic or supplemental export tax rebates and that these exports cannot be counted when determining the supplemental rebate on other eligible products.

Comment 6: The petitioners express their concern that the recalculation of the rate of assessment for the review period, coupled with the change in the deposit rate to reflect the elimination of the export tax rebate and RUSF programs for exports of pipe and tube to the United States, may allow Turkish pipe and tube exports to escape countervailing duties on the export tax rebates and RUSF payments earned by Yucel Boru on 1986 exports but received in 1987. The petitioners point out that if Yucel Boru did not export in 1987 these benefits cannot be captured with countervailing duties, and they suggest that an accrual method to capture these benefits in the 1986 review may be more appropriate. The petitioners also claim that if a review for the 1987 period is not requested, these benefits will not be captured because the 1987 entires will be liquidated at the deposit rate set by this review, which is based on the elimination of benefits from these two programs. Therefore petitioners suggest that the benefits from these two programs be included in the calculation of the deposit rate.

Department's Position: We consider the benefit from these programs to occur when the payments are received, rather than accrued. If Yucel Boru did not export pipe and tube to the United States in 1987, the firm will not have received benefits subject to countervailing duties.

If we conduct a review for the 1987 period, we will calculate countervailing duties based on benefits received by the companies that exported. If a review is not requested, entries will be liquidated at the deposit rate in effect at the time of entry, in this case the deposit rate set by the countervailing duty order. The duty deposit set by this review, which reflects the termination of the export tax rebate and RUSF programs, will affect only future entries.

Final Results of Review

After considering all of the comments received, we determine the net subsidy to be 1.43 percent ad valorem for Bant Boru and 12.67 percent ad valorem for all other firms during the period October 28, 1985 through December 31, 1986.

The Department will instruct the Customs Service to assess countervailing duties of 1.43 percent of the f.o.b. invoice price on shipments of this merchandise from Bant Boru and 12.67 percent of the f.o.b. invoice price on shipments of this merchandise from all other firms entered, or withdrawn from warehouse, for consumption on or after October 28, 1985 and exported on or before December 31, 1986.

Because of the termination of the export tax rebate and RUSF programs, the Department will instruct the Customs Service to waive cash deposits *9793 of estimated countervailing duties on shipments of this merchandise from Erkboru and to collect a cash deposit of estimated countervailing duties of 7.26 percent of the f.o.b. invoice price on shipments of this merchandise from all other firms entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice. This deposit requirement will remain in effect until publication of the final results of the next administrative review.

This administrative review and notice are in accordance with section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.10.

Dated: March 21, 1988.

Gilbert B. Kaplan,

Acting Assistant Secretary, Import Administration.

[FR Doc. 88-6588 Filed 3-24-88; 8:45 am]

BILLING CODE 3510-DS-M