[Federal Register Volume 76, Number 117 (Friday, June 17, 2011)]
[Notices]
[Pages 35405-35408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-15123]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-821-801]


Solid Urea From the Russian Federation: Preliminary Results of 
Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on solid urea from 
the Russian Federation (Russia). The review covers one producer/
exporter of the subject merchandise, MCC EuroChem (EuroChem). The 
period of review (POR) is July 1, 2009, through June 30, 2010. We 
preliminarily determine that EuroChem sold the subject merchandise at 
less than normal value during the POR.
    We invite interested parties to comment on these preliminary 
results. Parties who submit argument in this proceeding are requested 
to submit with the argument (1) a statement of the issue and (2) a 
brief summary of the argument.

DATES: Effective Date: June 17, 2011.

FOR FURTHER INFORMATION CONTACT: Dustin Ross or Minoo Hatten, AD/CVD 
Operations, Office 5, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
0747 or (202) 482-1690, respectively.

SUPPLEMENTARY INFORMATION:

[[Page 35406]]

Background

    On July 14, 1987, the Department published the antidumping duty 
order on solid urea from the Union of Soviet Socialist Republics 
(Soviet Union). See Antidumping Duty Order; Urea From the Union of 
Soviet Socialist Republics, 52 FR 26367 (July 14, 1987). Following the 
break-up of the Soviet Union, the antidumping duty order on solid urea 
from the Soviet Union was transferred to the individual members of the 
Commonwealth of Independent States. See Solid Urea From the Union of 
Soviet Socialist Republics; Transfer of the Antidumping Duty Order on 
Solid Urea From the Union of Soviet Socialist Republics to the 
Commonwealth of Independent States and the Baltic States and 
Opportunity to Comment, 57 FR 28828 (June 29, 1992).
    Pursuant to section 751(a)(1) of the Tariff Act of 1930, as amended 
(the Act), and 19 CFR 351.213(b), the Ad Hoc Committee of Domestic 
Nitrogen Producers and its individual urea-producing members, CF 
Industries, Inc., and PCS Nitrogen (collectively, the petitioner), 
requested an administrative review of the antidumping duty order on 
solid urea from Russia with respect to EuroChem on July 28, 2010. On 
August 31, 2010, in accordance with 19 CFR 351.221(c)(1)(i), we 
published a notice of initiation of administrative review of the order. 
See Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Deferral of Initiation of Administrative Review, 75 FR 
53274 (August 31, 2010). On March 23, 2011, we extended the deadline 
for the preliminary results by 75 days to June 16, 2011. See Solid Urea 
From the Russian Federation: Extension of Time Limit for Preliminary 
Results of Antidumping Duty Administrative Review, 76 FR 17380 (March 
29, 2011). We are conducting the administrative review of the order in 
accordance with section 751(a) of the Act.

Scope of the Order

    The merchandise subject to the order is solid urea, a high-nitrogen 
content fertilizer which is produced by reacting ammonia with carbon 
dioxide. The product is currently classified under the Harmonized 
Tariff Schedule of the United States (HTSUS) item number 3102.10.00.00. 
Such merchandise was classified previously under item number 480.3000 
of the Tariff Schedules of the United States. Although the HTSUS 
subheading is provided for convenience and customs purposes, the 
written description of the merchandise subject to the order is 
dispositive.

Fair-Value Comparisons

    To determine whether EuroChem's sales of solid urea from Russia 
were made in the United States at less than normal value, we compared 
the constructed export price (CEP) to the normal value as described in 
the ``Constructed Export Price'' and ``Normal Value'' sections of this 
notice.
    When making this comparison in accordance with section 771(16) of 
the Act, we considered all products sold in the home market as 
described in the ``Scope of the Order'' section of this notice, above, 
that were in the ordinary course of trade for purposes of determining 
an appropriate product comparison to the U.S. sale. If an identical 
home-market model with identical physical characteristics as described 
below was reported, we made comparisons to weighted-average home-market 
prices that were based on all sales of the identical product during a 
contemporaneous month. If there were no contemporaneous sales of an 
identical model, we identified sales of the most similar merchandise 
that were most contemporaneous with the U.S. sale in accordance with 19 
CFR 351.414(e).

Product Comparisons

    In accordance with section 771(16) of the Act, we compared products 
produced by EuroChem and sold in the U.S. and home markets on the basis 
of the comparison product which was closest in terms of the physical 
characteristics to the product sold in the United States. In the order 
of importance, these characteristics are form, grade, nitrogen content, 
size, urea-formaldehyde content, other additive/conditioning agent, 
coating agent, and biuret content.

Date of Sale

    Section 351.401(i) of the Department's regulations states that, 
normally, the Department will use the date of invoice, as recorded in 
the producer's or exporter's records kept in the ordinary course of 
business, as the date of sale. The regulation provides further that the 
Department may use a date other than the date of the invoice if the 
Secretary is satisfied that a different date better reflects the date 
on which the material terms of sale are established. The Department has 
a long-standing practice of finding that, where shipment date precedes 
invoice date, shipment date better reflects the date on which the 
material terms of sale are established. See Notice of Final 
Determination of Sales at Less Than Fair Value and Negative Final 
Determination of Critical Circumstances: Certain Frozen and Canned 
Warmwater Shrimp From Thailand, 69 FR 76918 (December 23, 2004), and 
accompanying Issues and Decision Memorandum at Comment 10; see also 
Notice of Final Determination of Sales at Less Than Fair Value: 
Structural Steel Beams From Germany, 67 FR 35497 (May 20, 2002), and 
accompanying Issues and Decision Memorandum at Comment 2.
    For all U.S. sales, EuroChem reported contract date as the date of 
sale. EuroChem defines contract date as the date on which the material 
terms of sale are established and no longer subject to change. In those 
cases where a price addendum to the contract was issued, EuroChem 
considers the addendum date to be the final contract date where all the 
material terms of sale are established and no longer subject to change. 
Based on record evidence, all material terms of sale are established on 
the date of contract or the date of the price addendum to the contract. 
Therefore, we have used contract date as reported by EuroChem as the 
date of sale for all U.S. sales.
    With respect to EuroChem's home-market sales, price and quantity 
are subject to change until invoicing. Because the material terms of 
sale are not established until invoicing, we have used invoice date as 
the date of sale in the home market except, in cases where shipment 
date precedes invoice date, we have used the shipment date as the date 
of sale in the home market.

Constructed Export Price

    In accordance with section 772(b) of the Act, we used CEP for 
EuroChem because the subject merchandise was sold in the United States 
by a U.S. seller affiliated with the producer and export price was not 
otherwise indicated.
    We calculated CEP based on the free-on-board or delivered price to 
unaffiliated purchasers in, or for exportation to, the United States. 
We also made deductions for any movement expenses in accordance with 
section 772(c)(2)(A) of the Act. In accordance with section 772(d)(1) 
of the Act, we calculated the CEP by deducting selling expenses 
associated with economic activities occurring in the United States, 
which includes direct selling expenses and indirect selling expenses. 
Finally, we made an adjustment for profit allocated to these expenses 
in accordance with section 772(d)(3) of the Act.

Normal Value

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for

[[Page 35407]]

calculating normal value (i.e., the aggregate volume of home-market 
sales of the foreign like product is five percent or more of the 
aggregate volume of U.S. sales), we compared the volume of EuroChem's 
home-market sales of the foreign like product to the volume of its U.S. 
sales of subject merchandise in accordance with section 773(a)(1)(C) of 
the Act. Based on this comparison, we determined that EuroChem had a 
viable home market during the POR. Consequently, we based normal value 
on home-market sales to unaffiliated purchasers made in the usual 
quantities in the ordinary course of trade and sales made to affiliated 
purchasers where we find prices were made at arm's length, described in 
detail below.
    We based normal value on the starting prices to home-market 
customers. Pursuant to section 773(a)(6)(B)(ii) of the Act, we deducted 
movement expenses EuroChem incurred on its home-market sales. Pursuant 
to section 773(a)(6)(B)(i) of the Act, we deducted home-market packing 
costs. We made deductions for direct selling expenses, as appropriate.

Affiliation

    The Department may calculate normal value based on a sale to an 
affiliated party only if it is satisfied that the price to the 
affiliated party is comparable to the price at which sales are made to 
parties not affiliated with the exporter or producer, i.e., sales were 
made at arm's-length prices. See 19 CFR 351.403(c). We exclude from our 
analysis transactions to affiliated customers for consumption in the 
home market that we determine were not sold at arm's-length prices.
    To test whether EuroChem's sales to affiliated parties were made at 
arm's-length prices, we compared the prices of sales of comparable 
merchandise to affiliated and unaffiliated customers, net of all 
rebates, movement charges, direct selling expenses, and packing. 
Pursuant to 19 CFR 351.403(c) and in accordance with our practice, when 
the prices charged to an affiliated party were, on average, between 98 
and 102 percent of the prices charged to unaffiliated parties for 
merchandise comparable to that sold to the affiliated party, we 
determined that the sales to the affiliated party were at arm's-length 
prices. See Antidumping Proceedings: Affiliated Party Sales in the 
Ordinary Course of Trade, 67 FR 69186 (November 15, 2002). We included 
in our calculation of normal value those sales to affiliated parties 
that were made at arm's-length prices. Where we excluded sales because 
they were not at arm's-length prices, we used, based on the information 
we requested and EuroChem provided, data related to sales of the 
foreign like product made by the affiliated parties' home-market 
customers.
    The petitioner alleges in this review that, through the provisions 
of its concession agreement with its home-market franchisees, EuroChem 
is in a position, potentially, to exhibit control over the franchisees. 
Therefore, they assert, the Department should treat EuroChem's 
franchisees as affiliates and, for sales to those franchisees that do 
not pass the arm's-length test, request the data for downstream sales.
    Based on information on the record, the Department preliminarily 
does not find that affiliation exists between EuroChem and its 
franchisees. For a detailed discussion of this issue, see Memorandum to 
Laurie Parkhill dated concurrently with this notice entitled ``Solid 
Urea from the Russian Federation--Affiliation Analysis.''

Level of Trade

    To the extent practicable, we determined normal value for sales at 
the same level of trade as the U.S. sales. When there were no sales at 
the same level of trade, we compared U.S. sales to home-market sales at 
a different level of trade. The normal-value level of trade is that of 
the starting-price sales in the home market. To determine whether home-
market sales are at a different level of trade than U.S. sales, we 
examined stages in the marketing process and selling functions along 
the chain of distribution between the producer and the unaffiliated 
customer.
    In the home market, EuroChem reported a single channel of 
distribution. Within this single channel of distribution, EuroChem 
reported a single level of trade for all three customer types (i.e., 
distributors, traders, and end-users). After analyzing the data on the 
record with respect to the selling functions performed for each 
customer type, we find that EuroChem made all home-market sales at a 
single marketing stage (i.e., one level of trade) in the home market.
    In the U.S. market, EuroChem had only CEP sales through its 
affiliated reseller to unaffiliated customers through a single channel 
of distribution and, thus, a single level of trade. See section 772(b) 
of the Act. We found that there were significant differences between 
the selling activities associated with the CEP level of trade and those 
associated with the home-market level of trade. For example, the CEP 
level of trade involved little or no sales-strategic and economic 
planning, personnel training, advertising, distributor/dealer training, 
procurement/sourcing service, packing, and sales/marketing support. 
Therefore, we considered the CEP level of trade to be different from 
the home-market level of trade and at a less advanced stage of 
distribution than the home-market level of trade. Consequently, we 
could not match U.S. sales to sales at the same level of trade in the 
home market nor could we determine a level-of-trade adjustment based on 
EuroChem's home-market sales of the foreign like product. Because the 
data available do not provide an appropriate basis to determine a 
level-of-trade adjustment and the home-market level of trade is at a 
more advanced stage of distribution than the CEP, we have made a CEP-
offset adjustment to normal value in accordance with section 
773(a)(7)(B) of the Act. The CEP offset is the sum of indirect selling 
expenses incurred on the home-market sales up to the amount of indirect 
selling expenses incurred on the U.S. sales.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that a 
dumping margin of 1.17 percent exists for EuroChem for the period July 
1, 2009, through June 30, 2010.

Disclosure and Comment

    We will disclose the calculations used in our analysis to parties 
to this review within five days of the date of publication of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of the publication of this notice in the Federal 
Register. See 19 CFR 351.310(c). If a hearing is requested, the 
Department will notify interested parties of the hearing schedule.
    Interested parties are invited to comment on the preliminary 
results of this review. Interested parties may submit case briefs 
within 30 days of the date of publication of this notice. See 19 CFR 
351.309(c). 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 of this notice. See 19 CFR 351.309(d). Parties who submit 
case briefs or rebuttal briefs in this review are requested to submit 
with each argument (1) a statement of the issue and (2) a brief summary 
of the argument with an electronic version included.
    We intend to issue the final results of this administrative review, 
including the results of our analysis of issues raised in the case 
briefs, within 120 days after the date on which the preliminary results 
are published. See 19 CFR 351.213(h)(1).

[[Page 35408]]

Assessment Rates

    The Department shall determine, and the U.S. Customs and Border 
Protection (CBP) shall assess, antidumping duties on all appropriate 
entries. In accordance with 19 CFR 351.212, we have calculated for 
EuroChem an importer/customer-specific assessment rate for these 
preliminary results of review. We will instruct CBP to assess the 
importer/customer-specific rate on applicable entries of subject 
merchandise made by the importer during the POR.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. This clarification applies to entries of subject 
merchandise during the POR produced by EuroChem where EuroChem did not 
know that its merchandise was destined for the United States. In such 
instances, we will instruct CBP to liquidate unreviewed entries at the 
all-others rate if there is no rate for the intermediate company(ies) 
involved in the transaction. For a full discussion of this 
clarification, see Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).
    The Department intends to issue assessment instructions to CBP 15 
days after the date of publication of the final results of this 
administrative review.

Cash Deposit Requirements

    The following deposit requirements will be effective upon 
publication of the notice of final results of administrative review for 
all shipments of subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the date of publication, as 
provided by section 751(a)(1) of the Act: (1) The cash deposit rate for 
EuroChem will be the rate established in the final results of this 
review; (2) for previously reviewed or investigated companies not 
listed above, the cash deposit rate will continue to be the company-
specific rate published for the most recent period; (3) if the exporter 
is not a firm covered in this review or the less-than-fair-value 
investigation but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; (4) the cash deposit rate for all other manufacturers 
or exporters will continue to be 64.93 percent, the all-others rate 
established in Urea From the Union of Soviet Socialist Republics; Final 
Determination of Sales at Less Than Fair Value, 52 FR 19557 (May 26, 
1987). These cash deposit requirements, when imposed, shall remain in 
effect until further notice.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f)(2) 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.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: June 10, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2011-15123 Filed 6-16-11; 8:45 am]
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