[Federal Register Volume 64, Number 173 (Wednesday, September 8, 1999)]
[Notices]
[Pages 48793-48796]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23328]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-834-803]


Titanium Sponge From the Republic of Kazakhstan; Notice of 
Preliminary Results of Antidumping Duty Administrative Review

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 a request from Titanium Metals Corporation, the 
Department of Commerce (the Department) is conducting an administrative 
review of the antidumping finding on titanium sponge from the Republic 
of Kazakhstan (Kazakhstan). This notice of preliminary results covers 
the period August 1, 1997 through July 31, 1998. This review covers one 
manufacturer/exporter and one trading company.
    We preliminarily determine that no sales were made below normal 
value during this review period. If this preliminary result is adopted 
in our final results of administrative review, we will instruct the 
U.S. Customs Service to liquidate entries during the period of review 
(POR) without regard to dumping duties. Interested parties are invited 
to comment on this preliminary result. 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, 1999.

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

Applicable Statute

    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, as amended (the 
Act) by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to 19 CFR Part 351 (1998).

Background

    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 28, 1998, Titanium Metals Company (Timet) requested that 
the Department conduct an administrative review of the antidumping 
finding on titanium sponge from Kazakhstan for one manufacturer/
exporter, Ust-Kamenorgorsk Titanium and Magnesium Plant (UKTMP), and 
one trading company, Specialty Metals Corporation (SMC), covering the 
period August 1, 1997 through July 31, 1998. The Department published a 
notice of initiation of the review on September 29, 1998 (63 FR 51893). 
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 on May 10, 1999 (64 FR 25024). 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 Kazakhstan, the 
Russian Federation (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 
finding covering titanium sponge imports from Kazakhstan. This 
revocation is effective as of August 13, 1998, the date of publication 
in the Federal Register of the ITC's determinations. 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 Review

    The product covered by this administrative review is titanium 
sponge from Kazakhstan. 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)

[[Page 48794]]

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 Determination

    To establish whether a company operating in a nonmarket economy 
(NME) is sufficiently independent to be entitled to a separate rate, 
the Department analyzes each exporting entity under the test 
established in the Final Determination of Sales at Less Than Fair 
Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 
6, 1991) (Sparklers), as amplified by 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) (Silicon Carbide). Under this policy, 
exporters in NMEs are entitled to separate, company-specific margins 
when they can demonstrate an absence of government control, both in law 
and in fact, with respect to export activities. Evidence supporting, 
though not requiring, a finding of de jure absence of government 
control over export activities includes: (1) An absence of restrictive 
stipulations associated with the individual exporter's business and 
export licenses; (2) any legislative enactments decentralizing control 
of companies; and, (3) any other formal measures by the government 
decentralizing control of companies. De facto absence of government 
control over exports is based on four factors: (1) Whether each 
exporter sets its own export prices independently of the government and 
without the approval of a government authority; (2) whether each 
exporter retains the proceeds from its sales and makes independent 
decisions regarding the disposition of profits or financing of losses; 
(3) whether each exporter has the authority to negotiate and sign 
contracts and other agreements; and, (4) whether each exporter has 
autonomy from the government regarding the selection of management. See 
Silicon Carbide, 59 FR at 22587 and Sparklers, 56 FR at 20589.
    In the final results of the 1996-1997 review of titanium sponge 
from Kazakhstan, the Department granted a separate rate to UKTMP and 
SMC. See Titanium Sponge From the Republic of Kazakhstan: Final Results 
of Antidumping Duty Administrative Review (64 FR 1598, January 11, 
1999). While UKTMP and SMC received a separate rate in the previous 
segment of this proceeding, it is the Department's policy that separate 
rates questionnaire responses must be evaluated each time a respondent 
makes a separate rate claim, regardless of any separate rate the 
respondent received in the past. See Manganese Metal from the People's 
Republic of China, Final Results and Partial Recission of Antidumping 
Duty Administrative Review, 63 Fed. Reg. 12441 (March 13, 1998). In the 
instant review, UKTMP and SMC submitted a complete response to the 
separate rates section of the Department's questionnaire. The evidence 
submitted in this review by UKTMP and SMC, which is consistent with the 
Department's findings in the previous review, is sufficient to 
demonstrate independence from the government entity. We therefore 
preliminarily determine that UKTMP and SMC continue to be entitled to a 
separate rate.

Export Price

    In accordance with section 772(a) of the Act, the Department 
calculated an export price (EP) on sales to the United States, because 
use of constructed export price was not warranted. For date of sale, we 
used the sales invoice date because this is the date when the price and 
quantity are set. We excluded those sales made to the United States 
which the respondents identified as having entered the United States 
under temporary importation bond (TIB). At this time, because 
merchandise entered under a TIB is not entered for consumption, such 
merchandise is not subject to the antidumping finding. See Titanium 
Metals Corp. v. United States, 901 F. Supp 362 (CIT 1995).
    We calculated export price based on the price to unaffiliated 
purchasers in the United States. We made deductions, where appropriate, 
for foreign inland freight, insurance, ocean freight, and brokerage and 
handling. SMC did not claim any other adjustments to EP, nor were any 
other adjustments allowed.

Surrogate Country Selection

    For companies located in NME countries, section 773(c)(1) of the 
Act provides that the Department shall determine normal value (NV) 
using a factors of production methodology if (1) the subject 
merchandise is exported from an NME country, and (2) available 
information does not permit the calculation of NV using home-market 
prices, third-country prices, or constructed value, in accordance with 
Section 773(a) of the Act. Section 351.408 of the Department's 
regulations sets forth the Department's methodology for calculating the 
NV of merchandise from NME countries.
    The Department has treated Kazakhstan as an NME country in every 
past case involving this country. Since none of the parties to these 
proceedings contested such treatment in this review, we calculated NV 
for the instant review in accordance with section 773(c) of the Act and 
section 351.408 of the Department's regulations.
    In accordance with section 773(c)(3) of the Act, the factors of 
production (FOP) utilized in producing titanium sponge include, but are 
not limited to--(A) hours of labor required, (B) quantities of raw 
materials employed, (C) amounts of energy and other utilities consumed, 
and (D) representative capital cost, including depreciation. In 
accordance with section 773(c)(4) of the Act, the Department valued the 
FOP, to the extent possible, using the cost of the FOP in a market 
economy that is--(A) at a level of economic development comparable to 
Kazakhstan, and (B) a significant producer of comparable merchandise. 
We determined that Egypt is comparable to Kazakhstan in terms of per 
capita gross national product, the growth rate in per capita income, 
and the national distribution of labor. Furthermore, Egypt is a 
significant producer of aluminum, a product comparable to titanium 
sponge. For a further discussion of the Department's selection of Egypt 
as the surrogate country, see Memorandum to the File, ``1997-1998 
Administrative Review of the Antidumping Finding on Titanium Sponge 
from Kazakhstan; Selection of a Surrogate Country,'' dated June 24, 
1999, which is on file in the Central Records Unit, Room B099 of the 
Main Commerce building (CRU--Public File).

Normal Value

    In accordance with section 773(c)(1) of the Act, for purposes of 
calculating normal value (NV), we valued Kazakhstan's FOP based on data 
for the POR. Surrogate values that were in effect during periods other 
than the POR were inflated or deflated, as appropriate, to account for 
price changes between the effective period and the POR. We calculated 
the inflation or deflation adjustments for all factor values, except 
labor, using the wholesale price indices for Egypt and Indonesia, where 
appropriate, that were reported in the IMF's publication, International 
Financial Statistics. We valued Kazakhstan's FOP as follows (for 
further discussion of our preliminary analysis, see Analysis Memorandum 
for the Preliminary Results of Administrative Review, dated August 31, 
1999, which is on file in the CRU--Public File.):
     Except as noted below, we valued raw materials using 
Egyptian import data from the Commodity Trade Statistics Section, 
United Nations Statistics Division, (UN import statistics) for the 
calendar year 1997. We

[[Page 48795]]

adjusted certain factor values to reflect the actual purity used in the 
production of the subject merchandise. Since UKTMP purchased titanium 
slag from both market and non-market economy suppliers, consistent with 
the Department's practice, we valued this input using the market 
economy price, regardless of the supplier. The most recent Egyptian 
import statistics that we were able to find for pitch coke and chlorine 
were Egypt's 1994 and 1996 UN import statistics, respectively. Since 
the UN statistics are reported in U.S. dollars, we did not adjust these 
values for the effects of inflation. We were unable to find information 
from Egypt in order to value carnallite and spent electrolyte. For 
carnallite, we used the 1995 Egyptian UN import statistics for 
dolomite, a commodity similar to carnallite, as the surrogate value. In 
order to value spent electrolyte, we used the surrogate value for 
potassium chloride because spent electrolyte is 75 percent potassium 
chloride. The surrogate value for potassium chloride was obtained from 
Egypt's 1997 UN import statistics.
     Pursuant to section 351.408(c)(3) of the Department's 
regulations, we valued labor by using the regression-based wage rate 
for Kazakhstan as posted on the Import Administration Internet web 
site.
     Although the respondents placed on the record an Egyptian 
electricity rate for large industrial consumers, they did not provide 
any source documentation to substantiate this rate. Therefore, we 
valued electricity in the instant review with the Indonesian surrogate 
value for electricity used in the 1996-1997 administrative review of 
this finding. In that review, we used the ``extra large industry user'' 
rate from Indonesia's electricity tariff schedule that UKTMP would have 
received had it been an electricity consumer in Indonesia during the 
POR. Since this rate is from 1994, and is expressed in Indonesian 
rupiahs, we adjusted this rate in order to account for the effects of 
inflation.
     We were unable to obtain a surrogate value from Egypt for 
steam. Since steam was not valued as a factor of production in the 
1996-1997 administrative review of this finding, we have used the 
surrogate for electricity, as discussed above, to value this energy 
input.
     UKTMP states that it incurred handling and reloading 
charges for merchandise transited through the port in St. Petersburg, 
Russia. We were unable to find a surrogate value from Egypt for 
handling and reloading charges. Since these expenses were incurred in 
Russia, we valued them, consistent with the 1996-1997 review of 
titanium sponge from Kazakhstan, with the surrogate value used in the 
1996-1997 administrative review of the antidumping finding on titanium 
sponge from the Russian Federation (titanium sponge from Russia). In 
that review, we determined that Venezuela was an appropriate surrogate 
country for Russia. However, since we were unable to locate a 
Venezuelan surrogate value for handling charges, we valued these 
charges with the surrogate value from the 1995-1996 administrative 
review of titanium sponge from Russia. In the 1995-1996 review, we 
valued these charges using the brokerage and handling charges reported 
in the public record of the antidumping administrative review of 
silicon metal from Brazil. Therefore, in the instant review, we valued 
the handling and reloading charges incurred by UKTMP in Russia with the 
weighted-average brokerage and handling expenses reported in the public 
record of the 1997-1998 administrative review of the antidumping duty 
order on silicon metal from Brazil.
     We valued truck and rail transportation in Kazakhstan 
using Egyptian truck and rail surrogate values obtained by the 
respondents. With respect to truck transportation, the respondents 
provided a schedule of trucking fees covering transport of cargo 
between various cities throughout Egypt. We used the price per 
kilometer per metric ton rate from the Ramadan City-to-Cairo fee 
because the distance between these two cities most closely matches the 
distance cargo traveled by truck in Kazakhstan. In regard to rail 
transportation, the respondents provided a schedule of rail fees 
covering transport of cargo between various cities throughout Egypt. We 
used the price per kilometer per metric ton rate from the city-to-city 
fees that most closely matched the distances cargo traveled by rail in 
Kazakhstan.
     UKTMP shipped its sales of titanium sponge to the United 
States via rail through Russia. We valued this transportation with the 
surrogate value for rail transportation used in the 1996-1997 
administrative review of titanium sponge from Russia, which is the most 
recently completed review of that finding. In that review, we valued 
transportation via the Russian rail lines using the Venezuelan 
Bolivares price per metric ton per kilometer quoted by the national 
Venezuelan railroad system administrator. Since the correspondence 
containing the price quote was issued during the instant review's POR, 
we did not adjust this rate to account for the effects of price 
changes.
     In regard to packing materials, we used the 1997 UN import 
statistics from Egypt that were provided by the respondent for 
polyethylene film, argon, and sheet steel. Since the UN data is 
reported in U.S. dollars, we did not adjust for the effects of 
inflation. We valued labor used in packing with the above-referenced 
regression-based labor rate for Kazakhstan.
     The respondents placed on the record the financial 
statements from three Egyptian aluminum companies. One of the three 
companies is a primary aluminum producer while the other two are 
aluminum products producers. Since primary aluminum producers use a 
production process that is closer to the process used to produce 
titanium sponge than producers of aluminum products, we normally prefer 
to use the financial statements from primary aluminum producers in our 
calculation of factory overhead, selling, general and administrative 
(SG&A) expense, and profit. However, the financial statements from the 
Egyptian primary aluminum producer did not contain enough detail to be 
used in our calculations. Similarly, the financial statements from one 
of the two aluminum products producers lacked sufficient detail to be 
used in our calculations. Therefore, we calculated the ratios used in 
our valuation of overhead, SG&A, and profit with the 1998 financial 
statements from Arab Aluminum Co., an Egyptian producer of aluminum 
products.

Currency Conversion

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

Preliminary Results of the Review

    SMC owns 65 percent of UKTMP and manages the operations of UKTMP 
under a long-term management contract. Due to SMC's equity ownership in 
UKTMP, we considered SMC and UKTMP to be affiliated for the purpose of 
the antidumping statute and regulations. During the POR, UKTMP sold 
titanium sponge to SMC who then resold the merchandise to unaffiliated 
purchasers in the United States. Because this was the only channel of 
distribution for sales to the United States, we calculated one rate 
that will apply to both SMC and UKTMP. As a result of our review, we 
preliminarily determine that the following margin exists for the period 
August 1, 1997 through July 31, 1998:

[[Page 48796]]



------------------------------------------------------------------------
                                                               Margin
         Manufacturer/Exporter                Period          (percent)
------------------------------------------------------------------------
Specialty Metals Company/Ust-              8/1/97-7/31/98         00.00
 Kamenogorsk Titanium and Magnesium
 Plant
------------------------------------------------------------------------

    Within 5 days of the date of publication of this notice, in 
accordance with 19 CFR 351.224, the Department will disclose its 
calculations. Any interested party may request a hearing within 30 days 
of publication of this notice in accordance with 19 CFR 351.310(c). Any 
hearing, if requested, will be held 37 days after the publication of 
this notice, or the first workday thereafter. Interested parties may 
submit written comments (case briefs) within 30 days of the date of 
publication of this notice in accordance with 19 CFR 351.309(c)(2). 
Rebuttal comments (rebuttal briefs), which must be limited to issues 
raised in the case briefs, may be filed not later than 35 days after 
the date of publication. The Department will publish a notice of the 
final results of this administrative review, which will include the 
results of its analysis of issues raised by the parties, within 120 
days of publication of this preliminary result.
    The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
this review.

Duty Assessment Rates

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Pursuant to 19 
CFR 351.212(b)(1), we have calculated an importer-specific ad valorem 
duty assessment rate based on the ratio of the total amount of the 
dumping margins calculated for the examined sales to the total entered 
value of those same sales. In order to estimate the entered value, we 
subtracted international movement expenses from the gross sales value. 
This rate will be assessed uniformly on all entries of that specific 
importer made during the POR. In accordance with 19 CFR 351.106 (c)(2), 
we will instruct the Customs Service to liquidate without regard to 
antidumping duties any entries for which the assessment rate is de 
minimis, i.e., less than 0.5 percent. The Department will issue 
appraisement instructions directly to the Customs Service.

Cash Deposit Requirements

    Pursuant to the ITC's determination that revocation of the finding 
covering titanium sponge imports from Kazakhstan is not likely to lead 
to continuation or recurrence of material injury to an industry in the 
United States, the Department revoked this finding on August 31, 1998, 
with an effective date of August 13, 1998. Since the revocation is 
currently in effect, current and future imports of titanium sponge from 
Kazakhstan shall be entered into the United States without regard to 
antidumping duties. Therefore, we will instruct Customs not to suspend 
future entries and to liquidate all future entries of this product, 
from Kazakhstan, without regard to antidumping duties.

Notification of Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 351.402(f) of the Department's regulations 
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 is in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) and 
1677f(i)(1) ).

    Dated: August 31, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-23328 Filed 9-7-99; 8:45 am]
BILLING CODE 3510-DS-P