Titanium Sponge from the Russian Federation: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration A-821-803

Titanium Sponge from the Russian Federation: Preliminary Results

of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review

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SUMMARY: In response to requests from AVISMA Titanium-Magnesium Works

(AVISMA), Interlink Metals, Inc. and Interlink Metals & Chemicals, S.A.

(collectively, Interlink), Cometals, Inc. (Cometals), TMC Trading

International Ltd. (TMC), and Titanium Metals Corporation (TIMET, a

petitioner), the Department of Commerce (the Department) is conducting

an administrative review of the antidumping finding on titanium sponge

from the Russian Federation (Russia). This notice of preliminary

results covers the period August 1, 1995 through July 31, 1996. This

review covers one manufacturer/exporter, AVISMA, and three trading

companies, Interlink, Cometals, and TMC.

We have preliminarily determined that dumping margins apply during

this review period. If these preliminary results are adopted in our

final results of administrative review, we will instruct the U.S.

Customs Service (Customs) to assess antidumping duties equal to the

difference between the United States price (USP) and the normal value

(NV). Interested parties are invited to comment on these preliminary

results. Parties who submit arguments in this proceeding are requested

to submit with the argument: (1) a statement of the issue; and (2) a

brief summary of the argument.

EFFECTIVE DATE: May 12, 1997.

FOR FURTHER INFORMATION CONTACT: Amy S. Wei or James Terpstra, Office

of AD/CVD Enforcement, Office 4, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution

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Avenue, NW., Washington, DC 20230; telephone (202) 482-4737.

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 Rounds Agreements Act (URAA). In addition, unless

otherwise indicated, all citations to the Department's regulations are

to the current regulations, as amended by the interim regulations

published in the Federal Register on May 11, 1995 (60 FR 25130).

Background

The Department published an antidumping finding on titanium sponge

from the Union of Soviet Socialist Republics (U.S.S.R.) on August 28,

1968 (33 FR 12138). In December 1991, the U.S.S.R. divided into fifteen

independent states. To conform to these changes, the Department changed

the original antidumping finding into fifteen findings applicable to

the each of the former republics of the U.S.S.R. (57 FR 36070, August

12, 1992).

The Department published a notice of ``Opportunity To Request an

Administrative Review'' of the antidumping finding from Russia for this

review period on August 12, 1996 (61 FR 41768). On August 29, 1996,

AVISMA and Interlink requested that the Department conduct an

administrative review of the antidumping finding on titanium sponge

from Russia for one manufacturer/exporter, AVISMA, and one trading

company, Interlink, covering the period August 1, 1995 through July 31,

1996. On August 30, 1996, TIMET requested that the Department conduct

an administrative review for AVISMA, Interlink, and another trading

company, Cometals. On the same date, Cometals and TMC both requested

that the Department conduct an administrative review for each

respective company. We published a notice of initiation of the review

on September 17, 1996 (61 FR 48882).

The Department is now conducting this administrative review in

accordance with section 751 of the Act.

Scope of the Review

The product covered by this administrative review is titanium

sponge from Russia. Titanium sponge is chiefly used for aerospace

vehicles, specifically, in construction of compressor blades and

wheels, stator blades, rotors, and other parts in aircraft gas turbine

engines. Imports of titanium sponge are currently classifiable under

the harmonized tariff schedule (HTS) subheading 8108.10.50.10. The HTS

subheading is provided for convenience and U.S. Customs purposes. Our

written description of the scope of this proceeding is dispositive.

The period of review (POR) is August 1, 1995 through July 31, 1996.

The review covers one manufacturer/exporter, AVISMA, and three trading

companies, TMC, Interlink, and Cometals.

Verification

As provided in section 782(i) of the Act, we verified the

information provided by TMC by using standard verification procedures,

including examination of relevant sales and financial records and

selection of original documentation containing relevant information.

Our verification results are outlined in the public versions of the

verification reports, which are on file in the public file of the

Central Records Unit (Room B-099 in the Department of Commerce).

Affiliation

TIMET, a petitioner, alleged that an affiliation existed between

TMC and AVISMA, within the context of section 771(33) of the Act. TIMET

based these allegations on newspaper and magazine articles and TMC's

submissions, which indicated that TMC and AVISMA may have been

connected through a common entity. TIMET requested that the Department

further scrutinize this relationship and ensure that TMC has fully

disclosed its corporate structure.

In response, the Department issued several supplemental

questionnaires to TMC and AVISMA regarding any relationships that may

exist between them within the context of section 771(33) of the Act.

TMC and AVISMA both responded to questions regarding control and equity

in each respective company.

After analyzing the totality of the responses, we have determined

that it is not necessary to address this affiliation issue for the

purposes of this review. We determined that regardless of whether any

affiliation between TMC and AVISMA exists, we would perform our

calculations and analysis in the same manner. The relevant transaction

for U.S. price is that of TMC to the first unaffiliated customer in the

United States. As with other third-country resellers in an NME context

where, as in this case, the producer does not know the ultimate

destination of the merchandise, we will base U.S. price on the sale

between TMC and its unaffiliated U.S. customer and normal value on the

producer's (e.g., AVISMA's) factors of production. Insofar as AVISMA

did not make any direct shipments to the United States (see below) and

did not have knowledge of the ultimate destination of the merchandise

sold through TMC, all relevant sales to the United States are captured

in our analysis without making an affiliation determination.

United States Price (USP)

AVISMA and Cometals

We determined that AVISMA's and Cometals' exports during the POR

entered the United States under temporary importation bonds (TIBs).

This entry information was provided to the Department by respondents in

their questionnaire responses and confirmed by Customs. At this time,

because merchandise entered under a TIB is not entered for consumption,

such merchandise is not subject to the antidumping finding. See

Titanium Metals Corp. v. The United States, 901 F.Supp 362 (CIT 1995).

Therefore, we determined that AVISMA and Cometals did not export

for consumption any subject merchandise to the United States during the

review period. If these preliminary results are adopted in our final

results of review, AVISMA will continue to be subject to the current

Russia-wide cash deposit rate of 83.96 percent and Cometals will

continue to be subject to its current cash deposit rate of 28.31

percent, which are the rates established in the final results of the

most recent administrative review of titanium sponge from Russia (61 FR

58525, November 15, 1996).

Interlink and TMC

Interlink and TMC are located in market-economy countries. For

purposes of this review, we are calculating a separate rate for these

resellers. In calculating USP for Interlink and TMC, we used export

price, as defined in section 772(a) of the Act. For date of sale, we

used the sales invoice date because this is the date when the price and

quantity are set. We excluded those sales made to the United States

which the respondents identified as having entered the United States

under TIBs. Respondents provided information regarding TIB entries, and

we were able to confirm this information through Customs and National

Census Bureau data.

We calculated export price based on the price to unaffiliated

purchasers in the United States. We made deductions, where appropriate,

for ocean freight,

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warehouse expenses, insurance, brokerage and handling, inland freight,

and U.S. duty charges.

No other adjustments to USP were claimed or allowed.

Surrogate Country Selection

Section 773(c)(1) of the Act provides that the Department shall

determine the normal value on the basis of the value of the factors of

production if (1) the subject merchandise is exported from a non-market

economy (NME) country, and (2) the available information does not

permit the calculation of normal value under section 773(a) of the Act.

In previous proceedings, the Department has considered Russia an NME

country. See Final Determination of Sales at Less Than Fair Value: Pure

Magnesium and Alloy Magnesium from the Russian Federation (Magnesium),

60 FR 16440 (March 30, 1995); Final Determination of Sales at Less Than

Fair Value: Ferrovanadium and Nitrided Vanadium from the Russian

Federation, 60 FR 27957 (May 26, 1995). Section 771(18)(C) of the Act

states that ``any determination that a foreign country is a nonmarket

economy country shall remain in effect until revoked by the

administering authority.'' Because this NME status has not been revoked

for Russia, we are considering Russia an NME country for purposes of

this review. Therefore, because AVISMA is located in Russia, we are not

able to determine normal value on the basis of AVISMA's costs and

prices. Therefore, we have applied surrogate values to the factors of

production to determine normal value.

We calculated normal value based on factors of production provided

by AVISMA, in accordance with section 773(c)(1) of the Act and 19 CFR

353.52 of the Department's regulations. We determined that Brazil is

comparable to the Russian Federation in terms of per capita gross

national product (GNP), the growth rate in per capita GNP, and the

national distribution of labor. In addition, Brazil is a significant

producer of comparable merchandise. Therefore, in accordance with

section 773(c)(4) of the Act, we chose Brazil as a comparable surrogate

on the basis of the above criteria and have used publicly available

information relating to Brazil to value the various factors of

production. See Memorandum to Holly A. Kuga from David Mueller,

Titanium Sponge from Russia: Nonmarket Economy Status and Surrogate

Country Selection, October 28, 1996.

Normal Value

To determine the normal value, in accordance with section 773(c)(3)

of the Act, we valued the factors of production as follows (for further

discussion, see the analysis memorandum for these preliminary results,

on file in the Central Records Unit):

To value raw materials, we used Brazilian import data from

the United Nations Trade Commodity Statistics (UN Trade Statistics) for

January through December 1995. We adjusted certain factor values to

reflect the actual purity used in the production of the subject

merchandise. For those raw materials for which we were unable to obtain

public information from Brazil, we used data provided for use in the

final determination of sales at less than fair value (LTFV) for pure

magnesium and alloy magnesium from the Russian Federation (magnesium

from Russia) and in AVISMA's March 12, 1997 submission.

To value truck and railcar freight, we used the rates

reported by the National Confederation of Transport in Brazil for 1996,

as identified by the American Consular Agency in Belo Horizonte,

Brazil. These rates were provided by the distance traveled and, for

truck rates, by the quantity transported.

For energy, because there was no public information

available to value the natural gas factor during the POR, we valued the

factor using information from the UN Trade Statistics, covering the

period January through December 1994. Because the value was denominated

in U.S. dollars, we did not adjust for the effects of inflation. For

electricity, we used the ``large industry user'' rate from Brazil's

electricity tariff schedule that AVISMA would have received had it been

an electricity consumer in Brazil during the POR. This decision was

based on finding that AVISMA's level of electricity usage during the

POR was similar to the profile of ``large industrial user'' in the

final determination of sales at LTFV for magnesium from Russia. See

Magnesium at 16446. To confirm that AVISMA would have received this

rate, we divided the total number of kilowatt hours used during the POR

for titanium sponge production by the number of hours in the POR, which

demonstrated that AVISMA's kilowatt use was higher than the minimum

necessary to receive the ``large industrial user'' rate in effect in

Brazil during the POR.

For direct labor, we used the unskilled and skilled labor

rates based on information gathered by the American Consulate in Sao

Paulo, Brazil. See Memorandum to The File from Amy S. Wei regarding

Surrogate Values for Brazilian labor rates, March 6, 1997.

For factory overhead, we used expense ratios based on

elements of constructed value data reported in the antidumping duty

administrative review of silicon metal from Brazil, covering the period

July 1, 1995 through June 30, 1996. In order to calculate expense

ratios for selling, general, and administrative (SG&A) expenses and

profit, we calculated simple averages of the SG&A and profit ratios

taken from the 1995 financial statements in the above-named review.

For packing materials, we used information provided in the

UN Trade Statistics from Brazil, covering the period of January through

December 1995. We included surrogate freight costs for the delivery of

packing materials to the plant reported by the National Confederation

of Transport in Brazil for 1996. We valued packing labor using the same

labor rates as used in direct labor above.

We included in normal value, where appropriate, movement

expenses incurred in bringing the subject merchandise from the Russian

plant to the resellers' warehouses. We valued these charges using

surrogate data based on Brazilian freight costs, where appropriate. See

Notice of Preliminary Results of the Antidumping Duty Administrative

Review of Chrome-Plated Lug Nuts from the People's Republic of China,

August 16, 1995, 60 FR 42504, 42506.

Currency Conversion

We made currency conversions in accordance with section 773A(a) of

the Act, based on rates certified by the Federal Reserve Bank and Dow

Jones Business Information Services.

Preliminary Results

As a result of this review, we preliminarily determine that the

following weighted-average dumping margins exist:

------------------------------------------------------------------------

Margin

Manufacturer/exporter Period (percent)

------------------------------------------------------------------------

Interlink Metals and Chemicals, Inc..... 8/1/95-7/31/96 0.00

TMC Trading International, Ltd.......... 8/1/95-7/31/96 0.00

Cometals, Inc........................... 8/1/95-7/31/96 28.31

Russia-wide rate........................ 8/1/95-7/31/96 83.96

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Parties to this proceeding may request disclosure within five days

of publication of this notice and any interested party may request a

hearing within 10 days of publication. Any hearing, if requested, will

be held 44 days after the date of publication, or the first working day

thereafter. Interested parties may submit case briefs and/or written

comments no later than 30 days after the date of publication. Rebuttal

briefs and rebuttals to written comments, limited to issues raised in

such briefs or comments, may be filed no later than 37 days after the

date of publication. The Department issue the final results of the

administrative review, which will include the results of its analysis

of issues raised in any such written comments or at the hearing, within

120 days from the date of publication of these preliminary results.

The Department shall determine, and Customs shall assess,

antidumping duties on all appropriate entries. Individual differences

between USP and NV may vary from the percentages stated above. The

Department will issue appraisement instructions directly to Customs.

The final results of this review shall be the basis for the assessment

of antidumping dumping duties on entries of merchandise covered by the

determination and for future deposits of estimated duties.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of this administrative review for

all shipments of titanium sponge from Russia entered, or withdrawn from

warehouse, for consumption on or after the publication date of the

final results of these administrative reviews, as provided by section

751(a)(1) of the Act: (1) The cash deposit rates for Interlink, TMC,

Cometals, and AVISMA will be the rates established in the final results

of this administrative review; (2) for merchandise exported by

manufacturers or exporters not covered in this review but covered in

the original LTFV investigation or a previous review and have a

separate rate, the cash deposit rate will continue to be the most

recent rate published in the final determination or final results for

which the manufacturer or exporter received a company-specific rate;

(3) for Russian manufacturers or exporters not covered in the LTFV

investigation or in this or prior administrative reviews, the cash

deposit rate will continue to be the Russia-wide rate; and (4) the cash

deposit rate for non-Russian exporters of subject merchandise from

Russia who were not covered in the LTFV investigation or in this or

prior administrative reviews will be the rate applicable to the Russian

supplier of that exporter. These deposit rates, when imposed, shall

remain in effect until publication of the final results of the next

administrative review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 353.26(b) to file a certificate regarding

the reimbursement of antidumping duties prior to liquidation of the

relevant entries during these review periods. Failure to comply with

this requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).

Dated: May 5, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-12202 Filed 5-9-97; 8:45 am]

BILLING CODE 3510-DS-P