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Oil Country Tubular Goods from Austria: Notice of Initiation of Countervailing Duty Investigation

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Import Administration, International Trade Administration, Department of Commerce.


April 26, 2002.

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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.

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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 Start Printed Page 20740Schedule 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.


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

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 Start Printed Page 20741adequate 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.

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Dated: April 18, 2002

Bernard T. Carreau,

Acting Assistant Secretaryfor Import Administration.

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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)

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[FR Doc. 02-10348 Filed 4-25-02; 8:45 am]