[Federal Register Volume 62, Number 130 (Tuesday, July 8, 1997)]
[Notices]
[Pages 36492-36495]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17726]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-429-601]
Preliminary Results of Antidumping Duty Administrative Review of
Solid Urea From the Former German Democratic Republic
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review.
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SUMMARY: In response to requests from interested parties, the
Department of Commerce is conducting an administrative review of the
antidumping duty order on solid urea
[[Page 36493]]
from the former German Democratic Republic. The review covers exports
of subject merchandise to the United States during the period July 1,
1995 through June 30, 1996, and one firm SKW Stickstoffwerke Piesteritz
GmbH (SKWP). The results of this review indicate the existence of no
dumping margins for the period.
We invite interested parties to comment on these preliminary
results. Parties who submit arguments in this proceeding are requested
to submit with the argument (1) a statement of the issue and (2) a
brief summary of the argument.
EFFECTIVE DATE: July 8, 1997.
FOR FURTHER INFORMATION CONTACT: Nithya Nagarajan or Steven Presing,
Office VII, Import Administration, International Trade Administration,
U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, DC 20230; telephone (202) 482-3793.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless indicated, all
citations to the Department regulations are to the current regulations,
as amended by the interim regulations published in the Federal Register
on May 11, 1995 (60 FR 25130).
Background
On July 8, 1996, the Department of Commerce (the Department)
published in the Federal Register (61 FR 35712) a notice of
``Opportunity to Request Administrative Review'' for the July 1, 1995
through June 30, 1996, period of review (POR) of the antidumping duty
order on solid urea from the former German Democratic Republic (GDR).
In accordance with 19 CFR 353.22, petitioners requested a review for
the aforementioned period. On August 15, 1996, the Department published
a notice of initiation of antidumping review (61 FR 42416, 42417). The
Department is now conducting a review of this respondent pursuant to
section 751 of the Act.
Scope of Review
Imports covered by this review are those of solid urea. At the time
of the publication of the antidumping duty order, such merchandise was
classifiable under item 480.30 of the Tariff Schedules of the United
States Annotated (TSUSA). This merchandise is currently classified
under the Harmonized Tariff Schedule of the United States (HTS) item
number 3102.10.00. These TSUSA and HTS item numbers are provided for
convenience and Customs purposes only. The Department's written
description of the scope remains dispositive for purposes of the order.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced and sold by the respondent in the home market during
the POR (and covered by the Scope of the Review) to be foreign like
products for purposes of product comparisons to U.S. sales.
Fair Value Comparisons
To determine whether sales of solid urea by respondent to the
United States were made at less than fair value, we compared the EP to
the NV, as described in the ``Export Price'' and ``Normal Value''
sections of this notice. In accordance with section 777A(d)(2), we
calculated monthly weighted-average prices for NV and compared these to
individual U.S. transactions, during the same month at the same level
of trade.
Export Price
We used EP, in accordance with subsections 772(a) and (c) of the
Act, where the subject merchandise was sold directly or indirectly to
the first unaffiliated purchaser in the United States prior to
importation.
We made adjustments as follows:
We calculated EP based on delivered prices to unaffiliated
customers in the United States. Where appropriate, we made adjustments
from the starting price for early payment discounts, foreign inland
freight, foreign brokerage and handling, international freight, U.S.
inland freight, U.S. brokerage and handling, and U.S. Customs duties.
We also adjusted the starting price for billing adjustments to the
invoice price.
Normal Value
In order to determine whether there was a sufficient volume of
sales in the home market to serve as a viable basis for calculating NV,
we compared respondent's volume of home market sales of the foreign
like product to the volume of U.S. sales of the subject merchandise in
accordance with section 773(a)(1)(C) of the Act. Since respondent's
aggregate volume of home market sales of the foreign like product was
greater than five percent of its aggregate volume of U.S. sales for the
subject merchandise, we determined that the home market was viable.
Therefore, we have based NV on home market sales.
Where appropriate, we adjusted for discounts, inland freight, and
inland insurance, and made circumstances of sale adjustments for credit
expenses and warranty expenses. We also adjusted the starting price for
billing adjustments to the invoice price. In addition, we deducted home
market packing costs and added U.S. packing costs.
Levels of Trade (LOT)
In accordance with section 773(a)(1)(B)(i) of the Act and the
Statement of Administrative Action accompanying the URAA, to the extent
practicable, the Department will calculate NV based on sales at the
same LOT as the U.S. sale. When the Department is unable to find
sale(s) in the comparison market at the same LOT as the U.S. sale(s),
the Department may compare sales in the United States to foreign market
sales at a different LOT. Final Determination of Sales at Less-Than-
Fair-Value of Certain Pasta from Italy, 61 FR 30330-31 (1996). The LOT
of NV is that of the starting price sales in the home market.
For EP, the relevant transaction for LOT is the sale from the
exporter to the importer. In order to determine whether foreign market
sales are at a different LOT than U.S. sales, the Department examines
whether the foreign market sales have been made at different stages in
the marketing process, or the equivalent, than the U.S. sales. The
marketing process in both markets begins with goods being sold by the
producer and extends to the sale to the final user, regardless of
whether the final user is an individual consumer or an industrial user.
The chain of distribution between the producer and the final user may
have many or few links, and the respondent's sales occur somewhere
along this chain. In the United States this is generally to an
importer, whether independent or affiliated. We review and compare the
distribution systems in the foreign market and the United States,
including selling functions, class of customer, and the extent and
level of selling expenses for each claimed LOT. Customer categories or
descriptions (such as trading company or end-user) are useful in
identifying different LOTs, but are insufficient to establish that
there is a difference in the LOT without substantiation. An analysis of
the chain of distribution and of the selling functions substantiates or
invalidates claimed levels of trade. If the claimed levels are
different, the selling functions performed in selling to each level
should also be different. Conversely, if
[[Page 36494]]
levels of trade are nominally the same, the selling functions performed
should also be the same. Different levels of trade necessarily involve
differences in selling functions, but differences in selling functions
(even substantial ones) are not alone sufficient to establish a
difference in the LOT. Different levels of trade are characterized by
purchasers at different places in the chain of distribution and sellers
performing qualitatively or quantitatively different functions in
selling to them.
When sales in the U.S. and foreign market cannot be compared at the
same LOT, an adjustment to NV may be appropriate. Section 773(a)(7)(A)
provides that, after making all appropriate adjustments to EP or
constructed export price (CEP) and NV, the Department will adjust NV to
account for differences in these prices that are demonstrated to be
attributable to differences in the LOT of the comparison sales in the
foreign market.
As noted in the Department's verification report, SKWP sold urea to
an unrelated trading company in the United States and to end-users,
distributors, and retailers in the home market. However, in applying
the principles, stated above, to the facts in this case, we sought to
compare the distribution systems used by SKWP for its U.S. and home
market sales, including selling functions, class of customer, and the
extent and level of selling expenses for each LOT. In reviewing the
selling functions performed by SKWP for both the U.S. and home market
sales transactions, we considered all types of selling activities, both
claimed and unclaimed, that had been performed. As noted above, it is
the Department's preference to examine selling functions on both a
qualitative and quantitative basis. While SKWP has not claimed sales to
different levels of trade in the home market and the U.S. market, the
company provided information on the nature of the various selling
functions performed for the sales transactions in both the U.S. and
home markets.
Our analysis of the record evidence regarding the distribution
systems in the foreign market and the United States (including selling
functions, class of customer, and the extent and level of selling
expenses for each claimed LOT) does not reveal sufficient differences
to justify a LOT adjustment. While SKWP claims to sell to different
classes of customers in its home market, our analysis of the chain of
distribution and selling functions associated with these sales did not
confirm the existence of two or more stages of marketing in the home
market. Moreover, at verification, we confirmed that the selling
functions associated with SKWP's home market sales were not materially
different from the selling functions performed in connection with its
U.S. sale.
Arm's-Length Sales
Sales to affiliated customers in the home market not made at arm's
length were excluded from our analysis. To test whether these sales
were made at arm's length, we compared the starting prices of sales to
affiliated and unaffiliated customers, net of all movement charges,
direct selling expenses, discounts and packing. Where the price to the
affiliated party was on average 99.5 percent or more of the price to
the unaffiliated party, we determined that the sales made to the
affiliated party were at arm's length.
Cost of Production Analysis
Petitioners alleged on December 11, 1996, that SKWP sold solid urea
in the home market at prices below the cost of production (COP). Based
on these allegations, the Department determined, for the reasons stated
in its initiation memo dated January 3, 1997, that it had reasonable
grounds to believe or suspect that SKWP had sold the subject
merchandise in the home market at prices below the COP. Therefore,
pursuant to section 773(b)(1) of the Act, we initiated a COP
investigation in order to determine whether SKWP made home market sales
during the POR at prices below its COP.
In accordance with section 773(b)(3) of the Act, we calculated an
average monthly COP based on the sum of the costs of materials and
fabrication employed in producing the foreign like product plus
selling, general and administrative (SG&A) expenses and all costs and
expenses incidental to placing the foreign like product in condition
ready for shipment. In our COP analysis, we used the home market sales
and COP information provided by the respondent in its questionnaire
responses.
After calculating an average monthly COP, we tested whether home
market sales of solid urea were made at prices below COP within an
extended period of time in substantial quantities and whether such
prices permit recovery of all costs within a reasonable period of time.
We compared model-specific average COP to the reported home market
prices less any applicable movement charges, discounts, and rebates. In
determining whether to disregard home market sales made at prices below
the average COP, we examined (1) whether, within an extended period of
time, such sales were made in substantial quantities, and (2) whether
such sales were made at prices which permitted the recovery of all
costs within a reasonable period of time in the normal course of trade.
After conducting our analysis, the Department determined that less
than one percent of all home market sales were sold below cost,
therefore, pursuant to section 773(b)(2)(C) of the Act, where less than
20 percent of the respondent's sales of a given product were at prices
less than COP, we did not disregard any below-cost sales of the product
because the below-cost sales were not made in substantial quantities.
Currency Conversion
The Department's preferred source for daily exchange rates is the
Federal Reserve Bank. For purposes of the preliminary results, we made
currency conversions based on the official exchange rates in effect on
the date of the U.S. sale as certified by the Federal Reserve Bank of
New York pursuant to section 773A(a) of the Act.
Section 773A(a) directs the Department to use a daily exchange rate
in order to convert foreign currencies into U.S. dollars, ignoring any
``fluctuations.'' We determine that a fluctuation exists when the daily
exchange rate differs from a benchmark rate by 2.25 percent or more.
The benchmark rate is defined as the rolling average of the rates for
the past 40 business days as reported by the Federal Reserve Bank of
New York. When we determined that a fluctuation existed, we substituted
the benchmark rate for the daily rate. For a complete discussion of the
Department's exchange rate methodology, see ``Change in Policy
Regarding Currency Conversions'' (61 FR 9434, March 8, 1996).
Preliminary Results of Review
As a result of our review, we preliminarily determine the dumping
margin for SKWP for the period July 1, 1995 through June 30, 1996 to be
0.00 percent.
Parties to the proceeding may request disclosure within five days
of the date of publication of this notice. Any interested party may
request a hearing within 10 days of publication. Any hearing, if
requested, will be held 44 days after the date of publication or the
first business day thereafter. Case briefs and/or other written
comments from interested parties may be submitted not later than 30
days after the date of publication. Rebuttal briefs and rebuttals to
written comments, limited to issues raised in those comments, may be
filed not later than 37 days after the date of publication of this
notice. The Department will issue its final results of
[[Page 36495]]
this administrative review, including its analysis of issues raised in
any written comments or at a hearing, not later than 120 days after the
date of publication of this notice.
Upon completion of this review, the Department shall determine, and
the Customs Service shall assess, antidumping duties on all appropriate
entries. The Department will issue appropriate appraisement
instructions directly to the Customs Service upon completion of this
review.
Furthermore, the following deposit requirements will be effective
for all shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication date of the
final results of review, as provided by section 751(a)(1) of the Tariff
Act: (1) The cash deposit rate for the reviewed company will be the
rate determined in the final results of review; (2) for previously
reviewed or investigated companies not mentioned above, the cash
deposit rate will continue to be the company-specific rate published
for the most recent period; (3) if the exporter is not a firm covered
in this review, a prior review, or the original LTFV investigation, but
the manufacturer is, the cash deposit rate will be the rate established
for the most recent period for the manufacturer of the merchandise; and
(4) the cash deposit rate for all other manufacturers or exporters will
be 44.80 percent, as explained below.
On May 25, 1993, the CIT in Floral Trade Council v. United States,
822 F. Supp. 766 (CIT 1993), and Federal-Mogul v. United States, 839 F.
Supp. 864 (CIT 1993), determined that once an ``all others'' rate is
established for a company, it can only be changed through an
administrative review. Therefore, the ``all others'' rate for this
order will be 44.80 percent, which was the ``all others'' rate
established in the final notice of the LTFV investigation by the
Department (52 FR 19549, 19552). These deposit requirements, when
imposed, shall remain in effect until publication of the final results
of the next administrative review.
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 353.26 to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during this review period. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This administrative review and notice are in accordance with the
Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated June 25, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-17726 Filed 7-7-97; 8:45 am]
BILLING CODE 3510-DS-P