Antidumping: Solid fertilizer grade ammonium nitrate from— Russian Federation,

[Federal Register: August 19, 1999 (Volume 64, Number 160)]

[Notices]

[Page 45236-45239]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr19au99-40]

DEPARTMENT OF COMMERCE

International Trade Administration

[A-821-811]

Initiation of Antidumping Duty Investigation: Solid Fertilizer Grade Ammonium Nitrate From the Russian Federation

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

EFFECTIVE DATE: August 19, 1999.

FOR FURTHER INFORMATION CONTACT: Rick Johnson at (202) 482-3818, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230.

INITIATION OF INVESTIGATION:

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (``the Act'') by the Uruguay Round Agreements Act (``URAA''). In addition, unless otherwise indicated, all citations to the Department's regulations are references to the provisions codified at 19 CFR Part 351 (1998).

The Petition

On July 23, 1999, the Department of Commerce (``the Department'') received a petition filedin proper form by the Committee for Fair Ammonium Nitrate Trade (``COFANT'' or ``petitioner''), whose members are domestic producers of solid fertilizer grade ammonium nitrate. The Department received supplemental information to the petition on August 6, 1999.

In accordance with section 732(b) of the Act, petitioner alleges that imports of fertilizer grade ammonium nitrate from the Russian Federation (``Russia'') are being, or are likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Act, and that such imports are materially injuring an industry in the United States.

The Department finds that petitioner filedthe petition on behalf of the domestic industry because it is an interested party as defined in sections 771(9)(C) and (F) of the Act and has demonstrated sufficient industry support with respect to the investigation it is requesting the Department to initiate (see Determination of Industry Support for the Petition below).

Scope of Investigation

For purposes of this investigation, the products covered are solid, fertilizer grade ammonium nitrate products, whether prilled, granular or in other solid form, with or without additives or coating, and with a bulk density equal to or greater than 53 pounds per cubic foot. Specifically excluded from this scope is solid ammonium nitrate with a bulk density less than 53 pounds per cubic foot (commonly referred to as industrial or explosive grade ammonium nitrate).

The merchandise subject to this investigation is classified in the Harmonized Tariff Schedule of the United States (``HTSUS'') at subheading 3102.30.00.00. Although the HTSUS subheadings are provided for convenience and Customs purposes, the written description of the merchandise under investigation is dispositive.

During our review of the petition, we discussed the scope with petitioner to ensure that the scope in the petition accurately reflects the product for which the domestic industry is seeking relief. Moreover, as we discussed in the preamble to the Department's regulations (62 FR 27323), we are setting aside a period for parties to raise issues regarding product coverage. In particular, we seek comments on the

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specific densities of fertilizer grade ammonium nitrate set out in the description above. The Department encourages all parties to submit such comments by August 23, 1999. Comments should be addressed to Import Administration's Central Records Unit at Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, D.C. 20230. The period of scope consultations is intended to provide the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of the preliminary determination.

Determination of Industry Support for the Petitions

Section 732(b)(1) of the Act requires that a petition be filedon behalf of the domestic industry. Section 732(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (1) at least 25 percent of the total production of the domestic like product; and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition.

Section 771(4)(A) of the Act defines the ``industry'' as the producers of a domestic like product. Thus, to determine whether the petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The International Trade Commission (``ITC''), which is responsible for determining whether ``the domestic industry'' has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to the law.‹SUP›1‹/SUP›

\1\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 639, 642-44 (CIT 1988); High Information Content Flat Panel Displays and Display Glass Therefore from Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991).

Section 771(10) of the Act defines the domestic like product as ``a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.'' Thus, the reference point from which the domestic like product analysis begins is ``the article subject to an investigation,'' i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition. Moreover, petitioner does not offer a definition of domestic like product distinct from the scope of the investigation.

The domestic like product referred to in the petition is the single domestic like product defined in the ``Scope of the Investigation'' section, above. The Department has no basis on the record to find the petitioner's definition of domestic like product to be inaccurate. We found that petitioner submitted sufficient reasonably available information that there is a clear dividing line between fertilizer and explosive grade ammonium nitrate based on their physical characteristics and uses. The Department has, therefore, adopted the domestic like product definition set forth in the petition.

The Department has determined that the petition contains accurate and adequate evidence of industry support because petitioner established industry support representing 74 percent of total production of the domestic like product (see Attachment to the Initiation Checklist, Re: Industry Support, August 12, 1999).

Accordingly, the Department determines that this petition is filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.

Export Price and Normal Value

Petitioner identified (1) JSC Angarsk Petrochemical Co., (2) JSC Berezniki Azot, (3) JCS Cherepovets PO Azot, (4) JSC Dorogobuzh, (5) JSC Kemerovo ``Azot,'' (6) JSC Kirovo-Chepetsk, (7) JSC Meleuz Prod. Assoc. Minudobreniya, (8) JSC Nevinnomysskiy Azot, (9) JSC Acron, (10) JSC Novomendeleyevsk Chemical Plant, (11) JSC Novomoskovsk AK ``Azot,'' (12) JSC ``Minudobreniya'', and (13) JSC ``Kuybyshevazot'' as possible producers/exporters of solid fertilizer grade ammonium nitrate from Russia. Petitioner further asserted that two of these producers, JSC Acron and JSC Nevinnomysskiy Azot, have exported significant amounts of ammonium nitrate into the United States during the last twelve months.

Petitioner based export price (``EP'') on two methods: (1) import values declared to the U.S. Customs Service during the anticipated period of investigation (``POI''); and (2) an actual U.S. selling price known to petitioner based on a quote in the anticipated POI provided by a U.S. importer on an ex-factory basis. Petitioner based its calculation of EP on the average unit value (customs value) of ammonium nitrate from Russia, as provided by the U.S. Bureau of the Census, for the applicable HTSUS category (3102.30) for the period January, 1999 through May, 1999. Petitioner deducted foreign inland freight from the customs value in order to obtain ex-factory prices. In order to calculate foreign inland freight, petitioner used Polish rail and truck rates because the per-capita GNP of Poland is much closer to Russia's GNP than is U.S. GNP, and because petitioner found transport rates on a per ton basis, based on distance traveled. Petitioner also used the Polish transport rates because they were the only published reasonably available to petitioner, and petitioner had no reasonable basis to know whether Russian producers relied on truck or rail transport to move the product from plant to port. Petitioner calculated foreign inland freight for the two significant producers noted above. Using estimated distances for each of these producers, petitioner calculated both a rail freight and truck freight estimate, and calculated normal values (``NV'') based on each of these estimates. Based on the information provided by petitioner, we believe that the use of Polish transport rates represents accurate and adequate information reasonably available to petitioner and is acceptable for purposes of initiation of this investigation.

In order to calculate actual U.S. selling prices known to petitioner, petitioner relied on a quote offered to an unaffiliated purchaser. Because the price was based on a ex-factory basis, no adjustments were made for foreign inland freight.

Petitioner asserted that Russia is a non-market economy country (``NME'') to the extent that sales or offers for sale of such or similar merchandise in Russia or to third countries do not permit calculation of NV under 19 CFR 351.404. Petitioner, therefore, constructed NV based on the factors of production methodology pursuant to section 773(c) of the Act. In previous investigations, the Department has determined that Russia is an NME. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Hot-Rolled Flat- Rolled Carbon-Quality Steel Products from the Russian Federation, 64 FR 38626 (July 19, 1999) (``Russian HR Steel''). In accordance with section

[[Page 45238]]

771(18)(C)(i) of the Act, a determination of NME status remains in effect until revoked by the Department. The determination of NME status for Russia has not been revoked by the Department and, therefore, remains in effect for purposes of the initiation of this investigation. Accordingly, the NV of the product appropriately is based on factors of production valued in a surrogate market economy country in accordance with section 773(c) of the Act. In the course of this investigation, all parties will have the opportunity to provide relevant information related to the issues of Russia's NME status and the granting of separate rates to individual exporters. See, e.g., Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the PRC, 59 FR 22585 (May 2, 1994).

For the calculation of NV, petitioner based the factors of production, as defined by section 773(c)(3) of the Act (raw materials, labor, energy and capital cost), for ammonium nitrate on the quantities of inputs used by a representative U.S. producer. Petitioner stated that it was unable to furnish information on Russian factors of production. Thus, petitioner has assumed, for purposes of the petition, that producers in Russia use the same inputs in the same quantities as petitioner. Because data regarding the quantities of inputs used by Russian producers was not reasonably available to petitioner, for purposes of this initiation we have accepted petitioner's U.S. quantities.

Petitioner selected Poland as its primary surrogate. Petitioner stated that the per-capita GNP of Poland differs only slightly from that of Russia and, thus, it maintains that Poland is the most suitable surrogate among the potential surrogates, because it is at a comparable level of economic development and is a significant producer of comparable merchandise (in accordance with section 773(c)(4) of the Act). Based on the information provided by petitioner, we believe that the petition contains adequate and accurate information supporting its allegation for using Poland as a surrogate country for purposes of initiation of this investigation.

In accordance with section 773(c)(4) of the Act, petitioner valued factors of production, where possible, on reasonably available, public surrogate country data. Labor was valued using the regression-based wage rate for Russia provided by the Department, in accordance with 19 CFR 351.408(c)(3). Electricity and natural gas were valued using the rate for Poland published in a quarterly report of the OECD's International Energy Agency for the fourth quarter of 1998. Petitioner attempted to obtain Polish import values for materials used in the production of ammonium nitrate, but stated that it could not reasonably obtain publicly available surrogate information from a comparable economy. Because petitioner could not reasonably identify this information for materials used in the production of ammonium nitrate (chemicals, stabilizers, coating agents and catalysts), petitioner relied on costs incurred by the U.S. producer to value the usage requirements, which represent only a small portion of total production costs. For overhead (exclusive of depreciation), depreciation, general expenses, and profit, petitioner applied rates derived from the 1997 public annual report of a Polish producer of subject merchandise, Zaklady Azotowe Kedzierzyn (``ZAK''). For purposes of initiation, we made two minor revisions to general expenses. For a further discussion of this revision, see Initiation Checklist, page 6, and Attachment III, dated August 12, 1999. Based on the information provided by petitioner, we believe that the surrogate values represent information reasonably available to petitioner and are acceptable for purposes of initiation of this investigation. For a more detailed discussion of home market price, U.S. price, factors of production and sources of data, see Initiation Checklist, dated August 12, 1999. Should the need arise to use as facts available under section 776 of the Act any of this information in our preliminary or final determinations, we may re- examine the information and revise the margin calculations, if appropriate.

Based on comparisons of EP to NV, calculated in accordance with section 773(c) of the Act, the calculated dumping margins for ammonium nitrate from Russia range from 112.08 to 357.09 percent.

Fair Value Comparisons

Based on the data provided by petitioner, there is reason to believe that imports of solid fertilizer grade ammonium nitrate from Russia are being, or are likely to be, sold at less than fair value.

Critical Circumstances

Petitioner has alleged that critical circumstances exist with regard to imports of solid fertilizer grade ammonium nitrate from Russia, and has supported its allegations with the following information.

First, petitioner claims that there is a history of injurious dumping of the subject merchandise by Russian producers. Petitioner argues that the Department considers the existence of an antidumping duty order covering the subject merchandise in another country as sufficient evidence of a history of injurious dumping. Petitioner provided a copy of a 1995 antidumping order imposed by the European Union on imports of Russian ammonium nitrate (see Exhibit 32, Petition dated July 23, 1999). Since this order is still in effect, petitioner claims that there is a history of injurious dumping by Russian producers of the subject merchandise.

Petitioner also has alleged that imports from Russia have been massive over a relatively short period. Alleging that there was sufficient pre-filing notice of the antidumping duty petition, petitioner contends that the Department should compare imports during September-December 1998 (base period) to imports during January-April 1999 (comparison period) for purposes of this determination, as provided in 19 CFR. 351.206(h)(2)(i). Specifically, petitioner supported this allegation with copies of news articles discussing the likelihood of filing antidumping complaints against Russian ammonium nitrate producers. See Petition dated July 23, 1999, Exhibit 37. According to the import statistics contained in the petition, during the time periods petitioner has requested for comparison, imports of ammonium nitrate from Russia increased by 270.35 percent (based on volume) from the period September-December 1998 to the period January- April 1999.

In the instant case, the increase in imports was more than fifteen times the amount considered ``massive.'' Taking into consideration the foregoing, we find that petitioner has alleged the elements of critical circumstances and supported them with information reasonably available for purposes of initiating a critical circumstances inquiry. For these reasons, we will investigate this matter further and will make a preliminary determination at the appropriate time, in accordance with section 735(e)(1) of the Act and Department practice (see Policy Bulletin 98/4 (63 FR 55364, October 15, 1998)).

Allegations and Evidence of Material Injury and Causation

Petitioner alleges that the U.S. industry producing the domestic like product is being materially injured, and is threatened with material injury, by reason of the individual and cumulated imports of the subject merchandise sold at less than NV. Petitioner explained that the industry's injured condition is evident in the declining trends in net

[[Page 45239]]

operating profits, net sales volumes, as well as domestic prices of ammonium nitrate. The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, lost sales, and pricing information. The Department assessed the allegations and supporting evidence regarding material injury and causation and determined that these allegations are supported by accurate and adequate evidence and meet the statutory requirements for initiation (see Attachments to Initiation Checklist, Re: Material Injury, August 12, 1999).

Initiation of Antidumping Investigation

Based upon our examination of the petition on solid fertilizer grade ammonium nitrate and petitioner's responses to our supplemental questionnaire clarifying the petition, we have found that the petition meets the requirements of section 732 of the Act. Therefore, we are initiating an antidumping duty investigation to determine whether imports of solid fertilizer grade ammonium nitrate from Russia are being, or are likely to be, sold in the United States at less than fair value. Unless this deadline is extended, we will make our preliminary determinations no later than 140 days after the date of this initiation.

Distribution of Copies of the Petition

In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of the petition has been provided to the representatives of Russia. We will attempt to provide a copy of the public version of the petition to each exporter named in the petition, as appropriate.

International Trade Commission Notification

We have notified the ITC of our initiations, as required by section 732(d) of the Act.

Preliminary Determination by the ITC

The ITC will determine, by no later than September 7, 1999, whether there is a reasonable indication that imports of solid fertilizer grade ammonium nitrate from Russia are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination will result in the investigation being terminated; otherwise, this investigation will proceed according to statutory and regulatory time limits.

This notice is published pursuant to section 777(i) of the Act.

Dated: August 12, 1999. Bernard Carreau, Acting Assistant Secretary for Import Administration.

[FR Doc. 99-21569Filed8-18-99; 8:45 am]

BILLING CODE 3510-DS-P

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