[Federal Register Volume 63, Number 173 (Tuesday, September 8, 1998)]
[Notices]
[Pages 47474-47477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24070]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-821-803]


Titanium Sponge from the Russian Federation: Preliminary Results 
of Antidumping Duty Administrative Review and Partial Revocation

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review and partial revocation.

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SUMMARY: In response to requests from AVISMA Titanium-Magnesium Works; 
the affiliated companies Interlink Metals, Inc., and Interlink Metals & 
Chemicals, S.A.; TMC Trading International Ltd.; and Titanium Metals 
Corporation, the Department of Commerce is conducting an administrative 
review of the antidumping finding on titanium sponge from the Russian 
Federation. This notice of preliminary results covers the period August 
1, 1996 through July 31, 1997. This review covers one manufacturer/
exporter, AVISMA Titanium-Magnesium Works, and two trading companies, 
TMC Trading International Ltd. and, collectively as one company, 
Interlink Metals, Inc., and Interlink Metals & Chemicals, S.A.
    We have preliminarily determined that no dumping margins apply 
during this review period. If these preliminary results are adopted in 
our final results of administrative review, we will instruct the U.S. 
Customs Service to liquidate entries during the period of review 
without regard to dumping duties. Furthermore, if these preliminary 
results are adopted in our final results of review, this will be the 
Interlink entities' third consecutive review with no dumping margins. 
Therefore, in the final results we will revoke this finding with 
respect to Interlink. Interested parties are invited 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: September 8, 1998.

FOR FURTHER INFORMATION CONTACT: Wendy Frankel or Mark Manning, Office 
of AD/CVD Enforcement, Office 4, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
5849 and 482-3936, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act. In addition, unless otherwise 
indicated, all citations to the Department of Commerce's regulations 
refer to the regulations codified at 19 CFR part 351, 62 FR 27296 (May 
19, 1997).

Background

    The Department of Commerce (the Department) published an 
antidumping finding on titanium sponge from the Union of Soviet 
Socialist Republics (U.S.S.R.) on August 28, 1968 (33 FR 12138). In 
December 1991, the U.S.S.R. divided into fifteen independent states. To 
conform to these changes, the Department changed the original 
antidumping finding into fifteen findings applicable to each of the 
former republics of the U.S.S.R. (57 FR 36070, August 12, 1992).
    On August 26, 1997, AVISMA Titanium-Magnesium Works (AVISMA) and 
Interlink Metals & Chemicals, S.A. and Interlink Metals, Inc. 
(collectively Interlink) requested that the Department conduct an 
administrative review of the antidumping finding on titanium sponge 
from the Russian Federation (Russia) for one manufacturer/exporter, 
AVISMA, and one trading company, Interlink, covering the period August 
1, 1996 through July 31, 1997. On August 27, 1997, Titanium Metals 
Corporation (TIMET) requested that the Department conduct an 
administrative review for the trading companies, Interlink and TMC 
Trading International, Ltd. (TMC). On August 28, 1997, TMC requested 
that the Department conduct an administrative review of its U.S. sales. 
The Department published a notice of initiation of the review on 
September 25, 1997 (62 FR 50292). Due to the complexity of the legal 
and methodological issues presented by this review, the Department 
postponed the date of the preliminary results of review by sixty days 
on February 10, 1998 (63 FR 6721). The Department published a second 
sixty day postponement of preliminary results of review on April 16, 
1998 (63 FR 18885). The Department is conducting this administrative 
review in accordance with section 751 of the Act.
    On August 13, 1998, the International Trade Commission (ITC) 
published in the Federal Register its determination that revocation of 
the findings covering titanium sponge imports from the Republic of 
Kazakhstan (Kazakhstan), Russia, and Ukraine and the antidumping duty 
order covering imports of titanium sponge from Japan is not likely to 
lead to continuation or recurrence of material injury to an industry in 
the United States. Due to this determination the Department has revoked 
the findings covering titanium sponge imports from Kazakhstan, Russia, 
and Ukraine and the antidumping duty order covering titanium sponge 
imports from Japan. This revocation is effective as of August 13, 1998. 
See Notice of Revocation of Antidumping Findings and Antidumping Duty 
Order and Termination of Five-Year (``Sunset'') Reviews: Titanium 
Sponge from Kazakhstan, Russia, Ukraine, and Japan, (63 FR 46215, 
August 31, 1998).

Scope of the Review

    The product covered by this administrative review is titanium 
sponge from Russia. Titanium sponge is chiefly used for aerospace 
vehicles, specifically, in construction of compressor blades and 
wheels, stator blades, rotors, and other parts in aircraft gas turbine 
engines. Imports of titanium sponge are currently classifiable under 
the harmonized tariff schedule (HTS) subheading 8108.10.50.10. The HTS 
subheading is provided for convenience and U.S. Customs purposes. Our 
written description of the scope of this proceeding is dispositive.

Separate Rates

    During the period of review (POR), AVISMA made direct sales of 
subject merchandise to the U.S. market that were entered for 
consumption. Due to these direct sales, AVISMA has requested a 
separate, company-specific rate. The claimed ownership of AVISMA during 
the POR is that of a publicly owned joint stock company, where 100 
percent of the shares are owned by private individuals and private 
companies. AVISMA asserted that the state owned zero percent of its 
shares.
    To establish whether a firm is sufficiently independent from

[[Page 47475]]

government control to be entitled to a separate rate, the Department 
analyzes each exporting entity under a test arising out of the Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991) and amplified in 
the Final Determination of Sales at Less Than Fair Value: Silicon 
Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994). 
Under the separate rates criteria, the Department assigns separate 
rates in nonmarket economy cases only if a respondent can demonstrate 
the absence of both de jure and de facto government control over its 
export activities. Since the Department did not verify the information 
submitted by AVISMA to the record of this proceeding, we must rely upon 
the information provided by AVISMA in its questionnaire responses in 
order to determine whether there is an absence of either de jure or de 
facto governmental control.

1. Absence of De Jure Control

    An individual company may be considered for a separate rate if it 
meets the following de jure criteria: (1) an absence of restrictive 
stipulations associated with an individual exporter's business and 
export licenses; (2) any legislative enactments decentralizing control 
of companies; (3) any other formal measures by the government 
decentralizing control of companies. AVISMA has placed on the 
administrative record a number of documents demonstrating absence of de 
jure control. These documents include laws, regulations, and provisions 
enacted by the government of Russia, describing the deregulation of 
Russian enterprises as well as the deregulation of the Russian export 
trade. Specifically, these documents include the President of the 
Russian Federation's Decree Number 721, that states ``a joint stock 
company from the moment of its registration is out of the control of 
Ministries, State and Local administrative organs and authorities.'' In 
addition, AVISMA has placed on the record Article 49 of the Russian 
Federation's Civil Code, which states ``Commercial organizations * * * 
can have civil rights and civil obligation necessary for any kind of 
activities, not prohibited by the regulation.'' ``Commercial 
organization'' is defined to be an organization, whose activities are 
aimed at gaining profit (Russian Federation Civil Code Article 50). See 
AVISMA's questionnaire response dated November 26, 1997. Furthermore, 
AVISMA claims that there are no licenses issued by any government 
agency to AVISMA with regard to any aspect of AVISMA's production or 
sales activity. Based on this information, we have concluded that there 
was a de jure absence of governmental control over AVISMA.

2. Absence of De Facto Control

    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto government control of 
its export functions: (1) whether the export prices are set by or 
subject to the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) it 
retains the proceeds of its export sales and makes independent 
decisions regarding disposition of profits or financing of losses.
    In its questionnaire responses, AVISMA asserted the following: (1) 
it establishes its own export price; (2) it negotiates contracts 
without guidance from any governmental entities or organizations; (3) 
it selects its own management; and (4) it retains the proceeds of its 
export sales, uses profits according to its business needs, and has no 
restrictions on the use of its retained foreign currency earnings. In 
support of its claim that it is free of de facto government control, 
AVISMA provided sample documents to one of its direct sales to the 
United States. These documents include the sales contract, currency 
control passport, commercial invoice, quality control shipping 
document, and customs declaration. In addition, AVISMA provided its 
audited financial statements from the two most recent fiscal years 
(1995 and 1996) as well as the income statements for the first and 
second quarters of 1997. This information supports a finding that, 
during the POR, there was a de facto absence of governmental control of 
export functions. Therefore, we have concluded that AVISMA is entitled 
to a separate rate.

The Russia-Wide Rate

    In past reviews of this finding, the Department has examined 
several export companies not included in the instant review. One of 
these exporters, Cometals Inc., had shipments that were reviewed and 
received a positive margin. See Titanium Sponge From the Russian 
Federation; Notice of Final Results of Antidumping Duty Administrative 
Review, 62 FR 48601 (September 16, 1997) (Titanium Sponge 1996). 
Therefore, we conclude that not all exporters of titanium sponge from 
Russia are included in the instant review. Accordingly, we are applying 
a single antidumping deposit rate--the Russia-wide rate--to all 
manufacturers/exporters of titanium sponge from the Russian Federation 
that have not received a company-specific rate in the current or prior 
administrative reviews.

Intent To Revoke

    On August 26, 1997, Interlink submitted a request, in accordance 
with Section 351.222(b), that the Department revoke the finding 
covering titanium sponge from the Russian Federation with respect to 
its sales of this merchandise. In accordance with Section 
351.222(b)(iii), Interlink submitted on December 10, 1997, a 
certification that it had not sold the subject merchandise at less than 
normal value for a three-year period, including this review period, and 
would not do so in the future.
    We preliminarily determine that Interlink sold titanium sponge from 
Russia at not less than normal value during this review period. Based 
on Interlink's three consecutive years of zero margins and the absence 
of evidence to the contrary, we preliminarily determine that it is not 
likely that Interlink will in the future sell titanium sponge at less 
than normal value. Therefore, if these preliminary findings are 
affirmed in our final results, we intend to revoke the order on 
titanium sponge from Russia with respect to Interlink.
    In the last two administrative reviews, we determined that 
Interlink did not sell titanium sponge at less than fair value. See 
Titanium Sponge 1996 and Titanium Sponge From the Russian Federation; 
Notice of Final Results of Antidumping Duty Administrative Review, 61 
FR 58525 (November 15, 1996). Additionally, as discussed below, we have 
preliminarily determined that Interlink has not sold titanium sponge at 
less than fair value during the period covered by this review. 
Consequently, we preliminarily determine that because Interlink has 
three consecutive years of zero or de minimis margins on titanium 
sponge, Interlink is eligible for revocation of the finding on titanium 
sponge from Russia under Section 351.222(b).

United States Price

AVISMA

    We calculated U.S. price (USP) for AVISMA's sales to unaffiliated 
purchasers in the United States based on export price (EP), as defined 
in section 772(a) of the Act. For the date of sale, we used the sales 
invoice date.

[[Page 47476]]

We made deductions, where appropriate, for inland freight, brokerage 
and handling, international freight, marine insurance, and Russian 
export charges. AVISMA did not claim any other adjustments to USP, nor 
were any other adjustments allowed.

Interlink and TMC

    For purposes of this review, we assigned a separate rate for 
Interlink and TMC (which are located in market-economy countries) 
because AVISMA, at the time of sale to these entities, did not have 
knowledge of the ultimate destination of the merchandise. We calculated 
USP for TMC based on EP. Interlink reported that its U.S. sales were EP 
sales that were made to unaffiliated U.S. customers prior to 
importation and customarily did not enter into the inventory of 
Interlink Metals & Chemicals S.A.'s U.S. affiliate. When U.S. sales are 
made in this manner, our practice is to examine several criteria in 
order to determine whether the sales are EP sales. Those criteria are: 
(1) Whether the merchandise was shipped directly from the manufacturer 
to the unaffiliated U.S. customer; (2) whether this was the customary 
commercial channel between the parties involved; and (3) whether the 
function of the U.S. selling agent was limited to that of a ``processor 
of sales-related documentation'' and a ``communications link'' with the 
unaffiliated U.S. buyer. Where all three criteria are met, indicating 
that the activities of the U.S. selling agent are ancillary to the 
sale, the Department has regarded the routine selling functions of the 
exporter as merely having been relocated geographically from the 
country of exportation to the United States where the sales agent 
performs them, and has determined the sales to be EP sales. Where one 
or more of these conditions is not met, indicating that the U.S. sales 
agent is substantially involved in the U.S. sales process, the 
Department has classified the sales in question as constructed export 
price (CEP) sales. See, e.g., Certain Cold-Rolled and Corrosion-
Resistant Carbon Steel Flat Products From Korea: Final Results of 
Antidumping Duty Administrative Reviews, 63 FR 13,170 (March 18, 1998) 
and Viscose Rayon Staple Fiber from Finland: Final Results of 
Antidumping Duty Administrative Review, 63 FR 32,820 (June 16, 1998). 
The record shows that during the POR Interlink Metals, Inc., 
Interlink's U.S. operation, was responsible for the sale of titanium 
sponge to customers and that sales activities were generally performed 
in the United States. Thus, we have preliminarily determined that 
Interlink Metals, Inc. acted as more than a ``processor of sales-
related documentation'' and a ``communications link'' with the 
unaffiliated U.S. buyer. Therefore, we based USP on CEP, as defined in 
section 772(b) of the Act. For date of sale, we used the sales invoice 
date for both TMC and Interlink. We excluded those sales made to the 
United States which the respondents identified as having entered the 
United States under temporary importation bond (TIB). We are currently 
confirming the information provided by respondents regarding TIB 
entries through Customs and National Census Bureau data.
    In calculating USP for TMC and Interlink, we made deductions, where 
appropriate, for ocean freight, warehouse expenses, insurance, 
brokerage and handling, inland freight, and U.S. duty and terminal 
handling charges. Additionally, in accordance with section 772 (d) of 
the Act and the Department's practice in non-market economy (NME) cases 
involving CEP sales, in calculating USP for Interlink we made 
deductions for U.S. credit and indirect selling expenses and the profit 
allocated to these U.S. expenses (see Notice of Final Determination of 
Sales at Less Than Fair Value: Bicycles From the People's Republic of 
China 61 FR 19026 (April 30, 1996)). TMC and Interlink did not claim 
any other adjustments to USP, nor were any other adjustments allowed.

Surrogate Country Selection

    Section 773(c)(1) of the Act provides that the Department shall 
determine normal value on the basis of the value of the factors of 
production if (1) the subject merchandise is exported from a NME 
country, and (2) the available information does not permit the 
calculation of normal value under section 773(a) of the Act. In 
previous proceedings, the Department has considered Russia to be a NME 
country. See Final Determination of Sales at Less Than Fair Value: Pure 
Magnesium and Alloy Magnesium from the Russian Federation (Magnesium 
From Russia), 60 FR 16440 (March 30, 1995); and Final Determination of 
Sales at Less Than Fair Value: Ferrovanadium and Nitrided Vanadium from 
the Russian Federation, 60 FR 27957 (May 26, 1995). Section 771(18)(C) 
of the Act states that ``any determination that a foreign country is a 
nonmarket economy country shall remain in effect until revoked by the 
administering authority.'' Because NME status has not been revoked in 
any previous proceeding for Russia, we are considering Russia to be a 
NME country for purposes of this review. Therefore, because AVISMA is 
located in Russia, we have applied surrogate values to the factors of 
production to determine normal value.
    We calculated normal value based on factors of production provided 
by AVISMA, in accordance with Section 773(c)(1) of the Act and section 
351.408 of the Department's regulations. We determined that Venezuela 
is comparable to Russia in terms of per capita gross national product 
(GNP), the growth rate in per capita GNP, and the national distribution 
of labor. In addition, Venezuela is a significant producer of 
comparable merchandise. See Memorandum to the File, Titanium Sponge 
from the Russian Federation; Surrogate Country Selection, dated July 2, 
1997. Therefore, in accordance with section 773(c)(4) of the Act, we 
selected Venezuela as a comparable surrogate on the basis of the above 
criteria and have used publicly available information relating to 
Venezuela to value the various factors of production, except as 
indicated below. See Memorandum from Jeff May, Acting Director, Office 
of Policy, to Holly A. Kuga, Senior Director, Office of AD/CVD 
Enforcement, October 20, 1997, and Memorandum from Jeff May, Acting 
Director, Office of Policy, to Holly A. Kuga, Senior Director, Office 
of AD/CVD Enforcement, January 27, 1998.

Normal Value

    To determine normal value, in accordance with section 773(c)(3) of 
the Act, we valued the factors of production as follows (for further 
discussion, see the Analysis Memorandum for the Preliminary Results of 
Administrative Review, dated August 31, 1998):
     Except as noted below, we valued raw materials and by-
products using the Venezuelan import data obtained by Interlink from 
the Commodity Trade Statistics Section, United Nations Statistics 
Division, (UN import statistics) for the calendar year 1996. We 
adjusted certain factor values to reflect the actual purity used in the 
production of the subject merchandise. We valued chlorine using the 
average of the calendar 1996 and 1997 price quotes that respondents 
obtained from a Venezuelan chlorine producer. We were unable to find 
publicly available information from Venezuela or from any of the other 
potential surrogate countries in order to value ilmenite, rutile 
concentrate and carnallite concentrate. For ilmenite, we used the 1995 
Brazilian price that was reported in the 1995-1996 administrative 
review of this finding. We valued rutile concentrate using the 1997 
Australian

[[Page 47477]]

price provided by Interlink. For carnallite concentrate, we used the 
Indian price for dolomite, a commodity similar to carnallite 
concentrate, that was reported in the antidumping duty investigation of 
magnesium from Russia (see Notice of Final Determination of Sales at 
Less Than Fair Value: Pure Magnesium and Alloy Magnesium From the 
Russian Federation 60 FR 16440, 16449 (March 30, 1995)) (Magnesium From 
Russia) and used to value carnallite concentrate in the 1995-1996 
administrative review of this finding. Since we obtained values for 
ilmenite and carnallite concentrate that are in U.S. dollars, we did 
not adjust for the effects of inflation.
     Pursuant to Section 351.408(c)(3), we valued direct labor 
by using the regression-based wage rate for Russia as posted on the 
Import Administration Internet website.
     For electricity, we used the simple average of the 1996 
and 1997 electricity rates for industrial users in Guayana, Venezuela, 
as reported by the Venezuelan Chamber of the Electric Industry. To 
value natural gas, we used the 1996 price of gas in Venezuela as 
reported by the International Energy Agency's (IEA's) publication 
Energy Prices and Taxes, 4th Quarter 1997. Since this price was 
reported in U.S. dollars per tonne of oil equivalent, we converted the 
IEA price into a U.S. dollar per metric ton measure. AVISMA reported 
its consumption of natural gas in tons of reference fuel. Using the 
conversion rate in the calculation memorandum in Magnesium From Russia, 
we converted AVISMA's natural gas consumption into a metric ton 
measure.
     To value railcar freight in Russia, we used the Venezuelan 
rates obtained by the petitioner from the national Venezuelan railway 
authority. This rate is on a per kilometer, per ton basis. We were 
unable to find truck rates from Venezuela or from any of the other 
potential surrogate countries. Therefore, we used the Brazilian 
trucking rates, provided by Interlink, that were used in the 1995-1996 
administrative review of this finding.
     For packing materials, we used the 1996 UN import 
statistics from Venezuela provided by Interlink. We valued labor used 
in packing with the above-referenced regression-based labor rate for 
Russia.
     We valued selling, general and administrative expenses and 
profit using the 1997 income statement for CVG Industria Venezolana De 
Aluminio C.A., a major aluminum producer in Venezuela.
     We were unable to find information on factory overhead for 
an appropriate company or industry from Venezuela or from any other 
potential surrogate country. Therefore, as in the 1995-1996 
administrative review of this finding, we valued factory overhead using 
cost data reported in the public record of the antidumping 
administrative review of silicon metal from Brazil. In the instant 
review, we relied on public cost data in the 1996-1997 antidumping 
administrative review of silicon metal from Brazil.
     We included in normal value, where appropriate, movement 
expenses incurred in bringing the subject merchandise from the Russian 
plant to the resellers' warehouses. We valued railcar freight in Russia 
using the Venezuelan rates obtained by the petitioner from the national 
Venezuelan railway authority. We valued railcar freight and brokerage 
in Finland using the prices AVISMA reported in the public version of 
the section C response that it submitted in the instant review. We 
valued the Russian customs fee, paid by AVISMA on its exports of 
subject merchandise, using the Venezuelan exportation fee as reported 
by the Department's commercial service personnel in Caracas, Venezuela.

Currency Conversion

    We made currency conversions in accordance with section 773A(a) of 
the Act, based on rates certified by the Federal Reserve Bank and Dow 
Jones Business Information Services.

Preliminary Results

    As a result of this review, we preliminarily determine that the 
following weighted-average dumping margins exist:

------------------------------------------------------------------------
                                                                Margin
          Manufacturer/exporter                 Period        (percent)
------------------------------------------------------------------------
Interlink Metals & Chemicals, S.A.......     8/1/96-7/31/97         0.00
TMC Trading International, Ltd..........     8/1/96-7/31/97         0.00
AVISMA Titanium-Magnesium Works.........     8/1/96-7/31/97         0.00
Russia-wide rate........................     8/1/96-7/31/97        83.96
------------------------------------------------------------------------

    Parties to this proceeding may request disclosure of our 
preliminary results within five days of publication of this notice and 
any interested party may request a hearing within 30 days of 
publication. Any hearing, if requested, will be held 44 days after the 
date of publication, or the first working day thereafter. Interested 
parties may submit case briefs and/or written comments no later than 30 
days after the date of publication. Rebuttal briefs and rebuttals to 
written comments, limited to issues raised in such briefs or comments, 
may be filed no later than 35 days after the date of publication. The 
Department will publish a notice of the final results of the 
administrative review, which will include the results of its analysis 
of issues raised in any such written comments or at the hearing, within 
120 days from the publication of the preliminary results.
    The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
the determination. The Department shall determine, and Customs shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between export price and normal value may vary from the 
percentages stated above. The Department will issue appraisement 
instructions directly to Customs.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) 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 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)). This notice is 
published in accordance with section 777(i) of the Act.

    Dated: August 31, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-24070 Filed 9-4-98; 8:45 am]
BILLING CODE 3510-DS-P