[Federal Register Volume 67, Number 69 (Wednesday, April 10, 2002)]
[Notices]
[Pages 17367-17374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-8701]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-823-812]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Carbon and Certain Alloy 
Steel Wire Rod From Ukraine

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

ACTION: Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination.

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SUMMARY: We preliminarily determine that carbon and certain alloy steel 
wire rod from Ukraine is being, or is likely to be, sold in the United 
States at less than fair value, as provided in section 733 of the 
Tariff Act of 1930, as amended.

DATES: April 10, 2002.

FOR FURTHER INFORMATION CONTACT: Carrie Blozy or Lori Ellison, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230; telephone: (202) 482-0165 or (202) 482-5811, 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 (``URAA''). In addition, 
unless otherwise indicated, all citations to the Department of Commerce 
(``the Department'') regulations are to the regulations at 19 CFR Part 
351 (April 2001).

Period of Investigation

    The period of investigation (``POI'') for this investigation 
corresponds to the two most recent fiscal quarters prior to the filing 
of the petition, i.e., January 1, 2001 through June 30, 2001.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on March 21, 2002, 
Krivorozhstal 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 the publication of the 
preliminary determination in the Federal Register, and extend the 
application of the provisional measures prescribed under 19 CFR 
351.210(e)(2) to not more than six months. In accordance with 19 CFR 
351.210(b), because (1) our preliminary determination is affirmative, 
(2) the requesting exporter accounts for a significant proportion of 
exports of the subject merchandise, and (3) no compelling reasons for 
denial exist, we are granting Krivorozhstal's request and are 
postponing the final determination until no later than 135 days after 
the publication of this notice in the Federal Register. Suspension of 
liquidation will be extended accordingly.

Scope of Investigation

    The merchandise covered by this investigation is certain hot-rolled 
products of carbon steel and alloy steel, in coils, of approximately 
round cross section, 5.00 mm or more, but less than 19.00 mm, in solid 
cross-sectional diameter.
    Specifically excluded are steel products possessing the above-noted 
physical characteristics and meeting the Harmonized Tariff Schedule of 
the United States (HTSUS) definitions for (a) stainless steel; (b) tool 
steel; (c) high nickel steel; (d) ball bearing steel; and (e) concrete 
reinforcing bars and rods. Also excluded are (f) free machining steel 
products (i.e., products that contain by weight one or more of the 
following elements: 0.03 percent or more of lead, 0.05 percent or more 
of bismuth, 0.08 percent or more of sulfur, more than 0.04 percent of 
phosphorus, more than 0.05 percent of selenium, or more than 0.01 
percent of tellurium).
    Also excluded from the scope are 1080 grade tire cord quality wire 
rod and 1080 grade tire bead quality wire rod. This grade 1080 tire 
cord quality rod is defined as: (i) grade 1080 tire cord quality wire 
rod measuring 5.0 mm or more but not more than 6.0 mm in cross-
sectional diameter; (ii) with an average partial decarburization of no 
more than 70 microns in depth (maximum individual 200 microns); (iii) 
having no inclusions greater than 20 microns; (iv) having a carbon 
segregation per heat average of 3.0 or better using European Method NFA 
04-114; (v) having a surface quality with no surface defects of a 
length greater than 0.15 mm; (vi) capable of being drawn to a diameter 
of 0.30 mm or less with 3 or fewer breaks per ton, and (vii) containing 
by weight the following elements in the proportions shown: (1) 0.78 
percent or more of carbon, (2) less than 0.01 percent of aluminum, (3) 
0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 
0.006 percent or less of nitrogen, and (5) not more than 0.15 percent, 
in the aggregate, of copper, nickel and chromium.
    This grade 1080 tire bead quality rod is defined as: (i) grade 1080 
tire bead quality wire rod measuring 5.5 mm or more but not more than 
7.0 mm in cross-sectional diameter; (ii) with an average partial 
decarburization of no more than 70 microns in depth (maximum individual 
200 microns); (iii) having no inclusions greater than 20 microns; (iv) 
having a carbon segregation per heat average of 3.0 or better using 
European Method NFA 04-114; (v) having a surface quality with no 
surface defects of a length greater than 0.2 mm; (vi) capable of being 
drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per 
ton; and (vii) containing by weight the following elements in the 
proportions shown: (1) 0.78 percent or more of carbon, (2) less than 
0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the 
aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of 
nitrogen, and (5) either not more than 0.15 percent, in the aggregate, 
of copper, nickel and chromium (if chromium is not specified), or not 
more than 0.10 percent in the aggregate of copper and nickel and a 
chromium content of 0.24 to 0.30 percent (if chromium is specified).
    The designation of the products as ``tire cord quality'' or ``tire 
bead quality'' indicates the acceptability of the product for use in 
the production of tire

[[Page 17368]]

cord, tire bead, or wire for use in other rubber reinforcement 
applications such as hose wire. These quality designations are presumed 
to indicate that these products are being used in tire cord, tire bead, 
and other rubber reinforcement applications, and such merchandise 
intended for the tire cord, tire bead, or other rubber reinforcement 
applications is not included in the scope. However, should petitioners 
or other interested parties provide a reasonable basis to believe or 
suspect that there exists a pattern of importation of such products for 
other than those applications, end-use certification for the 
importation of such products may be required. Under such circumstances, 
only the importers of record would normally be required to certify the 
end use of the imported merchandise.
    All products meeting the physical description of subject 
merchandise that are not specifically excluded are included in this 
scope.
    The products under investigation are currently classifiable under 
subheadings 7213.91.3010, 7213.91.3090, 7213.91.4510, 7213.91.4590, 
7213.91.6010, 7213.91.6090, 7213.99.0031, 7213.99.0038, 7213.99.0090, 
7227.20.0010, 7227.20.0020, 7227.20.0090, 7227.20.0095, 7227.90.6051, 
7227.90.6053, 7227.90.6058, and 7227.90.6059 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the scope of this proceeding is dispositive.
    See Carbon and Certain Alloy Steel Wire Rod: Requests for exclusion 
of various tire cord quality wire rod and tire bead quality wire rod 
products from the scope of antidumping duty (Brazil, Canada, Egypt, 
Germany, Indonesia, Mexico, Moldova, South Africa, Trinidad and Tobago, 
Ukraine, and Venezuela) and countervailing duty (Brazil, Canada, 
Germany, Trinidad and Tobago, and Turkey) investigations.

Case History

    On September 24, 2001, the Department initiated antidumping 
investigations of wire rod from Brazil, Canada, Egypt, Germany, 
Indonesia, Mexico, Moldova, South Africa, Trinidad and Tobago, Ukraine, 
and Venezuela. (See Notice of Initiation of Antidumping Duty 
Investigations: Carbon and Certain Alloy Steel Wire Rod From Brazil, 
Canada, Egypt, Germany, Indonesia, Mexico, Moldova, South Africa, 
Trinidad and Tobago, Ukraine, and Venezuela, 66 FR 50164-50173, 
(October 2, 2001) (``Notice of Initiation'')). The petitioners in this 
investigation are Co-Steel Raritan, Inc., GS Industries, Keystone 
Consolidated Industries, Inc., and North Star Steel Texas, Inc. 
(``Petitioners''). Since the initiation of the investigation, the 
following events have occurred.
    On October 17, 2001, the Ministry of Economy and for European 
Integration Issues of Ukraine submitted a request for, and information 
in support of, graduation to market economy status for Ukraine. On 
November 20, 2001, Krivorozhstal requested that the Department issue to 
it a Section B questionnaire. On December 21, 2001 Petitioners 
submitted comments regarding the request for market economy graduation. 
On March 1, 2002, Krivorozhstal responded to Petitioners' December 21, 
2001 submission.
    On October 15, 2001, the United States International Trade 
Commission (``USITC'') notified the Department of its affirmative 
preliminary injury determination on imports of subject merchandise from 
Brazil, Canada, Germany, Indonesia, Mexico, Moldova, Trinidad and 
Tobago, and Ukraine. On October 29, 2001, the USITC published its 
preliminary determination stating that there is a reasonable indication 
that an industry in the United States is materially injured by reason 
of imports of the subject merchandise from Brazil, Canada, Germany, 
Indonesia, Mexico, Moldova, Trinidad and Tobago, and Ukraine. See 
Carbon and Certain Alloy Steel Wire Rod From Brazil, Canada, Egypt, 
Germany, Indonesia, Mexico, Moldova, South Africa, Trinidad and Tobago, 
Turkey, Ukraine, and Venezuela. 66 FR 54539 (October 29, 2001).
    On January 17, 2002, Petitioners requested that the Department 
extend the deadline for issuance of the preliminary determination by 30 
days. On January 22, 2002, the Department postponed the preliminary 
determination in this and other concurrent wire rod investigations to 
March 13, 2002 (see Notice of Postponement of Preliminary Antidumping 
Duty Determinations: Carbon and Certain Alloy Steel Wire Rod From 
Brazil, Canada, Germany, Indonesia, Mexico, Moldova, Trinidad and 
Tobago, and Ukraine, 67 FR 3877 (January 28, 2002)). On March 4, 2002, 
Petitioners submitted a letter to the Department requesting the 
Department to extend the deadline for issuance of the preliminary 
determination by an additional 20 days. On March 7, 2002, the 
Department postponed the preliminary determination an additional 20 
days to April 2, 2002 (see Notice of Postponement of Preliminary 
Antidumping Duty Determinations: Carbon and Certain Alloy Steel Wire 
Rod From Brazil, Canada, Germany, Indonesia, Mexico, Moldova, Trinidad 
and Tobago, and Ukraine, 67 FR 11674 (March 15, 2002)).
    On October 9, 2001, Petitioners requested that the scope of the 
investigation be amended to exclude high carbon, high tensile 1080 
grade tire cord and tire bead quality wire rod actually used in the 
production of tire cord and bead, as defined by specific dimensional 
characteristics and specifications. On November 28, 2001, the five 
largest U.S. tire manufacturers and the industry trade association, the 
Rubber Manufacturers Association, submitted a letter to the Department 
in response to Petitioners' October 9, 2001, submission regarding the 
exclusion of certain 1080 grade tire cord and tire bead wire rod used 
in the production of tire cord and bead. Additionally, the tire 
manufacturers requested clarification from the Department if 1090 grade 
is included in Petitioners' October 9, 2001, scope exclusion request. 
The tire manufacturers requested an exclusion from the scope of this 
investigation for 1070 grade wire rod and related grades, citing a lack 
of domestic production capacity to meet the requirements of the tire 
industry. On November 28, 2001, Petitioners further clarified and 
modified their October 9, 2001 amendment of the scope of the petition. 
Finally, on January 21, 2002, Tokusen U.S.A., Inc. submitted a request 
that grade 1070 tire cord wire rod, and tire cord wire rod more 
generally, be excluded from the scope of the antidumping duty and 
countervailing duty investigations.
    The Department issued a letter on October 16, 2001 to interested 
parties in all of the concurrent wire rod antidumping investigations, 
providing an opportunity to comment on the Department's proposed model 
match characteristics and hierarchy. Petitioners submitted comments on 
October 24, 2001. The Department also received comments on model 
matching from respondents Hysla S.A. de C.V. (Mexico), Ivaco, Inc,. and 
Ispat Sidbec Inc. (Canada).
    On December 19, 2001, Krivorozhstal submitted a request to add an 
additional model matching characteristic. On December 21, 2001, the 
Department notified Krivorozhstal the Department was denying its 
request because, in developing its product characteristics, the 
Department determined not to include a variable for silicon content 
(see Letter to John Kalitka, dated December 21, 2001).
    On October 16, 2001, the Department issued a letter to the Embassy 
of Ukraine in Washington, D.C., requesting quantity

[[Page 17369]]

and value information from all Ukrainian producers/exporters who 
manufactured and exported subject merchandise to the United States 
during the POI. The Department requested that the Embassy forward this 
request to all Ukrainian producers/exporters of subject merchandise 
that sold to the United States during the POI. The Department also sent 
this request for quantity and value information directly to the five 
producers/exporters named in the petition. \1\ On October 24, 2001, the 
Embassy of Ukraine submitted a letter stating that Krivorozhstal was 
the sole Ukrainian producer that exported subject merchandise to the 
United States during the POI. Attached to this letter was quantity and 
value information for Krivorozhstal.
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    \1\ The five companies named in the petition were Dneprovsky 
Iron & Steel Works, Kramatorsk Iron & Steel Works, Krivorozhstal, 
Yenakievsky Iron & Steel Works, and Makeevsky Iron & Steel Works.
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    On November 2, 2001, the Department issued an antidumping 
investigation questionnaire to the Embassy of Ukraine. The Department 
requested that the Embassy forward the questionnaire to all Ukrainian 
producers/exporters of subject merchandise that sold to the United 
States during the POI. The Department also sent the antidumping 
questionnaire directly to Krivorozhstal. On November 6, 2001, and 
November 9, 2001, respectively, the Department issued corrections to 
the antidumping investigation questionnaire (see Memorandum to the File 
from Lori Ellison through James C. Doyle, dated November 6, 2001 and 
Memorandum to the File from Lori Ellison through James C. Doyle, dated 
November 9, 2001.)
    On November 13, 2001, the Department invited interested parties to 
comment on surrogate country selection and to provide publicly 
available information for valuing the factors of production. We 
received comments regarding surrogate country selection from 
Petitioners on November 27, 2001. Petitioners submitted surrogate value 
information on January 11, 2002 and provided certain additional pages 
on March 11, 2002. On January 8, 2002, Krivorozhstal submitted a 
request for an extension of the January 11, 2002 deadline for the 
submission of surrogate values for consideration in the preliminary 
determination. On January 10, 2002, the Department denied this request 
on the basis that the established deadline allowed the minimum amount 
of time necessary for the Department's consideration of these values 
for the scheduled preliminary determination.
    On November 30, 2001 and December 26, 2001, the Department received 
questionnaire responses from Krivorozhstal. Supplemental questionnaires 
were issued on December 10, 2001, January 10, 2002, January 25, 2002, 
February 21, 2002, February 28, 2002, and March 13, 2002. Supplemental 
responses were submitted by Krivorozhstal on December 31, 2001, 
February 4, 2002, February 5, 2002, February 11, 2002, March 8, 2002, 
and March 12, 2002 . Comments on each of Krivorozhstal's responses were 
submitted by Petitioners. On December 10, 2001, and March 12, 2002, the 
Department provided clarification and additional reporting requirements 
to Respondent regarding the Department's requirements. (See Memorandum 
to the File from Lori Ellison through James C. Doyle, dated December 
10, 2001 and Memorandum to the File from Lori Ellison through James C. 
Doyle, dated March 12, 2002.) Two full requests and six partial 
requests for extensions of the response deadlines were granted for 
these questionnaires. Petitioners submitted comments on separate rates/ 
non-market economy status and application of total adverse facts 
available on March 14, 2002, and March 15, 2002, respectively. On March 
18, 2002, Krivorozhstal submitted a rebuttal in response to 
Petitioners' March 14, 2002 submission.
    On March 19, 2002, the Krivorozhstal submitted a response to the 
Department's March 13, 2002 questionnaire which included a revised 
factors of production (by stage) worksheet, technical description, and 
table of distances and means of transportation. This information was 
submitted too late for the Department to fully analyze in time for the 
preliminary determination. The Department therefore is not considering 
it for purposes of the preliminary determination and is instead relying 
on Krivorozhstal's March 12, 2002 response.

Critical Circumstances

    On December 5, 2001 Petitioners alleged that there that there was a 
reasonable basis to believe or suspect that critical circumstances 
exist with respect to imports of wire rod from Brazil, Germany, Mexico, 
Moldova, Turkey, and Ukraine. \2\ On February 4, 2002, the Department 
preliminarily determined that critical circumstances exist with respect 
to wire rod from Ukraine. See Memorandum to Faryar Shirzad Re: 
Antidumping Duty Investigation of Carbon and Certain Alloy Steel Wire 
Rod from Ukraine - Preliminary Affirmative Determination of Critical 
Circumstances(February 4, 2002); See also Carbon and Alloy Wire Rod 
from Germany, Mexico, Moldova, Trinidad and Tobago, and Ukraine: Notice 
of Preliminary Determination of Critical Circumstances, 67 FR 6224 
(February 11, 2002) (``Critical Circumstances Notice'').
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    \2\ On December 21, 2001 the petitioners further alleged that 
there was a reasonable basis to believe or suspect that critical 
circumstances exist with respect to imports of wire rod from 
Trinidad and Tobago
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Nonmarket Economy Country Status

    The Department has treated Ukraine as a nonmarket economy (``NME'') 
country in all past antidumping investigations. See, e.g., Notice of 
Final Determination of Sales at Less Than Fair Value: Solid 
Agricultural Grade Ammonium Nitrate from Ukraine, 66 FR 38632 (July, 
25, 2001), (``Ammonium Nitrate from Ukraine''); Notice of Preliminary 
Determinations of Sales at Less Than Fair Value: Steel Concrete 
Reinforcing Bars from Poland, Indonesia, and Ukraine, 66 FR 8343 
(January 30, 2001); and Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from Ukraine, 
62 FR 61754 (November 19, 1997) (``CTL Plate from Ukraine''). This NME 
designation remains in effect until it is revoked by the Department 
(see section 771(18)(C) of the Act). As explained in the ``Case 
History'' section, on October 17, 2001, the Government of Ukraine 
submitted a request for, and information in support of, graduation to 
market economy status for Ukraine. The Department is currently 
analyzing this request. For purposes of the preliminary determination, 
we have continued to treat Ukraine as an NME country.
    When the Department is investigating imports from an NME, section 
773(c)(1) of the Act directs us to base the 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. The 
sources of individual factor prices are discussed under the ``Normal 
Value'' section, below.

Separate Rates

    In an NME proceeding, the Department presumes that a single dumping 
margin is appropriate for all exporters unless a firm establishes that 
it is eligible for a separate rate. In this investigation, 
Krivorozhstal has requested that it be assigned a separate rate. 
Pursuant to this request, Krivorozhstal has provided the requested 
company-specific separate rates information and has stated that its 
export activities are not subject to any element of government control.

[[Page 17370]]

    The Department establishes whether each exporting entity is 
entitled to a separate rate based on its independence from government 
control over its exporting activities by applying 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), as 
modified by Final Determination of Sales at Less Than Fair Value: 
Silicon Carbide from the People's Republic of China (``Silicon 
Carbide''), 59 FR 22585 (May 2, 1994).
    The Department's separate rate test is not concerned, in general, 
with macroeconomic/ border-type controls, e.g., export licenses, 
quotas, and minimum export prices, particularly if these controls are 
imposed to prevent dumping. The test focuses, rather, on controls over 
the investment, pricing, and output decision-making process at the 
individual firm level. See CTL Plate from Ukraine, 62 FR at 61757-
61759; Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, from the People's Republic of China: Final Results of 
Antidumping Duty Administrative Review, 62 FR 61276, 61279 (November 
17, 1997) (``TRBs IX''); and Honey from the People's Republic of China: 
Preliminary Determination of Sales at Less than Fair Value(``Honey 
Investigation''), 60 FR 14725, 14726 (March 20, 1995).
    Under the separate rates test, the Department assigns a separate 
rate in an NME case only if an individual respondent can demonstrate 
the absence of both de jure and de facto governmental control over its 
export activities.
    In this case, Petitioners submitted comments on March 13, 2002, 
alleging that Krivorozhstal is not eligible for a separate rate for the 
following reasons: 1) Krivorozhstal is state-owned; 2) Krivorozhstal 
must abide by export price controls that are subject to government 
review and approval; 3) the subject merchandise was subject to export 
quotas; 4) control over Krivorozhstal has not been decentralized; 5) 
the Government has control over the selection and approval of 
Krivorozhstal's management; and 6) Krivorozhstal does not possess full 
control over the disposition of its exports sales or profits.
    Krivorozhstal maintains that it is an ``independent, public-owned'' 
distinct legal entity (see Krivorozhstal's November 30, 2001 Response 
at pages 3 and 21). Krivorozhstal states that, unlike state-owned 
enterprises, public-owned enterprises are ``not accountable'' to the 
Government of Ukraine regarding the results of business activities. 
Krivorozhstal states that, as a public-owned enterprise, the laws of 
Ukraine ``prohibit the government from interfering'' with any of the 
``business activities of the company.'' According to Krivorozhstal, 
public-owned enterprises have many of the same ownership rights as 
those enterprises owned by private persons and collectives. Through 
Krivorozhstal's ownership right, Krivorozhstal maintains that it 
operates independently in business decisions, independently negotiates 
and signs contracts, and independently chooses its managers (see 
Krivorozhstal's November 30, 2001 Response at pages 2-4). The fact that 
Krivorozhstal is a 100 percent publicly owned entity does not effect 
its eligibility for a separate rate. In analogous situations, the 
Department has determined that ownership of a company by a state-owned 
enterprise does not require the application of a single rate. In 
silicon carbide from the People's Republic of China, the Department 
determined that the ownership of certain of the Chinese respondents 
``by all the people,'' in and of itself, cannot be considered as 
dispositive in determining whether those companies can receive separate 
rates. See Silicon Carbide, 59 FR at 22586. In this instance, 
Krivorozhstal has claimed that there is an absence of government 
control with respect to export activities on a de jure and de facto 
basis.
    1. Absence of De Jure Control. The Department considers three 
factors which support, though do not require, a finding of de jure 
absence of governmental control. These factors include: 1) an absence 
of restrictive stipulations associated with an individual exporter's 
business and export licenses; 2) any legislative enactments 
decentralizing control of companies; or 3) any other formal measures by 
the government decentralizing control of companies. See Sparklers, 56 
FR at 20508.
    Krivorozhstal has placed documents on the record that it claims 
demonstrate the absence of de jure governmental control, including the 
``Law of Ukraine on Ownership,'' the ``Law of Ukraine On Foreign 
Economic Activities'' and the ``Law of Ukraine on Enterprises in 
Ukraine'' (see Krivorozhstal's February 11, 2002 submission, at 
Exhibits ADS 3 and 4; Krivorozhstal's November 30, 2001 submission at 
Exhibit A-2; and Krivorozhstal's February 11, 2002 submission at 
Exhibits ADS 1 and 2, respectively). These laws, enacted by the 
Government of Ukraine, demonstrate a significant degree of deregulation 
of Ukrainian business activity, as well as deregulation of Ukrainian 
export activity. In a prior case, CTL Plate from Ukraine, 62 FR at 
61758-59, the Department analyzed Ukraine's laws and regulations, 
including those mentioned above, and found that they establish an 
absence of de jure control. See also Notice of Preliminary 
Determination of Sales at Less than Fair Value and Postponement of 
Final Determination: Solid Agricultural Grade Ammonium Nitrate from 
Ukraine, 66 FR 13286, 13289 (March 5, 2001). We have no new information 
in this proceeding that would cause us to reconsider this 
determination.
    Although there is no longer a general export licensing regime in 
place, the Ukrainian Government does continue to retain de jure control 
over exports for certain categories of goods, including goods subject 
to antidumping duty investigations and antidumping duty orders.
    Mandatory controls are in place regarding: (1) the registration of 
contracts for export of these goods and (2) the setting of ``indicative 
prices'' for these goods by the government. In CTL Plate from Ukraine, 
the Department found that mandatory registration did not preclude the 
granting of a separate rate because registration was for statistical 
and tax collection purposes, and for monitoring compliance by exporters 
with international trading rules and agreements (see CTL Plate from 
Ukraine, 62 FR at 61759).
    In the antidumping investigation of honey from the People's 
Republic of China, the Department determined that mandatory minimum 
export prices set by the Chinese government, intended to control 
worldwide prices of exported honey and to increase such prices through 
macro-economic means, did not preclude the respondent companies from 
receiving separate rates. See Honey Investigation, 60 FR at 14727-
14728. In the Honey Investigation, the Department found that, among 
other things, the companies were free to independently negotiate export 
prices with their customers above the floor price. In other words, when 
considering the totality of all circumstances, the Department found in 
the Honey Investigation that the companies had sufficient independence 
in their export pricing decisions from government control to qualify 
for separate rates.
    In this case, Krivorozhstal has stated that the subject merchandise 
exported to the United States was subject only to price floors that 
were set by the Government in response to the Section 201 Investigation 
in order to prevent dumping (see Krivorozhstal's November 30, 2001 
Response at pages 5-6). According to Krivorozhstal, negotiated

[[Page 17371]]

prices during the POI were above, and sometimes below, the floor price 
and were free from government review or intervention (see 
Krivorozhstal's December 31, 2001 Response at pages 10-11 and 
Krivorozhstal's February 11, 2002 Response at page 16). However, 
Krivorozhstal further explained that in cases where the customs value 
is lower than the indicative price, it must obtain an expert opinion 
concerning the lower selling price or the Customs Authority may 
disallow export of the product. See Krivorozhstal's March 12, 2002 
Response at 8. Additionally, although the subject merchandise exported 
to the European Union is subject to licensing requirements and quotas, 
Krivorozhstal asserts that the subject merchandise exported to the 
United States does not appear on any government list regarding export 
provisions or licensing and that there are no export quotas applicable 
to the subject merchandise (see Krivorozhstal's November 30, 2001 
Response at pages 5-6). Accordingly, we preliminarily determine that 
there is an absence of de jure governmental control over 
Krivorozhstal's export pricing and marketing decisions.
    The Department will examine at verification whether through either 
registration or the setting of indicative prices, the Government of 
Ukraine did anything other than monitor foreign economic activity of 
exports of certain goods in order to prevent dumping by exporters 
subject to antidumping measures in other countries and thereby ensure 
compliance with international trading rules.
2. Absence of De Facto ControlThe Department typically considers four 
factors in evaluating whether a respondent is subject to de facto 
governmental 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 its management; and 4) whether the respondent retains the 
proceeds of its export sales and makes independent decisions regarding 
disposition of profits or financing of losses. See Final Determination 
of Sales at Less Than Fair Value: Certain Preserved Mushrooms from the 
People's Republic of China, 63 FR 72255, 72257 (December 31, 1998).
    Krivorozhstal has asserted (and provided supporting documentation) 
that it: 1) establishes its own export prices (see Krivorozhstal's 
November 30, 2001 Response at Exhibit A-6 and Krivorozhstal's December 
31, 2001 Response at page 11); 2) negotiates contracts without guidance 
from any governmental entities or organizations (see Krivorozhstal's 
February 11, 2002 Response at page 4 and Exhibit A-6); 3) makes its own 
personnel decisions with regard to the selection of management (see 
Krivorozhstal's November 30, 2001 Response at page 8; Krivorozhstal's 
February 11, 2002 Response at Exhibits ADS 1 and 2; and Krivorozhstal's 
March 12, 2002 Response at pages 7-8); and 4) retains the proceeds from 
export sales and uses profits according to its business needs without 
any restrictions (see Krivorozhstal's November 30, 2001 Response at 
pages 10-11). Although, according to Ukrainian Law, 50 percent of 
foreign currency earnings must be converted into Ukrainian currency, 
the Department has previously determined that this does not preclude 
the granting of a separate rate. See CTL Plate from Ukraine 62 FR at 
61759-60. Additionally, Krivorozhstal has stated that it does not 
coordinate or consult with other exporters regarding its pricing (see 
Krivorozhstal's November 30, 2001 Response at page 7 and Exhibit A-2).
    As stated in the previous section, the Government of Ukraine 
requires registration of exports and sets indicative prices. However, 
this does not preclude Krivorozhstal from receiving a separate rate if 
the government does not control the flow of subject merchandise through 
exporters which have the lowest margin. In CTL Plate from Ukraine, the 
Department found that these restrictions were ``evidence of the 
government's good faith attempt to monitor exports of certain goods to 
ensure that such goods are not traded unfairly.'' See 62 FR at 61759.
    The information placed on the record by Krivorozhstal as well as 
Krivorozhstal's verifiable claims support a preliminary finding that 
there is an absence of de facto governmental control of the export 
functions of Krivorozhstal. Consequently, subject to verification, we 
preliminarily determine that Krivorozhstal has met the criteria for the 
application of separate rates.

Ukraine-Wide Rate

    As discussed, supra, in a NME proceeding, the Department presumes 
that all companies within the country are subject to governmental 
control. The Department assigns a single NME rate unless a producer can 
demonstrate eligibility for a separate rate. Krivorozhstal has 
preliminarily qualified for a separate rate. Furthermore, the 
information on the record (i.e., U.S. import statistics from Ukraine) 
indicates that Krivorozhstal accounted for all imports of subject 
merchandise during the POI. Since Krivorozhstal is the only known 
Ukrainian producer of the subject merchandise which exported to the 
United States during the POI, we have calculated a Ukraine-wide rate 
for this investigation based on the weighted-average margin determined 
for Krivorozhstal. This Ukraine-wide rate applies to all entries of 
subject merchandise except for entries of subject merchandise exported 
by Krivorozhstal.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by 
Krivorozhstal for export to the United States were made at less than 
fair value, we compared EP to NV, as described in the ``Export Price'' 
and ``Normal Value'' sections of this notice, below. In accordance with 
section 777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-
average EPs to the NVs.
    On March 15, 2002, Petitioners submitted a letter to the Department 
in which they requested that the Department apply total adverse facts 
available to determine the dumping margin for Krivorozhstal for the 
preliminary determination. In their letter, Petitioners make the 
following allegations: 1) an accurate and reliable normal value cannot 
be calculated using Krivorozhstal's section D database; 2) 
Krivorozhstal's U.S. sales database is unreliable, making accurate 
product matching impossible; and 3) Krivorozhstal's questionnaire 
responses remain materially incomplete. Moreover, Petitioners maintain 
that substantial record evidence demonstrates a pattern of 
uncooperative behavior warranting application of adverse facts 
available. The Department has examined Krivorozhstal's submissions and 
data, and preliminarily found that they are adequate for purposes of 
calculating a dumping margin. In its responses, Krivorozhstal has made 
a number of direct, verifiable claims and presented a calculation 
methodology which can be analyzed further at verification. The 
Department fully intends to verify all claims made by Krivorozhstal and 
the methodology used by Krivorozhstal to prepare its U.S. sales 
database and its factors of production database.

Export Price

    For Krivorozhstal, we used EP methodology in accordance with 
section 772(a) of the Act because the subject

[[Page 17372]]

merchandise was sold directly to unaffiliated purchasers outside of the 
United States, with the knowledge that the final destination of subject 
merchandise was the United States. Constructed export price (``CEP'') 
methodology was not otherwise appropriate. We calculated EP based on 
FCA Ukrainian port prices. We made deductions from the starting price 
(gross unit price) for inland freight from the plant to the port of 
export. Because the domestic inland freight expense was paid for in a 
nonmarket economy currency, we based domestic inland freight expense on 
a surrogate value from Indonesia. (See ``Normal Value'' section below 
for further discussion.)

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine the NV using a factors-of-production methodology if: (1) the 
merchandise is exported from a NME country; and (2) the information 
does not permit the calculation of NV using home-market prices, third-
country prices, or constructed value under section 773(a) of the Act.
    Factors of production include: (1) hours of labor required; (2) 
quantities of raw materials employed; (3) amounts of energy and other 
utilities consumed; and (4) representative capital costs, including 
depreciation. We calculated NV based on factors of production reported 
by Krivorozhstal (see Memorandum to Edward C. Yang, Office Director, 
AD/CVD Enforcement, Group III, Factors of Production Valuation for 
Preliminary Determination, dated April 2, 2002). (``Factor Valuation 
Memo''). We valued all the input factors using publicly available 
information as discussed in the ``Surrogate Country'' and ``Factor 
Valuations'' sections of this notice, infra.
1. Surrogate Country 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. Regarding the 
first criterion, the Department has determined that Egypt, Morocco, 
Philippines, Sri Lanka, Indonesia, and Pakistan are countries 
comparable to Ukraine in terms of overall economic development (see 
Memorandum from Jeff May, Director, Office of Policy, to James C. 
Doyle, Program Manager, AD/CVD Enforcement, Group III, dated November 
7, 2001 (``Surrogate Country Memorandum'')). Petitioners have argued 
that Indonesia is the most appropriate surrogate and submitted public 
available Indonesian values. For purposes of the preliminary 
determination, we have used Indonesia as our primary surrogate (see 
Memorandum to Edward C. Yang, Office Director, AD/CVD Enforcement, 
Group III, Selection of a Surrogate Country, dated April 2, 2002). As 
noted in the Surrogate Country Memorandum, Indonesia is economically 
comparable to Ukraine. Indonesia is also a significant producer of 
comparable merchandise. Moreover, there is sufficient publicly 
available information on Indonesian values. Accordingly, we have 
calculated NV using publicly available information from Indonesia to 
value Krivorozhstal's factors of production, except where noted below.
    In accordance with section 351.301(c)(3)(i) of the Department's 
regulations, for the final determination in an antidumping 
investigation, interested parties may submit publicly available 
information to value factors of production within 40 days after the 
date of publication of the preliminary determination.
2.Factors of ProductionIn accordance with section 773(c) of the Act, we 
calculated NV based on the factors of production reported by 
Krivorozhstal using Indonesian values, except where noted below.
    In selecting the surrogate values, we considered the quality, 
specificity, and contemporaneity of the data. For those values not 
contemporaneous with the POI, unless otherwise noted below, we adjusted 
for inflation using price indices published in the International 
Monetary Fund's International Financial Statistics. As appropriate, we 
adjusted input values to make them delivered prices. For factor values 
where we used Indonesian import statistics, we did not include data 
pertaining to imports from non-market economy countries. See e.g., 
Notice of Final Results of the Antidumping Duty Administrative Review 
of Chrome-Plated Lug Nuts from the People's Republic of China, 63 FR 
53872 (October 7, 1998). We also did not include imports from 
Indonesia, Korea, and Thailand because these countries maintain non-
specific export subsidies. See Notice of Final Determination of Sales 
at Less Than Fair Value: Certain Automotive Replacement Glass 
Windshields From the People's Republic of China, 67 FR 6482 (February 
12, 2002). For a detailed analysis of surrogate values, see Factor 
Valuation Memo.
    We valued raw material inputs, energy inputs, and packing materials 
using values from the appropriate HTSUS category. Pursuant to section 
351.408(c)(1) of our regulations, where a factor was purchased from a 
market economy supplier and paid for in a market economy currency, we 
used the price paid to the market economy supplier. See Id; see also 
Lasko Metal Products v. United States, 43 F.3d 1442, 1445-46 (Fed. Cir. 
1994). To value labor, we used regression-based wage rates, in 
accordance with section 351.408(c)(3) of the Department's regulations. 
See Factor Valuation Memo. We based the value of freight by rail on 
public information from a cable from the American Embassy in Indonesia 
(see Factor Valuation Memo). We based the value of freight by truck on 
public information from the Indonesian company PT Batam Samdura (see 
Factor Valuation Memo).
    In the Department's November 2, 2001 original questionnaire, 
Krivorozhstal was requested to report freight information regarding its 
sales of subject merchandise during the POI. On February 21, 2002, the 
Department requested that Krivorozhstal clarify certain discrepancies 
regarding the factor names for which it had reported freight 
information. On March 18, 2002, the Department further requested that 
Krivorozhstal report, for each purchased input used in the production 
of subject merchandise, the distance from the plant to the port of exit 
or other location where the purchaser takes possession of the 
merchandise.
    Krivorozhstal did not report freight information (quantity 
supplied, name of the supplier, and distance from the supplier) for 
purchased coke (PURCOK) and sulfacoal (SULFFCO). Regarding sulfocoal 
(SULFCO), Krivorozhstal explained that it had no purchases of sulfocoal 
during the POI. Because Krivorozhstal failed to report the requested 
information, we find it appropriate to use facts otherwise available 
pursuant to section 776(a)(2)(B) of the Act. As facts available, we 
applied to these inputs the freight information reported for similar 
products. For sulfacoal (SULFFCO), we applied the reported freight 
information for metallurgical coals (coals mix) (METCOA). For purchased 
coke (PURCOK), we applied the reported freight information for coke 
breeze purchased (CKBREP). See Factor Valuation Memorandum for freight 
calculations.
    In its March 22, 2002 Response, Krivorozhstal identified the 
following byproducts as being sold during the POI: granular slag, lime, 
lime dust and lime screening, gaseous oxygen, gaseous argon, krypton-
xenon concentrate, gaseous nitrogen, neon-helium mixture, coke 10-25, 
coke 0-10, coal, sulfate

[[Page 17373]]

ammonium, crude benzene, and blast furnace gas. We have granted offsets 
only for those byproducts where Krivorozhstal provided evidence of the 
sale of the byproduct during the POI as requested by the Department's 
January 10, 2002 supplemental questionnaire (question 104) and February 
21, 2002 supplemental questionnaire (question 50). Accordingly, we have 
granted offsets for the following byproducts: granular slag, coke 10-
25, coke 0-10, coal tar, and blast furnace gas. Moreover, consistent 
with the Department's practice, we have granted an offset only for the 
amount of the byproduct actually sold during the POI (see Final 
Determination of Sales at Less Than Fair Value: Bulk Aspirin from the 
People's Republic of China, 65 FR 33805 (May 25, 2000) and accompanying 
Decision Memorandum at Comment 13). For further information, see Factor 
Valuation Memo.
    To value depreciation, SG&A, interest, and profit, we used data 
from the 1998 financial statements of Alexandria National Iron & Steel 
Co., an Egyptian steel company, which produces the subject merchandise. 
Egypt has been identified as a country at a level of economic 
development comparable to Ukraine. See Surrogate Country Memo. We did 
not use the financial statements of PT Krakatau, an Indonesian producer 
of the subject merchandise, because we found Alexandria National Iron & 
Steel Co. to be a more appropriate surrogate for Krivorozhstal for the 
following two reasons. First, the 1998 financial statements for 
Alexandria National Iron & Steel Co. are more contemporaneous than 
those from 1997 for PT Krakatau. Second, for Alexandria National Iron & 
Steel Co., we found evidence that it is a purchaser of argon, oxygen, 
and nitrogen. See Memorandum to the File: Analysis for the Preliminary 
Determination of Carbon and Certain Alloy Steel Wire Rod from Ukraine, 
Attachment 3, April 2, 2002. While Krivorozhstal self-produces these 
inputs, we were unable to find information indicating whether PT 
Krakatau purchases or self-produces any of these inputs in its 
production process. Because the Department has more information on 
Alexandria's purchase/self-production of certain energy inputs than PT 
Krakatau's, it is better able to adjust normal value for the self-
production by Krivorozhstal of certain energy inputs.
    For each of the surrogate values selected for use in the 
Department's calculations, we adjusted the values for inflation using 
appropriate price index inflators when those values were not from a 
period concurrent with the POI. See Factor Valuation Memo.
    In its responses Krivorozhstal reported that its operates three 
open pit mines: No.2-bis, No. 3, and ``Yuzhniy'' from which it obtained 
iron ore for use in the production of the subject merchandise. Open pit 
mines No. 2-bis and No. 3 are part of the Mining and Enrichment 
Intergrated Works of Krivorozhstal. Krivorozhstal also reported that it 
also operates an underground mine from which it obtained iron ore for 
use in the production of the subject merchandise. Krivorozhstal 
explained that ``Yuzhniy'' and the underground mine became part of 
Krivorozhstal in May 2001 and are part of the Mining Department of 
Krivorozhstal. See Krivorozhstal's December 26, 2001 Response at pages 
5-6; Krivorozhstal's December 31, 2001 Response at page 20; and 
Krivorozhstal's February 4, 2002 Response at pages 19-21. Krivorozhstal 
stated that the distance between the underground mine and the sintering 
factory of Krivorozhstal is approximately 16 kilometers and the 
distance from the open pit mines to the enrichment complex is between 5 
and 7 kilometers. See Krivorozhstal's February 4, 2002 Response at page 
26. For purposes of reporting its factors of production for that iron 
ore obtained from its open pit mines or its underground mine, 
Krivorozhstal reported the aggregate usage of the inputs into obtaining 
the iron ore, rather than the aggregate usage of the self-produced iron 
ore used to produce one metric ton of the subject merchandise.
    In its narrative responses, Krivorozhstal also reported that it has 
its own energy generating facilities, including facilities to generate 
a certain portion of its electricity requirements and all of its argon, 
nitrogen, and oxygen requirements. See Krivorozhstal's December 26, 
2001 Response at pages 14-16. In the antidumping investigation of hot-
rolled carbon steel flat products from the People's Republic of China, 
the Department determined to value certain self-produced energy 
components (electricity, argon, oxygen, and nitrogen) through surrogate 
valuation, rather than based on surrogate valuation of the factors 
going into the production of those inputs based on the fact that the 
financial statements of the sole surrogate indicated that it purchased 
a large portion of the inputs in question and did not appear to self-
produce any of the inputs. See Notice of Final Determination of Sales 
at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products 
From the People's Republic of China (``Hot-Rolled Steel from the 
PRC''), 66 FR 49632 (September 28, 2001) and accompanying Issues and 
Decision Memorandum at Comment 2. In Hot-Rolled Steel from the PRC, we 
stated that because the surrogate (TATA) does not incur the capital 
costs associated with the substantial plant and machinery needed to 
produce the inputs in question, ``the capital costs cannot and do not 
appear on TATA's financial statements and would not be included in the 
normal value under respondents' preferred methodology.'' See Id. 
Further, the Department explained that ``To ignore such costs, 
especially where they are likely to be significant as in the present 
case, would result in a less accurate calculation, not greater accuracy 
as implied by the respondents.'' See Id. In structural steel beams from 
the People's Republic of China, the Department followed the approach 
established in Hot-Rolled Steel from the PRC regarding the valuation of 
certain self-produced energy inputs, explaining that ``the respondent's 
methodology would add needless complications to our calculation of NV 
and lead to potentially erroneous results.'' See Notice of Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination: Structural Steel Beams From The People's Republic 
of China(``Structural Steel Beams''), 66 FR 67197, 67201 (December 28, 
2001).
    In this case, as explained above, to value overhead, SG&A, 
interest, and profit, we are relying on the 1998 financial statements 
of Alexandria National Iron and Steel Company (``Alexandria''). The 
financial statements of Alexandria do not indicate that they self-
produce iron ore, electricity, argon, nitrogen, and oxygen. In 
addition, a press release from the European Investment Bank, dated 
April 26, 1999, regarding a loan to an Egyptian gas company for the 
construction of a new air separation plant for the production of 
industrial gases reports that Alexandria will be a major buyer of the 
company's products (oxygen, nitrogen, and argon). For a copy of 
article, see Analysis Memorandum for the Preliminary Determination: 
Carbon and Alloy Steel Wire Rod from Ukraine(``Prelim Analysis Memo''), 
dated April 2, 2002. The Department was unable to locate any other 
publicly available information regarding Alexandria's self-production 
of these inputs. Accordingly, for purposes of the preliminary 
determination, consistent with Hot-Rolled Steel from the PRC and

[[Page 17374]]

Structural Steel Beams from the PRC, we are valuing self-produced iron 
ore, argon, nitrogen, and oxygen through the use of surrogate 
valuation, rather than valuation of the factor inputs going into the 
production of these inputs. Because Krivorozhstal only generates a 
relatively small portion of electricity needs (see Prelim Analysis 
Memo), we are not using a surrogate value to value that portion of 
electricity that is self-produced. The Department has adjusted 
Krivorozhstal's factors of production to account for this 
methodological change. See Prelim Analysis Memo for calculation 
details. We invite parties to comment on this issue, particularly 
regarding Alexandria's purchase and use of these inputs, and will 
reconsider this issue for purposes of the final determination.

Verification

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

Final Critical Circumstances Determination

    We will make a final determination concerning critical 
circumstances for Ukraine when we make our final determination 
regarding sales at LTFV in this investigation, which will be no later 
than 135 days after the publication of this notice in the Federal 
Register.

Suspension of Liquidation

    Because of our preliminary affirmative critical circumstances 
finding, we are directing the Customs Service to suspend liquidation of 
all entries of wire rod from Ukraine entered, or withdrawn from 
warehouse, for consumption on or after the date which is 90 days prior 
to the date on which this notice is published in the Federal Register 
(see Critical Circumstances Notice). We are instructing the Customs 
Service to require a cash deposit or the posting of a bond equal to the 
weighted-average amount by which the NV exceeds the EP, as indicated in 
the chart below. These instructions suspending liquidation will remain 
in effect until further notice.
    The weighted-average dumping margins are provided below:

------------------------------------------------------------------------
                                                       Weighted-average
                Exporter/manufacturer                  margin percentage
------------------------------------------------------------------------
Krivorozhstal.......................................              129.52
Ukraine-wide rate...................................              129.52
------------------------------------------------------------------------

    The Ukraine-wide rate applies to all entries of the subject 
merchandise except for entries from exporters/manufacturers that are 
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 determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Public Comment

    Case briefs or other written comments in six copies must be 
submitted to the Assistant Secretary for Import Administration no later 
than 50 days after the date of publication of this notice, and rebuttal 
briefs no later than 55 days after the publication of this notice. A 
list of authorities used and an executive summary of issues should 
accompany any briefs submitted to the Department. Such summary should 
be limited to five pages total, including footnotes. In accordance with 
section 774 of the Act, we will hold a public hearing, if requested, to 
afford interested parties an opportunity to comment on arguments raised 
in case or rebuttal briefs. Tentatively, the hearing will be held on 
fifty-seven days after publication of this notice, at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, DC 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 
1870, within 30 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. 
Oral presentations will be limited to issues raised in the briefs. See 
19 CFR 351.310(c). We will make our final determination not later than 
135 days after the date of publication of the preliminary 
determination.
    This determination is issued and published in accordance with 
sections 733(d) and 777(i)(1) of the Act.

    Dated: April 2, 2002
Faryar Shirzad,
Assistant Secretaryfor Import Administration.
[FR Doc. 02-8701 Filed 4-9-02; 8:45 am]
BILLING CODE 3510-DS-S