[Federal Register Volume 64, Number 160 (Thursday, August 19, 1999)]
[Notices]
[Pages 45236-45239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21569]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-821-811]
Initiation of Antidumping Duty Investigation: Solid Fertilizer
Grade Ammonium Nitrate From the Russian Federation
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: August 19, 1999.
FOR FURTHER INFORMATION CONTACT: Rick Johnson at (202) 482-3818, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230.
INITIATION OF INVESTIGATION:
The 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
otherwise indicated, all citations to the Department's regulations are
references to the provisions codified at 19 CFR Part 351 (1998).
The Petition
On July 23, 1999, the Department of Commerce (``the Department'')
received a petition filed in proper form by the Committee for Fair
Ammonium Nitrate Trade (``COFANT'' or ``petitioner''), whose members
are domestic producers of solid fertilizer grade ammonium nitrate. The
Department received supplemental information to the petition on August
6, 1999.
In accordance with section 732(b) of the Act, petitioner alleges
that imports of fertilizer grade ammonium nitrate from the Russian
Federation (``Russia'') are being, or are likely to be, sold in the
United States at less than fair value within the meaning of section 731
of the Act, and that such imports are materially injuring an industry
in the United States.
The Department finds that petitioner filed the petition on behalf
of the domestic industry because it is an interested party as defined
in sections 771(9)(C) and (F) of the Act and has demonstrated
sufficient industry support with respect to the investigation it is
requesting the Department to initiate (see Determination of Industry
Support for the Petition below).
Scope of Investigation
For purposes of this investigation, the products covered are solid,
fertilizer grade ammonium nitrate products, whether prilled, granular
or in other solid form, with or without additives or coating, and with
a bulk density equal to or greater than 53 pounds per cubic foot.
Specifically excluded from this scope is solid ammonium nitrate with a
bulk density less than 53 pounds per cubic foot (commonly referred to
as industrial or explosive grade ammonium nitrate).
The merchandise subject to this investigation is classified in the
Harmonized Tariff Schedule of the United States (``HTSUS'') at
subheading 3102.30.00.00. Although the HTSUS subheadings are provided
for convenience and Customs purposes, the written description of the
merchandise under investigation is dispositive.
During our review of the petition, we discussed the scope with
petitioner to ensure that the scope in the petition accurately reflects
the product for which the domestic industry is seeking relief.
Moreover, as we discussed in the preamble to the Department's
regulations (62 FR 27323), we are setting aside a period for parties to
raise issues regarding product coverage. In particular, we seek
comments on the
[[Page 45237]]
specific densities of fertilizer grade ammonium nitrate set out in the
description above. The Department encourages all parties to submit such
comments by August 23, 1999. Comments should be addressed to Import
Administration's Central Records Unit at Room 1870, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington, D.C.
20230. The period of scope consultations is intended to provide the
Department with ample opportunity to consider all comments and consult
with parties prior to the issuance of the preliminary determination.
Determination of Industry Support for the Petitions
Section 732(b)(1) of the Act requires that a petition be filed on
behalf of the domestic industry. Section 732(c)(4)(A) of the Act
provides that 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.
Section 771(4)(A) of the Act defines the ``industry'' as the
producers of a domestic like product. Thus, to determine whether the
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
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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 Therefore from Japan: Final Determination;
Rescission of Investigation and Partial Dismissal of Petition, 56 FR
32376, 32380-81 (July 16, 1991).
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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 title.'' 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. Moreover, petitioner does not offer a definition of domestic
like product distinct from the scope of the investigation.
The domestic like product referred to in the petition is the single
domestic like product defined in the ``Scope of the Investigation''
section, above. The Department has no basis on the record to find the
petitioner's definition of domestic like product to be inaccurate. We
found that petitioner submitted sufficient reasonably available
information that there is a clear dividing line between fertilizer and
explosive grade ammonium nitrate based on their physical
characteristics and uses. The Department has, therefore, adopted the
domestic like product definition set forth in the petition.
The Department has determined that the petition contains accurate
and adequate evidence of industry support because petitioner
established industry support representing 74 percent of total
production of the domestic like product (see Attachment to the
Initiation Checklist, Re: Industry Support, August 12, 1999).
Accordingly, the Department determines that this petition is filed
on behalf of the domestic industry within the meaning of section
732(b)(1) of the Act.
Export Price and Normal Value
Petitioner identified (1) JSC Angarsk Petrochemical Co., (2) JSC
Berezniki Azot, (3) JCS Cherepovets PO Azot, (4) JSC Dorogobuzh, (5)
JSC Kemerovo ``Azot,'' (6) JSC Kirovo-Chepetsk, (7) JSC Meleuz Prod.
Assoc. Minudobreniya, (8) JSC Nevinnomysskiy Azot, (9) JSC Acron, (10)
JSC Novomendeleyevsk Chemical Plant, (11) JSC Novomoskovsk AK ``Azot,''
(12) JSC ``Minudobreniya'', and (13) JSC ``Kuybyshevazot'' as possible
producers/exporters of solid fertilizer grade ammonium nitrate from
Russia. Petitioner further asserted that two of these producers, JSC
Acron and JSC Nevinnomysskiy Azot, have exported significant amounts of
ammonium nitrate into the United States during the last twelve months.
Petitioner based export price (``EP'') on two methods: (1) import
values declared to the U.S. Customs Service during the anticipated
period of investigation (``POI''); and (2) an actual U.S. selling price
known to petitioner based on a quote in the anticipated POI provided by
a U.S. importer on an ex-factory basis. Petitioner based its
calculation of EP on the average unit value (customs value) of ammonium
nitrate from Russia, as provided by the U.S. Bureau of the Census, for
the applicable HTSUS category (3102.30) for the period January, 1999
through May, 1999. Petitioner deducted foreign inland freight from the
customs value in order to obtain ex-factory prices. In order to
calculate foreign inland freight, petitioner used Polish rail and truck
rates because the per-capita GNP of Poland is much closer to Russia's
GNP than is U.S. GNP, and because petitioner found transport rates on a
per ton basis, based on distance traveled. Petitioner also used the
Polish transport rates because they were the only published reasonably
available to petitioner, and petitioner had no reasonable basis to know
whether Russian producers relied on truck or rail transport to move the
product from plant to port. Petitioner calculated foreign inland
freight for the two significant producers noted above. Using estimated
distances for each of these producers, petitioner calculated both a
rail freight and truck freight estimate, and calculated normal values
(``NV'') based on each of these estimates. Based on the information
provided by petitioner, we believe that the use of Polish transport
rates represents accurate and adequate information reasonably available
to petitioner and is acceptable for purposes of initiation of this
investigation.
In order to calculate actual U.S. selling prices known to
petitioner, petitioner relied on a quote offered to an unaffiliated
purchaser. Because the price was based on a ex-factory basis, no
adjustments were made for foreign inland freight.
Petitioner asserted that Russia is a non-market economy country
(``NME'') to the extent that sales or offers for sale of such or
similar merchandise in Russia or to third countries do not permit
calculation of NV under 19 CFR 351.404. Petitioner, therefore,
constructed NV based on the factors of production methodology pursuant
to section 773(c) of the Act. In previous investigations, the
Department has determined that Russia is an NME. See, e.g., Notice of
Final Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-
Rolled Carbon-Quality Steel Products from the Russian Federation, 64 FR
38626 (July 19, 1999) (``Russian HR Steel''). In accordance with
section
[[Page 45238]]
771(18)(C)(i) of the Act, a determination of NME status remains in
effect until revoked by the Department. The determination of NME status
for Russia has not been revoked by the Department and, therefore,
remains in effect for purposes of the initiation of this investigation.
Accordingly, the NV of the product appropriately is based on factors of
production valued in a surrogate market economy country in accordance
with section 773(c) of the Act. In the course of this investigation,
all parties will have the opportunity to provide relevant information
related to the issues of Russia's NME status and the granting of
separate rates to individual exporters. See, e.g., Final Determination
of Sales at Less Than Fair Value: Silicon Carbide from the PRC, 59 FR
22585 (May 2, 1994).
For the calculation of NV, petitioner based the factors of
production, as defined by section 773(c)(3) of the Act (raw materials,
labor, energy and capital cost), for ammonium nitrate on the quantities
of inputs used by a representative U.S. producer. Petitioner stated
that it was unable to furnish information on Russian factors of
production. Thus, petitioner has assumed, for purposes of the petition,
that producers in Russia use the same inputs in the same quantities as
petitioner. Because data regarding the quantities of inputs used by
Russian producers was not reasonably available to petitioner, for
purposes of this initiation we have accepted petitioner's U.S.
quantities.
Petitioner selected Poland as its primary surrogate. Petitioner
stated that the per-capita GNP of Poland differs only slightly from
that of Russia and, thus, it maintains that Poland is the most suitable
surrogate among the potential surrogates, because it is at a comparable
level of economic development and is a significant producer of
comparable merchandise (in accordance with section 773(c)(4) of the
Act). Based on the information provided by petitioner, we believe that
the petition contains adequate and accurate information supporting its
allegation for using Poland as a surrogate country for purposes of
initiation of this investigation.
In accordance with section 773(c)(4) of the Act, petitioner valued
factors of production, where possible, on reasonably available, public
surrogate country data. Labor was valued using the regression-based
wage rate for Russia provided by the Department, in accordance with 19
CFR 351.408(c)(3). Electricity and natural gas were valued using the
rate for Poland published in a quarterly report of the OECD's
International Energy Agency for the fourth quarter of 1998. Petitioner
attempted to obtain Polish import values for materials used in the
production of ammonium nitrate, but stated that it could not reasonably
obtain publicly available surrogate information from a comparable
economy. Because petitioner could not reasonably identify this
information for materials used in the production of ammonium nitrate
(chemicals, stabilizers, coating agents and catalysts), petitioner
relied on costs incurred by the U.S. producer to value the usage
requirements, which represent only a small portion of total production
costs. For overhead (exclusive of depreciation), depreciation, general
expenses, and profit, petitioner applied rates derived from the 1997
public annual report of a Polish producer of subject merchandise,
Zaklady Azotowe Kedzierzyn (``ZAK''). For purposes of initiation, we
made two minor revisions to general expenses. For a further discussion
of this revision, see Initiation Checklist, page 6, and Attachment III,
dated August 12, 1999. Based on the information provided by petitioner,
we believe that the surrogate values represent information reasonably
available to petitioner and are acceptable for purposes of initiation
of this investigation. For a more detailed discussion of home market
price, U.S. price, factors of production and sources of data, see
Initiation Checklist, dated August 12, 1999. Should the need arise to
use as facts available under section 776 of the Act any of this
information in our preliminary or final determinations, we may re-
examine the information and revise the margin calculations, if
appropriate.
Based on comparisons of EP to NV, calculated in accordance with
section 773(c) of the Act, the calculated dumping margins for ammonium
nitrate from Russia range from 112.08 to 357.09 percent.
Fair Value Comparisons
Based on the data provided by petitioner, there is reason to
believe that imports of solid fertilizer grade ammonium nitrate from
Russia are being, or are likely to be, sold at less than fair value.
Critical Circumstances
Petitioner has alleged that critical circumstances exist with
regard to imports of solid fertilizer grade ammonium nitrate from
Russia, and has supported its allegations with the following
information.
First, petitioner claims that there is a history of injurious
dumping of the subject merchandise by Russian producers. Petitioner
argues that the Department considers the existence of an antidumping
duty order covering the subject merchandise in another country as
sufficient evidence of a history of injurious dumping. Petitioner
provided a copy of a 1995 antidumping order imposed by the European
Union on imports of Russian ammonium nitrate (see Exhibit 32, Petition
dated July 23, 1999). Since this order is still in effect, petitioner
claims that there is a history of injurious dumping by Russian
producers of the subject merchandise.
Petitioner also has alleged that imports from Russia have been
massive over a relatively short period. Alleging that there was
sufficient pre-filing notice of the antidumping duty petition,
petitioner contends that the Department should compare imports during
September-December 1998 (base period) to imports during January-April
1999 (comparison period) for purposes of this determination, as
provided in 19 CFR. 351.206(h)(2)(i). Specifically, petitioner
supported this allegation with copies of news articles discussing the
likelihood of filing antidumping complaints against Russian ammonium
nitrate producers. See Petition dated July 23, 1999, Exhibit 37.
According to the import statistics contained in the petition, during
the time periods petitioner has requested for comparison, imports of
ammonium nitrate from Russia increased by 270.35 percent (based on
volume) from the period September-December 1998 to the period January-
April 1999.
In the instant case, the increase in imports was more than fifteen
times the amount considered ``massive.'' Taking into consideration the
foregoing, we find that petitioner has alleged the elements of critical
circumstances and supported them with information reasonably available
for purposes of initiating a critical circumstances inquiry. For these
reasons, we will investigate this matter further and will make a
preliminary determination at the appropriate time, in accordance with
section 735(e)(1) of the Act and Department practice (see Policy
Bulletin 98/4 (63 FR 55364, October 15, 1998)).
Allegations and Evidence of Material Injury and Causation
Petitioner alleges that the U.S. industry producing the domestic
like product is being materially injured, and is threatened with
material injury, by reason of the individual and cumulated imports of
the subject merchandise sold at less than NV. Petitioner explained that
the industry's injured condition is evident in the declining trends in
net
[[Page 45239]]
operating profits, net sales volumes, as well as domestic prices of
ammonium nitrate. The allegations of injury and causation are supported
by relevant evidence including U.S. Customs import data, lost sales,
and pricing information. The Department assessed the allegations and
supporting evidence regarding material injury and causation and
determined that these allegations are supported by accurate and
adequate evidence and meet the statutory requirements for initiation
(see Attachments to Initiation Checklist, Re: Material Injury, August
12, 1999).
Initiation of Antidumping Investigation
Based upon our examination of the petition on solid fertilizer
grade ammonium nitrate and petitioner's responses to our supplemental
questionnaire clarifying the petition, we have found that the petition
meets the requirements of section 732 of the Act. Therefore, we are
initiating an antidumping duty investigation to determine whether
imports of solid fertilizer grade ammonium nitrate from Russia are
being, or are likely to be, sold in the United States at less than fair
value. Unless this deadline is extended, we will make our preliminary
determinations no later than 140 days after the date of this
initiation.
Distribution of Copies of the Petition
In accordance with section 732(b)(3)(A) of the Act, a copy of the
public version of the petition has been provided to the representatives
of Russia. We will attempt to provide a copy of the public version of
the petition to each exporter named in the petition, as appropriate.
International Trade Commission Notification
We have notified the ITC of our initiations, as required by section
732(d) of the Act.
Preliminary Determination by the ITC
The ITC will determine, by no later than September 7, 1999, whether
there is a reasonable indication that imports of solid fertilizer grade
ammonium nitrate from Russia 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;
otherwise, this investigation will proceed according to statutory and
regulatory time limits.
This notice is published pursuant to section 777(i) of the Act.
Dated: August 12, 1999.
Bernard Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-21569 Filed 8-18-99; 8:45 am]
BILLING CODE 3510-DS-P