[Federal Register Volume 61, Number 168 (Wednesday, August 28, 1996)]
[Notices]
[Pages 44293-44296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21969]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-834-805]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Beryllium Metal and High 
Beryllium Alloys from Kazakstan

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

EFFECTIVE DATE: August 28, 1996.

FOR FURTHER INFORMATION CONTACT: Dorothy Tomaszewski or Ellen Grebasch, 
Office of Antidumping Investigations, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-0631 or (202) 482-3773, respectively.

The Applicable Statute

     Unless otherwise indicated, all citations to the Tariff Act of 
1930 (``the Act'') are references to the provisions effective January 
1, 1995, the effective date of the amendments made to the Act by the 
Uruguay Rounds Agreements Act.

Preliminary Determination

    We preliminarily determine that beryllium metal and high beryllium 
alloys (``beryllium'') from Kazakstan are being, or are likely to be, 
sold in the United States at less than fair value (``LTFV''), as 
provided in section 733 of the Act. The estimated margins are shown in 
the ``Suspension of Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation on April 3, 1996 (61 FR 
15770, April 9, 1996), the following events have occurred:
    On April 26, 1996, a cable was sent to the U.S. embassy in 
Kazakstan requesting the identification of Kazakstan producers and 
exporters of beryllium exported to the United States. On May 3, 1996, a 
letter of appearance was filed on behalf of the Kazak Joint-Stock 
Company of Atomic Energy and Industry (``KATEP'') and the Joint-Stock 
Company of Ulba Metallurgical Plant (``Ulba''). The Department of 
Commerce (``the Department'') received a response from the U.S. Embassy 
on May 8, 1996, identifying the same companies named in the May 3, 
1996, letter of appearance. The record indicates that during the POI 
these companies were the only companies licensed to export beryllium 
from Kazakstan and that Ulba is the only beryllium producer in 
Kazakstan. The companies did not request that separate, exporter-
specific dumping margins be calculated.
    On May 15, 1996, the Department sent its antidumping questionnaire 
to the Embassy of Kazakstan, with a request that it be transmitted to 
all companies that produce beryllium for export to the United States 
and to all companies that were engaged in selling beryllium to the 
United States during the period of investigation. A copy of the 
questionnaire was also sent to Ulba and KATEP. The Department received 
responses to the questionnaire from Ulba and KATEP during June and 
July.
    On April 29, 1996, the United States International Trade Commission 
(``ITC'') notified the Department of its affirmative preliminary 
determination.
    On June 18, 1996, the Department provided interested parties with 
the opportunity to submit published, publicly-available information for 
the Department to consider when valuing the factor inputs. Petitioner, 
Brush Wellman Inc., and respondents submitted information on July 23 
and July 30, 1996. Additional comments from petitioner and respondents 
were received on August 6, 1996.

Postponement of Final Determination

    Pursuant to section 735(a)(2)(A) of the Act, on August 14, 1996, 
respondents requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until 135 days after the date of publication of the 
determination in the Federal Register. Pursuant to 19 CFR 353.20(b), 
because (1) our preliminary determination is affirmative, (2) the 
respondents account for a significant proportion of exports of the 
subject merchandise, and (3) no compelling reasons for denial exist, we 
are granting respondents' request and postponing the final 
determination.

Scope of Investigation

    The scope of this investigation is beryllium metal and high 
beryllium alloys with a beryllium content equal to or greater than 30 
percent by weight, whether in ingot, billet, powder, block, lump, 
chunk, blank, or other semifinished form. These are intermediate or 
semifinished products that require further machining, casting and/or 
fabricating into sheet, extrusions, forgings or other shapes in order 
to meet the specifications of the end user. Beryllium and high 
beryllium alloys within the scope of this investigation are 
classifiable under the Harmonized Tariff Schedule of the United States 
(``HTSUS'') 8112.11.6000, 8112.11.3000, 7601.20.9075, and 7601.20.9090. 
Although the HTSUS subheading is provided for convenience and customs 
purposes, our written description of the scope of this investigation is 
dispositive.

Period of Investigation

    The period of investigation (``POI'') is July 1, 1995, through 
December 31, 1995.

Separate Rates

    Respondents made no claim for receiving a separate rate; therefore, 
the Department did not address this issue.

Fair Value Comparisons

    To determine whether sales of beryllium from Kazakstan to the 
United States by Ulba were made at less than fair value, we compared 
the Export

[[Page 44294]]

Price (``EP'') to the NV, as specified in the ``Export Price'' and 
``Normal Value'' sections of this notice.

Export Price

    We calculated EP in accordance with section 772(a) of the Act, 
because the subject merchandise was sold directly to the first 
unaffiliated purchaser in the United States prior to importation. 
Although respondents, Ulba and KATEP, reported that they have a U.S. 
subsidiary, Beryllium Metals International Ltd. (``BMI''), calculation 
of constructed export price (``CEP'') under section 772(b) is not 
otherwise warranted for purposes of the preliminary determination based 
on the facts of this investigation. It has been the Department's 
longstanding and well-recognized practice that a transaction will be 
considered an export price sale, despite the involvement of an 
affiliate in the United States where: (1) the merchandise in question 
was shipped directly from the manufacturer to the unrelated buyer, 
without being introduced into the physical inventory of the related 
selling agent; (2) this was the customary commercial channel for sales 
of this merchandise between the parties involved; and (3) the related 
selling agent in the United States acted only as a processor of 
documentation and a communication link with the unrelated buyer. See, 
e.g., Final Determination of Sales at Less Than Fair Value: Large 
Newspaper Printing Presses and Components Thereof, Whether Assembled or 
Unassembled, From Germany (61 FR 38166, 38175, July 23, 1996). The 
facts in the present case indicate that the merchandise is not taken 
into the physical inventory of the U.S. subsidiary. Because there has 
only been one sale, we conclude that there is no ``customary commercial 
channel.'' Therefore, we are disregarding this criterion for purposes 
of this preliminary determination. Finally, because of the limits on 
BMI's authority to finalize sales, it appears that BMI is acting solely 
as a processor of documentation and communications link. Therefore we 
conclude that the sale in question is properly characterized as an EP 
sale. However, the issue of whether the reported U.S. sale should be 
treated as CEP will be further examined at verification.
    We calculated EP based on packed, CIF U.S. port prices to 
unaffiliated purchasers in the United States, as appropriate. We made 
deductions from the starting price, where appropriate, for foreign 
inland freight, international freight, and foreign brokerage and 
handling. Additionally, for three reported sales observations, 
respondents noted that following the shipment of the subject 
merchandise, the price was adjusted downward from the originally 
invoiced unit price. For purposes of the preliminary determination, we 
are treating this change in price as a post-sale price discount to 
gross unit price.

Normal Value

A. Nonmarket Economy Country Status
    The Department has treated Kazakstan as a nonmarket economy country 
(``NME'') in all past antidumping investigations (see, e.g., Final 
Determinations of Sales at Less Than Fair Value: Ferrosilicon from 
Kazakstan and Ukraine; and Postponement of Final Determination; 
Ferrosilicon from the Russian Federation 58 FR 13050 (March 9, 1993)). 
Because neither respondents nor petitioner have challenged such 
treatment, we will continue to treat Kazakstan as a NME in this 
investigation, in accordance with section 771(18)(C) of the Act.
    When the Department is investigating imports from a NME, section 
773(c)(1) of the Act directs us to base normal value (``NV'') on the 
NME producer's factors of production, valued in a comparable market 
economy that is a significant producer of comparable merchandise.
B. Surrogate Country Selection
    Section 773(c)(4) of the Act requires the Department to value the 
NME producer's factors of production, to the extent possible, in one or 
more market economy countries that: (1) are at a level of economic 
development comparable to that of the NME and (2) are significant 
producers of comparable merchandise. The Department has determined that 
Peru, Ecuador, Algeria, Colombia, and Tunisia are countries comparable 
to Kazakstan in terms of overall economic development (see June 10, 
1996, Memorandum from David Mueller, Director, Office of Policy, to 
Gary Taverman, Division I Director, Office of Antidumping 
Investigations). 1
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    \1\  Respondents propose that the analysis of comparable levels 
of economic development should be based on per-capita purchasing 
power parity (``PPP''). However, it is important to note that it is 
the Department's longstanding practice in selecting surrogate 
countries to rely on market-exchange-rate-based, per-capita income 
as an indicator of economic development (see, e.g., Final 
Determination of Sales at Less Than Fair Value: Antidumping Duty 
Investigation of Bicycles from the People's Republic of China, 61 FR 
19026, April 30, 1996; Final Determination of Sales at Less Than 
Fair Value: Antidumping Duty Investigation of Steel Pipe from 
Romania, 61 FR 24274, May 14, 1996). While arguments for relying on 
PPP per capita income have been considered (see, e.g., Final 
Determination of Sales at Less Than Fair Value: Antidumping Duty 
Investigation of Manganese Metal from the People's Republic of 
China, November 6, 1995, 60 FR 56048), the Department continues to 
rely primarily on exchange-rate-based per capita income for 
surrogate country selection in this investigation.
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    Because none of these five countries satisfies the second statutory 
requirement for the selected surrogate country to be a significant 
producer of comparable merchandise, respondents proposed India as the 
appropriate surrogate country in this investigation. According to 
respondents, India and Kazakstan are at a similar level of economic 
development based on per-capita PPP; India is ``likely to be'' a 
producer of beryllium metal; and, India is a significant producer of 
titanium and zirconium, which respondents deem comparable to beryllium 
metal in terms of physical characteristics and end use.
    Petitioner proposed Brazil as the appropriate surrogate country in 
which to value the factors of production. Petitioner notes that Brazil 
and Kazakstan both experienced negative gross domestic product growth 
and both countries produce beryl ore, the primary input, used in the 
production of beryllium.
    Based on information on the record of this investigation, the only 
producers of beryllium (excluding waste and scrap) are the United 
States, Kazakstan, and the People's Republic of China. Further, the 
staff of the U.S. Geological Survey and the Department's Metals 
Division have stated that it is not possible to identify any 
merchandise truly comparable to beryllium in terms of similar 
production process or production inputs. Even though petitioner's 
surrogate country choice, Brazil, is a significant producer of beryl 
ore, an input in producing beryllium, information on the record 
indicates that this ore cannot be considered to be merchandise 
comparable to beryllium. Moreover, Brazil's 1993 per-capita annual 
income was $2930 versus $1560 for Kazakstan. Although the record 
contains market reports which make passing reference to production of 
beryllium metal in respondents' surrogate country choice, India, the 
Department has been unable to confirm such production. See August 21, 
1996, Memorandum to File; and Preliminary Determination of Beryllium 
Metal and High Beryllium Alloys from Kazakstan, Calculation Memorandum, 
August 21, 1996 (``Calculation Memorandum'').
    Absent information on a market economy country which produces 
beryllium and is at a level of economic development comparable to that 
of Kazakstan, the Department selected Peru as the primary surrogate 
country based on its comparable level of economic development for 
purposes of this investigation. Peru and Kazakstan

[[Page 44295]]

share approximately the same per-capita annual income.
    Accordingly, where possible, we have calculated NV using Peruvian 
prices based on POI data to value Ulba's factors of production. The 
sources of individual surrogate factor prices are discussed under the 
``Normal Value'' section, below.
C. Factors of Production
    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by Ulba (the sole Kazakstan 
producer of beryllium). To calculate NV, the reported unit factor 
quantities were multiplied by publicly available Peru values, where 
possible. Because respondents ceased production of subject merchandise 
at the end of 1989, reported unit factor quantities are based on 1989 
records. According to the staff of the U.S. Geological Survey, no known 
changes to the technology of producing the subject merchandise have 
taken place in Kazakstan (see August 21, 1996, Memorandum to File). 
Therefore, in this investigation, the use of reported factor quantities 
based on 1989 records is appropriate.
    Where Peru values were not available for certain of the factors, we 
used values from other countries. The selection of the surrogate values 
applied in this determination was based on the quality and 
contemporaneity of the data. As appropriate, we adjusted input prices 
to make them delivered prices. For those values not contemporaneous 
with the POI, we adjusted for inflation using wholesale price indices 
or, in the case of labor rates, consumer price indices, published in 
the International Monetary Fund's International Financial Statistics. 
(For further discussion, see Calculation Memorandum.)
    Petitioner has suggested that the Department should base surrogate 
country selection and factor valuation on data from the year of 
production of the beryllium that was actually sold during the POI. We 
do not agree with petitioner's position. It has been the Department's 
practice to value factors of production in the time period 
contemporaneous to the date of sale of the subject merchandise (i.e., 
the POI) to reflect the value of that merchandise during the POI. (See, 
for example, Final Determination: Antidumping Duty Investigation of 
Pure and Alloy Magnesium from the Russian Federation, 61 FR 16440 
(March 30, 1995); and Final Determination: Antidumping Duty 
Investigation of Pure Magnesium from Ukraine, 61 FR 16432 (March 30, 
1995).) The fact that the subject merchandise sold during the POI was 
not produced in the POI does not affect the choice of time period for 
valuing the factors. Therefore, all factor values from the surrogate 
country are based on POI data.
    To value beryllium concentrate, the primary material input, we used 
the 1995 world market price provided by the U.S. Geological Survey. For 
all other reported direct material inputs and packing materials (the 
specific identities of which are business proprietary), we used 1994 UN 
Trade Statistics data--the latest available information--for Peru, 
except for one material input, where we used data from Colombia. Three 
of the reported material inputs were determined not to be direct 
material inputs in the production of subject merchandise and, 
therefore, have been treated as part of the factory overhead cost. (For 
further discussion, see Calculation Memorandum.)
    To value direct skilled, direct unskilled, and packing labor, we 
used the 1994 wage rate--the latest available information--for the 
manufacturing sector in Peru published in the International Labor 
Organization's 1995 Yearbook of Labour Statistics. Because we cannot 
determine if the labor values from this source were for skilled or 
unskilled workers, we, in accordance with the Department's practice in 
past NME cases, applied a single earnings rate to all reported labor 
factors (see Preliminary Determination of Sales at Less Than Fair 
Value: Polyvinyl Alcohol from the PRC, (60 FR 52647, October 10, 1995) 
and Preliminary Determination of Sales at Less Than Fair Value: Steel 
Pipe from Romania, 60 FR 61532 (November 30, 1995)). Further, because 
this earnings rate is exclusive of benefits, we increased the amount 
reported to include employer-paid benefits based on information 
reflected in publicly available information in Price Waterhouse's 1994 
publication, Doing Business in Peru.
    To value electricity, we used 1995 electricity rates for industrial 
users in Peru, published quarterly by the Latin American Energy 
Organization (``OLADE''). We based the value of coal on 1994 UN Trade 
Statistics data--the latest available information--for Peru.
    We were unable to find Peru data for either factory overhead or 
selling, general and administrative (``SG&A'') expenses. Further, we 
considered these components of normal value to be most appropriately 
based on a market economy company that actually produces Beryllium. 
Accordingly, we based our calculation of factory overhead and SG&A 
expenses on petitioner's experience as reported in the petition.
    With respect to profit, we were also unable to find surrogate data 
from Peru. Therefore, we calculated surrogate profit using actual 
1994--the latest available information--profit reported in the income 
statement of a metal producer in Brazil (see Calculation 
Memorandum).2
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    \2\ We note that metal is the most similar product to beryllium 
for which we have publicly available information on profit.
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    Absent any data for rail freight in Peru, we are using rail and 
truck freight data from Brazil (see Calculation Memorandum).

Kazakstan-Wide Rate

    The U.S. Embassy identified what we believe to be a complete list 
of producers and exporters of beryllium from Kazakstan. We compared the 
respondents' sales data with U.S. import statistics for time periods 
including the POI and found no indication of unreported sales. 
Accordingly, the Kazakstan-wide rate is based on the weighted-average 
margin calculated in this proceeding.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information used in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all entries of beryllium 
originating from Kazakstan, that are entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice in the Federal Register. The Customs Service will require a cash 
deposit or posting of a bond equal to the estimated dumping margins by 
which the normal value exceeds the export price, as shown below. These 
suspension of liquidation instructions will remain in effect until 
further notice.
    The weighted-average dumping margin is as follows:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
               Manufacturer/Producer/Exporter                   margin  
                                                              (percent) 
------------------------------------------------------------------------
Ulba Metallurgical Plant/KATEP.............................        70.80
Kazakstan-Wide Rate 3......................................        70.80
------------------------------------------------------------------------
 AThe Kazakstan-wide rate applies to all entries of subject merchandise 
  originating from Kazakstan except for entries from the exporter that  
  is identified individually above.                                     

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our 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

[[Page 44296]]

determination whether these imports are materially injuring, or 
threaten material injury to, the U.S. industry.

Public Comment

    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies must be submitted to the Assistant 
Secretary for Import Administration no later than November 20, 1996, 
and rebuttal briefs, no later than November 27, 1996. A list of 
authorities used and a summary of arguments made in the briefs should 
accompany these briefs. Such summary should be limited to five pages 
total, including footnotes. We will hold a public hearing, if 
requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. At this time, the hearing 
is scheduled for Thursday, December 4, 1996, the time and place to be 
determined, at the U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230. Parties should 
confirm by telephone the time, date, and place of the hearing 48 hours 
before the scheduled time.
    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 
B-099, within ten days of the 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. In accordance with 19 CFR 353.38(b), oral presentations will 
be limited to issues raised in the briefs. If this investigation 
proceeds normally, we will make our final determination no later than 
135 days after the publication of this notice in the Federal Register.
    This determination is published pursuant to section 733(f) of the 
Act.

    Dated: August 21, 1996.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 96-21969 Filed 8-27-96; 8:45 am]
BILLING CODE 3510-DS-P