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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-821-803]

Titanium Sponge from the Russian Federation: Preliminary Results

of Antidumping Duty Administrative Review and Partial Revocation

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review and partial revocation.

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

the affiliated companies Interlink Metals, Inc., and Interlink Metals &

Chemicals, S.A.; TMC Trading International Ltd.; and Titanium Metals

Corporation, the Department of Commerce is conducting an administrative

review of the antidumping finding on titanium sponge from the Russian

Federation. This notice of preliminary results covers the period August

1, 1996 through July 31, 1997. This review covers one manufacturer/

exporter, AVISMA Titanium-Magnesium Works, and two trading companies,

TMC Trading International Ltd. and, collectively as one company,

Interlink Metals, Inc., and Interlink Metals & Chemicals, S.A.

We have preliminarily determined that no 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 to liquidate entries during the period of review

without regard to dumping duties. Furthermore, if these preliminary

results are adopted in our final results of review, this will be the

Interlink entities' third consecutive review with no dumping margins.

Therefore, in the final results we will revoke this finding with

respect to Interlink. 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: September 8, 1998.

FOR FURTHER INFORMATION CONTACT: Wendy Frankel or Mark Manning, Office

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

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

Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-

5849 and 482-3936, 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. In addition, unless otherwise

indicated, all citations to the Department of Commerce's regulations

refer to the regulations codified at 19 CFR part 351, 62 FR 27296 (May

19, 1997).

Background

The Department of Commerce (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 each of the

former republics of the U.S.S.R. (57 FR 36070, August 12, 1992).

On August 26, 1997, AVISMA Titanium-Magnesium Works (AVISMA) and

Interlink Metals & Chemicals, S.A. and Interlink Metals, Inc.

(collectively Interlink) requested that the Department conduct an

administrative review of the antidumping finding on titanium sponge

from the Russian Federation (Russia) for one manufacturer/exporter,

AVISMA, and one trading company, Interlink, covering the period August

1, 1996 through July 31, 1997. On August 27, 1997, Titanium Metals

Corporation (TIMET) requested that the Department conduct an

administrative review for the trading companies, Interlink and TMC

Trading International, Ltd. (TMC). On August 28, 1997, TMC requested

that the Department conduct an administrative review of its U.S. sales.

The Department published a notice of initiation of the review on

September 25, 1997 (62 FR 50292). Due to the complexity of the legal

and methodological issues presented by this review, the Department

postponed the date of the preliminary results of review by sixty days

on February 10, 1998 (63 FR 6721). The Department published a second

sixty day postponement of preliminary results of review on April 16,

1998 (63 FR 18885). The Department is conducting this administrative

review in accordance with section 751 of the Act.

On August 13, 1998, the International Trade Commission (ITC)

published in the Federal Register its determination that revocation of

the findings covering titanium sponge imports from the Republic of

Kazakhstan (Kazakhstan), Russia, and Ukraine and the antidumping duty

order covering imports of titanium sponge from Japan is not likely to

lead to continuation or recurrence of material injury to an industry in

the United States. Due to this determination the Department has revoked

the findings covering titanium sponge imports from Kazakhstan, Russia,

and Ukraine and the antidumping duty order covering titanium sponge

imports from Japan. This revocation is effective as of August 13, 1998.

See Notice of Revocation of Antidumping Findings and Antidumping Duty

Order and Termination of Five-Year (``Sunset'') Reviews: Titanium

Sponge from Kazakhstan, Russia, Ukraine, and Japan, (63 FR 46215,

August 31, 1998).

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.

Separate Rates

During the period of review (POR), AVISMA made direct sales of

subject merchandise to the U.S. market that were entered for

consumption. Due to these direct sales, AVISMA has requested a

separate, company-specific rate. The claimed ownership of AVISMA during

the POR is that of a publicly owned joint stock company, where 100

percent of the shares are owned by private individuals and private

companies. AVISMA asserted that the state owned zero percent of its

shares.

To establish whether a firm is sufficiently independent from

[[Page 47475]]

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) and amplified in

the Final Determination of Sales at Less Than Fair Value: Silicon

Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994).

Under the separate rates criteria, the Department assigns separate

rates in nonmarket economy cases only if a respondent can demonstrate

the absence of both de jure and de facto government control over its

export activities. Since the Department did not verify the information

submitted by AVISMA to the record of this proceeding, we must rely upon

the information provided by AVISMA in its questionnaire responses in

order to determine whether there is an absence of either de jure or de

facto governmental control.

1. Absence of De Jure Control

An individual company may be considered for a separate rate if it

meets the following de jure criteria: (1) an absence of restrictive

stipulations associated with an individual exporter's business and

export licenses; (2) any legislative enactments decentralizing control

of companies; (3) any other formal measures by the government

decentralizing control of companies. AVISMA has placed on the

administrative record a number of documents demonstrating absence of de

jure control. These documents include laws, regulations, and provisions

enacted by the government of Russia, describing the deregulation of

Russian enterprises as well as the deregulation of the Russian export

trade. Specifically, these documents include the President of the

Russian Federation's Decree Number 721, that states ``a joint stock

company from the moment of its registration is out of the control of

Ministries, State and Local administrative organs and authorities.'' In

addition, AVISMA has placed on the record Article 49 of the Russian

Federation's Civil Code, which states ``Commercial organizations * * *

can have civil rights and civil obligation necessary for any kind of

activities, not prohibited by the regulation.'' ``Commercial

organization'' is defined to be an organization, whose activities are

aimed at gaining profit (Russian Federation Civil Code Article 50). See

AVISMA's questionnaire response dated November 26, 1997. Furthermore,

AVISMA claims that there are no licenses issued by any government

agency to AVISMA with regard to any aspect of AVISMA's production or

sales activity. Based on this information, we have concluded that there

was a de jure absence of governmental control over AVISMA.

2. Absence of De Facto Control

The Department typically considers four factors in evaluating

whether each respondent is subject to de facto government 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 management; and (4) it

retains the proceeds of its export sales and makes independent

decisions regarding disposition of profits or financing of losses.

In its questionnaire responses, AVISMA asserted the following: (1)

it establishes its own export price; (2) it negotiates contracts

without guidance from any governmental entities or organizations; (3)

it selects its own management; and (4) it retains the proceeds of its

export sales, uses profits according to its business needs, and has no

restrictions on the use of its retained foreign currency earnings. In

support of its claim that it is free of de facto government control,

AVISMA provided sample documents to one of its direct sales to the

United States. These documents include the sales contract, currency

control passport, commercial invoice, quality control shipping

document, and customs declaration. In addition, AVISMA provided its

audited financial statements from the two most recent fiscal years

(1995 and 1996) as well as the income statements for the first and

second quarters of 1997. This information supports a finding that,

during the POR, there was a de facto absence of governmental control of

export functions. Therefore, we have concluded that AVISMA is entitled

to a separate rate.

The Russia-Wide Rate

In past reviews of this finding, the Department has examined

several export companies not included in the instant review. One of

these exporters, Cometals Inc., had shipments that were reviewed and

received a positive margin. See Titanium Sponge From the Russian

Federation; Notice of Final Results of Antidumping Duty Administrative

Review, 62 FR 48601 (September 16, 1997) (Titanium Sponge 1996).

Therefore, we conclude that not all exporters of titanium sponge from

Russia are included in the instant review. Accordingly, we are applying

a single antidumping deposit rate--the Russia-wide rate--to all

manufacturers/exporters of titanium sponge from the Russian Federation

that have not received a company-specific rate in the current or prior

administrative reviews.

Intent To Revoke

On August 26, 1997, Interlink submitted a request, in accordance

with Section 351.222(b), that the Department revoke the finding

covering titanium sponge from the Russian Federation with respect to

its sales of this merchandise. In accordance with Section

351.222(b)(iii), Interlink submitted on December 10, 1997, a

certification that it had not sold the subject merchandise at less than

normal value for a three-year period, including this review period, and

would not do so in the future.

We preliminarily determine that Interlink sold titanium sponge from

Russia at not less than normal value during this review period. Based

on Interlink's three consecutive years of zero margins and the absence

of evidence to the contrary, we preliminarily determine that it is not

likely that Interlink will in the future sell titanium sponge at less

than normal value. Therefore, if these preliminary findings are

affirmed in our final results, we intend to revoke the order on

titanium sponge from Russia with respect to Interlink.

In the last two administrative reviews, we determined that

Interlink did not sell titanium sponge at less than fair value. See

Titanium Sponge 1996 and Titanium Sponge From the Russian Federation;

Notice of Final Results of Antidumping Duty Administrative Review, 61

FR 58525 (November 15, 1996). Additionally, as discussed below, we have

preliminarily determined that Interlink has not sold titanium sponge at

less than fair value during the period covered by this review.

Consequently, we preliminarily determine that because Interlink has

three consecutive years of zero or de minimis margins on titanium

sponge, Interlink is eligible for revocation of the finding on titanium

sponge from Russia under Section 351.222(b).

United States Price

AVISMA

We calculated U.S. price (USP) for AVISMA's sales to unaffiliated

purchasers in the United States based on export price (EP), as defined

in section 772(a) of the Act. For the date of sale, we used the sales

invoice date.

[[Page 47476]]

We made deductions, where appropriate, for inland freight, brokerage

and handling, international freight, marine insurance, and Russian

export charges. AVISMA did not claim any other adjustments to USP, nor

were any other adjustments allowed.

Interlink and TMC

For purposes of this review, we assigned a separate rate for

Interlink and TMC (which are located in market-economy countries)

because AVISMA, at the time of sale to these entities, did not have

knowledge of the ultimate destination of the merchandise. We calculated

USP for TMC based on EP. Interlink reported that its U.S. sales were EP

sales that were made to unaffiliated U.S. customers prior to

importation and customarily did not enter into the inventory of

Interlink Metals & Chemicals S.A.'s U.S. affiliate. When U.S. sales are

made in this manner, our practice is to examine several criteria in

order to determine whether the sales are EP sales. Those criteria are:

(1) Whether the merchandise was shipped directly from the manufacturer

to the unaffiliated U.S. customer; (2) whether this was the customary

commercial channel between the parties involved; and (3) whether the

function of the U.S. selling agent was limited to that of a ``processor

of sales-related documentation'' and a ``communications link'' with the

unaffiliated U.S. buyer. Where all three criteria are met, indicating

that the activities of the U.S. selling agent are ancillary to the

sale, the Department has regarded the routine selling functions of the

exporter as merely having been relocated geographically from the

country of exportation to the United States where the sales agent

performs them, and has determined the sales to be EP sales. Where one

or more of these conditions is not met, indicating that the U.S. sales

agent is substantially involved in the U.S. sales process, the

Department has classified the sales in question as constructed export

price (CEP) sales. See, e.g., Certain Cold-Rolled and Corrosion-

Resistant Carbon Steel Flat Products From Korea: Final Results of

Antidumping Duty Administrative Reviews, 63 FR 13,170 (March 18, 1998)

and Viscose Rayon Staple Fiber from Finland: Final Results of

Antidumping Duty Administrative Review, 63 FR 32,820 (June 16, 1998).

The record shows that during the POR Interlink Metals, Inc.,

Interlink's U.S. operation, was responsible for the sale of titanium

sponge to customers and that sales activities were generally performed

in the United States. Thus, we have preliminarily determined that

Interlink Metals, Inc. acted as more than a ``processor of sales-

related documentation'' and a ``communications link'' with the

unaffiliated U.S. buyer. Therefore, we based USP on CEP, as defined in

section 772(b) of the Act. For date of sale, we used the sales invoice

date for both TMC and Interlink. We excluded those sales made to the

United States which the respondents identified as having entered the

United States under temporary importation bond (TIB). We are currently

confirming the information provided by respondents regarding TIB

entries through Customs and National Census Bureau data.

In calculating USP for TMC and Interlink, we made deductions, where

appropriate, for ocean freight, warehouse expenses, insurance,

brokerage and handling, inland freight, and U.S. duty and terminal

handling charges. Additionally, in accordance with section 772 (d) of

the Act and the Department's practice in non-market economy (NME) cases

involving CEP sales, in calculating USP for Interlink we made

deductions for U.S. credit and indirect selling expenses and the profit

allocated to these U.S. expenses (see Notice of Final Determination of

Sales at Less Than Fair Value: Bicycles From the People's Republic of

China 61 FR 19026 (April 30, 1996)). TMC and Interlink did not claim

any other adjustments to USP, nor were any other adjustments allowed.

Surrogate Country Selection

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

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

production if (1) the subject merchandise is exported from a 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 to be a NME

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

Magnesium and Alloy Magnesium from the Russian Federation (Magnesium

From Russia), 60 FR 16440 (March 30, 1995); and 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 NME status has not been revoked in

any previous proceeding for Russia, we are considering Russia to be a

NME country for purposes of this review. Therefore, because AVISMA is

located in Russia, 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 section

351.408 of the Department's regulations. We determined that Venezuela

is comparable to Russia in terms of per capita gross national product

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

of labor. In addition, Venezuela is a significant producer of

comparable merchandise. See Memorandum to the File, Titanium Sponge

from the Russian Federation; Surrogate Country Selection, dated July 2,

1997. Therefore, in accordance with section 773(c)(4) of the Act, we

selected Venezuela as a comparable surrogate on the basis of the above

criteria and have used publicly available information relating to

Venezuela to value the various factors of production, except as

indicated below. See Memorandum from Jeff May, Acting Director, Office

of Policy, to Holly A. Kuga, Senior Director, Office of AD/CVD

Enforcement, October 20, 1997, and Memorandum from Jeff May, Acting

Director, Office of Policy, to Holly A. Kuga, Senior Director, Office

of AD/CVD Enforcement, January 27, 1998.

Normal Value

To determine 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 the Preliminary Results of

Administrative Review, dated August 31, 1998):

Except as noted below, we valued raw materials and by-

products using the Venezuelan import data obtained by Interlink from

the Commodity Trade Statistics Section, United Nations Statistics

Division, (UN import statistics) for the calendar year 1996. We

adjusted certain factor values to reflect the actual purity used in the

production of the subject merchandise. We valued chlorine using the

average of the calendar 1996 and 1997 price quotes that respondents

obtained from a Venezuelan chlorine producer. We were unable to find

publicly available information from Venezuela or from any of the other

potential surrogate countries in order to value ilmenite, rutile

concentrate and carnallite concentrate. For ilmenite, we used the 1995

Brazilian price that was reported in the 1995-1996 administrative

review of this finding. We valued rutile concentrate using the 1997

Australian

[[Page 47477]]

price provided by Interlink. For carnallite concentrate, we used the

Indian price for dolomite, a commodity similar to carnallite

concentrate, that was reported in the antidumping duty investigation of

magnesium from Russia (see Notice of Final Determination of Sales at

Less Than Fair Value: Pure Magnesium and Alloy Magnesium From the

Russian Federation 60 FR 16440, 16449 (March 30, 1995)) (Magnesium From

Russia) and used to value carnallite concentrate in the 1995-1996

administrative review of this finding. Since we obtained values for

ilmenite and carnallite concentrate that are in U.S. dollars, we did

not adjust for the effects of inflation.

Pursuant to Section 351.408(c)(3), we valued direct labor

by using the regression-based wage rate for Russia as posted on the

Import Administration Internet website.

For electricity, we used the simple average of the 1996

and 1997 electricity rates for industrial users in Guayana, Venezuela,

as reported by the Venezuelan Chamber of the Electric Industry. To

value natural gas, we used the 1996 price of gas in Venezuela as

reported by the International Energy Agency's (IEA's) publication

Energy Prices and Taxes, 4th Quarter 1997. Since this price was

reported in U.S. dollars per tonne of oil equivalent, we converted the

IEA price into a U.S. dollar per metric ton measure. AVISMA reported

its consumption of natural gas in tons of reference fuel. Using the

conversion rate in the calculation memorandum in Magnesium From Russia,

we converted AVISMA's natural gas consumption into a metric ton

measure.

To value railcar freight in Russia, we used the Venezuelan

rates obtained by the petitioner from the national Venezuelan railway

authority. This rate is on a per kilometer, per ton basis. We were

unable to find truck rates from Venezuela or from any of the other

potential surrogate countries. Therefore, we used the Brazilian

trucking rates, provided by Interlink, that were used in the 1995-1996

administrative review of this finding.

For packing materials, we used the 1996 UN import

statistics from Venezuela provided by Interlink. We valued labor used

in packing with the above-referenced regression-based labor rate for

Russia.

We valued selling, general and administrative expenses and

profit using the 1997 income statement for CVG Industria Venezolana De

Aluminio C.A., a major aluminum producer in Venezuela.

We were unable to find information on factory overhead for

an appropriate company or industry from Venezuela or from any other

potential surrogate country. Therefore, as in the 1995-1996

administrative review of this finding, we valued factory overhead using

cost data reported in the public record of the antidumping

administrative review of silicon metal from Brazil. In the instant

review, we relied on public cost data in the 1996-1997 antidumping

administrative review of silicon metal from Brazil.

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 railcar freight in Russia

using the Venezuelan rates obtained by the petitioner from the national

Venezuelan railway authority. We valued railcar freight and brokerage

in Finland using the prices AVISMA reported in the public version of

the section C response that it submitted in the instant review. We

valued the Russian customs fee, paid by AVISMA on its exports of

subject merchandise, using the Venezuelan exportation fee as reported

by the Department's commercial service personnel in Caracas, Venezuela.

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:

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Margin

Manufacturer/exporter Period (percent)

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Interlink Metals & Chemicals, S.A....... 8/1/96-7/31/97 0.00

TMC Trading International, Ltd.......... 8/1/96-7/31/97 0.00

AVISMA Titanium-Magnesium Works......... 8/1/96-7/31/97 0.00

Russia-wide rate........................ 8/1/96-7/31/97 83.96

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Parties to this proceeding may request disclosure of our

preliminary results within five days of publication of this notice and

any interested party may request a hearing within 30 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 35 days after the date of publication. The

Department will publish a notice of 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 publication of the preliminary results.

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

assessment of antidumping duties on entries of merchandise covered by

the determination. The Department shall determine, and Customs shall

assess, antidumping duties on all appropriate entries. Individual

differences between export price and normal value may vary from the

percentages stated above. The Department will issue appraisement

instructions directly to Customs.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 351.402(f) 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.

This administrative review and notice are in accordance with

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

published in accordance with section 777(i) of the Act.

Dated: August 31, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-24070 Filed 9-4-98; 8:45 am]

BILLING CODE 3510-DS-P