[Federal Register Volume 67, Number 192 (Thursday, October 3, 2002)]
[Notices]
[Pages 62015-62018]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25188]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-822-805]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Urea Ammonium Nitrate Solutions From Belarus

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

EFFECTIVE DATE: October 3, 2002.

FOR FURTHER INFORMATION CONTACT: Tom Martin or Tom Futtner, AD/CVD 
Enforcement, Office 4, Group II, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
3936, and (202) 482-3814, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    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 codified at 19 CFR part 
351 (April 2002).

Preliminary Determination

    We preliminarily determine that imports of urea ammonium nitrate 
solutions (UANS) from Belarus are being sold, or are likely to be sold, 
in the United States at less than fair value (LTFV), as provided in 
section 733 of the Act. The estimated margins of sales at LTFV are 
shown in the ``Suspension of Liquidation'' section of this notice.

Case History

    On May 9, 2002, the Department initiated antidumping duty 
investigations to determine whether imports of UANS from Lithuania, 
Belarus, the Russian Federation, and Ukraine are being, or are likely 
to be, sold in the United States at LTFV. See Initiation of Antidumping 
Investigations: Urea Ammonium Nitrate Solutions from Belarus, 
Lithuania, the Russian Federation, and Ukraine, 67 FR 35492 (May 20, 
2002) (Initiation Notice).\1\
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    \1\ The petitioner in this investigation is the Nitrogen 
Solutions Fair Trade Committee (the petitioner). Its members consist 
of CF Industries, Inc., Mississippi Chemical Corporation, and Terra 
Industries, Inc.
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    On June 4, 2002, the International Trade Commission (ITC) 
preliminarily determined that there is a reasonable indication that an 
industry in the United States is materially injured or threatened with 
material injury by reason of imports of UANS from Belarus, the Russian 
Federation and Ukraine. See Urea Ammonium Nitrate Solution from 
Belarus, Lithuania, the Russian Federation and Ukraine, 67 FR 39439 
(June 7, 2002).
    During May 2002, the Department provided participating parties with 
an opportunity to comment on scope and the product characteristics of 
subject merchandise. No parties submitted comments.
    On May 22, 2002, the Department issued its antidumping 
questionnaire\2\ to the Embassy of Belarus in Washington D.C., and to 
the company identified in the petition, Grodno Production Republican 
Enterprise ``GPO Azot'' (Grodno). The Department requested that the 
Embassy of Belarus send the questionnaire to all companies that 
manufactured and exported UANS to the United States, as well as all 
manufacturers that produced UANS for companies engaged in exporting 
subject merchandise to the United States, and all companies that 
exported UANS to the United States, during the period of investigation 
(POI). Only Grodno responded to the Department's questionnaire; the 
Department received timely responses on June 12, 2002 for the section A 
response, and July 2, 2002 for the section C and D responses. During 
July and August 2002, the Department issued and Grodno responded to 
three supplemental questionnaires.
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    \2\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under investigation that it sells, and the manner in 
which it sells that merchandise in all of its markets. Section B 
requests a complete listing of all home market sales, or, if the 
home market is not viable, of sales in the most appropriate third-
country market (this section is not applicable to respondents in 
nonmarket economy (NME) cases). Section C requests a complete 
listing of U.S. sales. Section D requests information on the factors 
of production of the merchandise sold in or to the United States 
under investigation. Section E requests information on further 
manufacturing.
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Period of Investigation

    The POI is October 1, 2001, through March 31, 2002. This period 
corresponds to the two most recent fiscal quarters prior to the month 
of the filing of the petition (i.e., April, 2002). See 19 CFR 
351.204(b)(1).

Scope of Investigation

    For purposes of this investigation, the product covered is all 
mixtures of urea and ammonium nitrate in aqueous or ammoniacal 
solution, regardless of nitrogen content by weight, and regardless of 
the presence of additives, such as corrosion inhibitors. The 
merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (HTSUS) under item 
number 3102.80.00.00. Although the HTSUS item number is provided for 
convenience and U.S. Customs Service (U.S. Customs) purposes, the 
written description of the merchandise under investigation is 
dispositive.

[[Page 62016]]

Nonmarket Economy Country Status

    The Department has treated Belarus as a nonmarket economy (NME) 
country in all previous antidumping investigations. See Notice of Final 
Determination of Sales at Less Than Fair Value: Steel Concrete 
Reinforcing Bars From Belarus, 66 FR 33528 (June 22, 2001) . In 
accordance with section 771(18)(C)(i) of the Act, any determination 
that a foreign country is an NME country shall remain in effect until 
revoked. Therefore, pursuant to section 771(18)(C)(i) of the Act, the 
Department will continue to treat Belarus as an NME country for the 
purposes of this investigation.
    When the Department is investigating imports from an NME country, 
section 773(c)(1) of the Act directs the Department to base 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 all companies 
within the country are subject to governmental control and should be 
assigned a single antidumping duty rate unless the respondent 
demonstrates the absence of both de jure and de facto governmental 
control over its export activities. See Notice of Final Determination 
of Sales at Less Than Fair Value: Bicycles From the People's Republic 
of China, 61 FR 19026, 19027 (April 30, 1996). Grodno has provided the 
requested company-specific separate rates information and has indicated 
that, although it is 100 percent state owned, there is no element of 
government control over its operations. We have considered whether 
Grodno is eligible for a separate rate as discussed below.
    The Department's separate-rates 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. Rather, the test focuses on controls over the 
export-related investment, pricing, and output decision-making 
processes at the individual firm level. See Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate From Ukraine, 62 FR 61754, 61757 (November 19, 
1997); 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); and Notice of Preliminary Determination of Sales at Less 
Than Fair Value: Honey From the People's Republic of China, 60 FR 
14725, 14727 (March 20, 1995).
    To establish whether a firm is sufficiently independent from 
government control to be entitled to a separate rate, the Department 
analyzes each exporting entity under a test arising out of the Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991), as modified in 
the Final Determination of Sales at Less Than Fair Value: Silicon 
Carbide from the People's Republic of China, 59 FR 22585, 22587 (May 2, 
1994) (Silicon Carbide). Under this test, the Department assigns 
separate rates in NME cases only if an exporter can demonstrate the 
absence of both de jure and de facto governmental control over its 
export activities. See Silicon Carbide, 59 FR 22587, and the Notice of 
Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol 
From the People's Republic of China, 60 FR 22544, 22545 (May 8, 1995).
1. Absence of De Jure Control
    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) An absence of restrictive stipulations associated with an 
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.
    Grodno has placed on the record a number of documents to 
demonstrate the absence of de jure control, including Regulation No. 
359 of the Belarus Government, which specifies that its management has 
specific decision making authority, (i.e, hiring supervisors, 
controlling state property, reorganizing and dissolving enterprises), 
and Regulation No. 1835, pertaining to Grodno's export licenses 
(authorizing Grodno to export under license on condition that domestic 
consumers have priority). Grodno has also submitted a copy of an export 
license for subject merchandise covering the first half of the POI. We 
note that the export license did contain minimum export prices and 
quantitative limits. Nonetheless, Grodno has demonstrated that the type 
of decision-making the Department considers significant in separate 
rates determinations, such as pricing, is conducted at the company 
level. Grodno claims to have the autonomy to set the price at whatever 
level it wishes without government interference, and states that it is 
free to negotiate export prices independently with its customers above 
the floor price indicated in the export license. In past cases, the 
Department has found an absence of government control over the export 
pricing and marketing decisions of firms, even when there is some 
government involvement with respect to the export of products subject 
to investigation. See Notice of 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); Honey from the 
People's Republic of China: Preliminary Determination of Sales at Less 
than Fair Value, 60 FR 14725, 14727-14728 (March 20, 1995). Therefore, 
based on the foregoing, we have preliminarily found an absence of de 
jure control.
2. Absence of De Facto Control
    The Department typically considers four factors in evaluating 
whether each 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 the disposition of profits or 
financing of losses.
    With regard to the issue of de facto control, Grodno has reported 
the following: (1) It establishes its own prices; (2) it has the 
authority to negotiate binding contracts; (3) its General Manager is 
appointed by its parent company, and management is selected by the 
general manager; (4) it is not required to notify the Belarus 
government of its decisions; and (5) it decides how to distribute 
profits from export sales with no restrictions on the use of its export 
revenue. Although, according to the law of Belarus, 30 percent of 
foreign currency earnings must be sold to the government of Belarus, 
the Department has not considered such foreign exchange requirements to 
constitute de facto control. See 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);

[[Page 62017]]

Notice of Final Determination of Sales At Less Than Fair Value: Solid 
Agricultural Grade Ammonium Nitrate From Ukraine, 66 FR 38632, 38633 
(July 25, 2001). Additionally, Grodno has stated that it is the sole 
exporter of subject merchandise from Belarus, and therefore, it does 
not coordinate prices with other producers or exporters. Furthermore, 
our analysis of Grodno's questionnaire response reveals no other 
information indicating governmental control of export activities. 
Therefore, based on the information provided, we preliminarily 
determine that there is an absence of de facto government control over 
Grodno's export functions. Consequently, we preliminarily determine 
that Grodno has met the criteria for the application of a separate 
rate. (For a detailed discussion of this issue, see Separate Rates 
Analysis for the Preliminary Determination: Antidumping Duty 
Investigation of Urea Ammonium Nitrate Solutions from Belarus, dated 
concurrently with this notice on file in the Central Records Unit (CRU) 
located in B-099 of the main Department of Commerce building.)

The Belarus-Wide Rate

    In all NME cases, the Department makes a rebuttable presumption 
that all exporters or producers located in the NME comprise a single 
exporter under common government control, ``the NME entity.'' The 
Department assigns a single NME rate to the NME entity unless an 
exporter can demonstrate eligibility for a separate rate.
    Grodno has preliminarily qualified for a separate rate. 
Furthermore, information on the record of this investigation indicates 
that Grodno accounted for all imports of subject merchandise during the 
POI. Since Grodno is the only known Belarusian exporter of UANS to the 
United States during the POI, we have calculated a Belarus-wide rate 
for this investigation based on the weighted-average margin determined 
for Grodno.

Fair Value Comparisons

    To determine whether Grodno's sales of UANS to customers in the 
United States were made at LTFV, we compared Export Price (EP) to NV, 
calculated using our NME methodology, 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 calculated 
weighted-average EPs.

Export Price

    We used an EP methodology in accordance with section 772(a) of the 
Act because Grodno sold subject merchandise to unaffiliated U.S. 
customers prior to importation and because constructed export price 
methodology was not otherwise warranted. At the time of sale, Grodno 
knew that its reported sales of subject merchandise were destined for 
the United States.
    We calculated EP based on the prices charged to the first 
unaffiliated customer for exportation to the United States. Where 
appropriate, we made deductions from the starting price (gross unit 
price) for foreign inland freight. Where foreign inland freight was 
provided by NME companies, we used surrogate values from South Africa 
to value these expenses (see the Factors of Production Valuation 
Memorandum dated September 26, 2002, on file in the CRU).

Normal Value

1. Surrogate Country
    Section 773(c)(4) of the Act requires that the Department value the 
NME producer's factors of production, to the extent possible, based on 
the prices or costs of factors of production in one or more market 
economy countries that are: (1) at a level of economic development 
comparable to that of the NME country; and (2) significant producers of 
comparable merchandise. The Department's Office of Policy initially 
identified six countries that are at a level of economic development 
comparable to Belarus in terms of per capita gross national product 
(GNP) and the national distribution of labor. Those countries are 
Panama, Turkey, South Africa, Latvia, the Dominican Republic and Peru 
(see the memorandum from Jeffrey May to Holly Kuga dated May 17, 2002, 
on file in the CRU). As noted, South Africa is economically comparable 
to Belarus. South Africa is also a significant producer of comparable 
merchandise. Moreover, there is sufficient publicly available 
information on South African values. Accordingly, we have preliminarily 
calculated NV using publicly available information from South Africa to 
value Grodno's factors of production, except where noted below.
2. Factors of Production
    In its questionnaire response, Grodno reported factors of 
production for the subject merchandise. The 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. See section 
773(c)(3) of the Act. To calculate NV, we multiplied the reported per-
unit quantities for these factors by publicly available surrogate 
values from South Africa.
    The surrogate values employed for the production of subject 
merchandise were selected because of their quality, specificity, and 
contemporaneity. For those values not contemporaneous with the POI, we 
adjusted the values to account for inflation using the Production Price 
Index (PPI) from Statistics South Africa, an official government body 
of South Africa. As appropriate, we included freight costs in input 
prices to make them delivered prices. Specifically, we added to the 
surrogate values a surrogate freight cost using the shorter of the 
reported distance from the domestic input supplier to the factory or 
the distance from the nearest seaport to the factory. This adjustment 
is in accordance with the Court of Appeals for the Federal Circuit's 
decision in Sigma Corp. v. United States, 117 F. 3d 1401, 1407-1408 
(Fed. Cir. 1997).
    We valued material inputs (including sodium hydroxide, quicklime, 
iron sulphate, trisodium phosphate, and hydrazine-hydrate) using values 
obtained from imports into South Africa during the POI under the 
appropriate HTS item number, from the World Trade Atlas, published by 
Global Trade Information Services, Inc. One input, the corrosion 
inhibitor, was purchased from a market economy supplier, and was paid 
for in U.S. currency. Pursuant to section 351.408(c)(1) of the 
Department's regulations, we valued the corrosion inhibitor based upon 
the value that Grodno reported that it paid this supplier.
    For labor, consistent with 19 CFR 351.408(c)(3), we used the 
regression-based wage rate for Belarus from the Import Administration's 
home page, Import Library, Expected Wages of Selected NME Countries, 
revised in September 2002 (see http://ia.ita.doc.gov/wages). The source 
of the wage rate data on the Import Administration's website is the 
2001 Year Book of Labour Statistics, International Labour Organization 
(Geneva: 2001), Chapter 5B: Wages in Manufacturing.
    We valued natural gas using information for October to December 
2001, released by the South African Department of Minerals & Energy 
(DME) and published in DME Statistics.
    We valued electricity using the published prices for industrial 
electricity in 2000, obtained from the Electricity Price Report in DME 
Statistics, published by South Africa's Department of Minerals and 
Energy.

[[Page 62018]]

    We based our calculation of selling, general and administrative 
expenses, overhead, and profit on the fiscal year 2002 (April 2001 to 
March 2002) publicly available financial statement of Omnia Holdings 
Limited, a South African producer of the subject merchandise.
    For a complete analysis of surrogate values used in the preliminary 
determination, see the Factors of Production Valuation Memorandum, 
dated concurrently with this notice.

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
all information relied upon in making our final determination.

Suspension of Liquidation

    We are directing the U.S. Customs Service to suspend liquidation of 
all entries of subject merchandise from Belarus entered, or withdrawn 
from warehouse, for consumption on or after the date on which this 
notice is published in the Federal Register. In addition, 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.
    We determine that the following weighted-average percentage margins 
exist for the POI:

------------------------------------------------------------------------
                                                        Weighted-Average
                Manufacturer/exporter                    [chyph]Margin
                                                           (percent)
------------------------------------------------------------------------
Grodno...............................................             190.34
Belarus-Wide Rate....................................             190.34
------------------------------------------------------------------------

    The Belarus-wide rate applies to all entries of subject merchandise 
except entries from Grodno.

Disclosure

    In accordance with 19 CFR 351.224(b), the Department will disclose 
the calculations performed in the preliminary determination to 
interested parties within five days of the date of publication of this 
notice.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of the Department's preliminary affirmative determination. If the 
final determination in this proceeding is affirmative, the ITC will 
determine before the later of 120 days after the date of this 
preliminary determination or 45 days after the final determination 
whether imports of UANS from Belarus are materially injuring, or 
threaten material injury to, the U.S. industry.

Public Comment

    In accordance with 19 CFR 351.301(c)(3)(i), interested parties may 
submit publicly available information to value the factors of 
production for purposes of the final determination within 40 days after 
the date of publication of this preliminary determination. Case briefs 
or other written comments must be submitted to the Assistant Secretary 
for Import Administration no later than one week after issuance of the 
verification report. Rebuttal briefs, whose contents are limited to the 
issues raised in the case briefs, must be filed within five days after 
the deadline for the submission of case briefs. A list of authorities 
used, a table of contents, and an executive summary of issues should 
accompany any briefs submitted to the Department. Executive summaries 
should be limited to five pages total, including footnotes. Further, we 
request that parties submitting briefs and rebuttal briefs provide the 
Department with a copy of the public version of such briefs on 
diskette.
    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. If a request 
for a hearing is made, we will tentatively hold the hearing two days 
after the deadline for submission of rebuttal briefs at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, DC 20230, at a time and in a room to be determined. Parties 
should confirm by telephone the date, time, and location of the hearing 
48 hours before the scheduled date. Interested parties who wish to 
request a hearing, or to participate in a hearing 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 date of 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. At the 
hearing, oral presentations will be limited to issues raised in the 
briefs. See 19 CFR 351.310(c). The Department will make its final 
determination no later than 75 days after this preliminary 
determination.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act.

    Dated: September 26, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-25188 Filed 10-02-02; 8:45 am]
BILLING CODE 3510-DS-S