[Federal Register Volume 65, Number 217 (Wednesday, November 8, 2000)]
[Notices]
[Pages 66966-66969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28683]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-823-810]


Initiation of Antidumping Duty Investigation: Solid Agricultural 
Grade Ammonium Nitrate From Ukraine

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

EFFECTIVE DATE: November 8, 2000.

FOR FURTHER INFORMATION CONTACT: Melani Miller or Jarrod Goldfeder, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-0116 and (202) 482-0189, 
respectively.

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. In addition, unless otherwise 
indicated, all citations to the Department of Commerce's regulations 
are to 19 CFR Part 351 (April 1999).

The Petition

    On October 13, 2000, the Department of Commerce (``the 
Department'') received a petition filed in proper form by the Committee 
for Fair Ammonium Nitrate Trade (``the petitioner''), whose members are 
domestic producers of solid agricultural grade ammonium nitrate. The 
Department received supplemental information to the petition on October 
27, 2000.
    In accordance with section 732(b) of the Act, the petitioner 
alleges that imports of solid agricultural (or fertilizer) grade 
ammonium nitrate from Ukraine 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 the petitioner filed this petition on 
behalf of the domestic industry because it is an interested party as 
defined in section 771(9)(C) of the Act and it has demonstrated 
sufficient industry support with respect to the antidumping 
investigation that it is requesting the Department initiate (see 
Determination of Industry Support for the Petition section 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 for 
purposes of the U.S. Customs Service, the written description of the 
merchandise under investigation is dispositive.
    This scope is identical to the scope used in the Department's 
investigation of solid fertilizer grade ammonium nitrate from the 
Russian Federation. See Notice of Final Determination of Sales at Less 
Than Fair Value; Solid Fertilizer Grade Ammonium Nitrate from the 
Russian Federation,  65 FR 42669 (July 11, 2000) (``Ammonium Nitrate 
from Russia''). Nevertheless, during our review of the petition, we 
discussed the scope with the petitioner to ensure that it accurately 
reflects the product for which the domestic industry is seeking relief. 
Moreover, as discussed in the preamble to the Department's regulations 
(62 FR 27296, 27323), we are setting aside a period for parties to 
raise issues regarding product coverage. The Department encourages all 
parties to submit such comments within 20 days of publication of this 
notice. Comments should be addressed to Import Administration's Central 
Records Unit (``CRU'') at Room 1870, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 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 our preliminary determination.

Period of Investigation

    Section 351.204(b) of the Department's regulations states that, in 
the case of a nonmarket economy country, in an investigation, the 
Department normally will examine merchandise sold during the two most 
recently completed fiscal quarters as of the month preceding the month 
in which the petition was filed. The regulations further state that the

[[Page 66967]]

Department may examine merchandise sold during any additional or 
alternate period it concludes is appropriate.
    Following the above noted guidelines from section 351.204(b) of the 
Department's regulations, the two most recently completed fiscal 
quarters as of the month preceding the month in which the petition was 
filed would be the second and third fiscal quarters of 2000, April 
through September 2000.
    For this investigation, the petitioner has requested that the 
Department either modify or expand the period of investigation 
(``POI'') to include the first fiscal quarter of 2000, January through 
March 2000. The petitioner argues that the ammonium nitrate industry is 
highly seasonal and that the volume of ammonium nitrate shipments is 
directly linked to agricultural cycles; specifically, demand and 
imports are higher during the spring planting season which runs from 
February through June. The petitioner notes that the Department has 
recognized the seasonality of the ammonium nitrate market in Ammonium 
Nitrate from Russia. Moreover, the petitioner points out that calendar 
year 2000 import data for Ukraine supports the conclusion that the 
first quarter 2000 should be included in the POI. According to the 
petitioner, the data shows that imports of ammonium nitrate from 
Ukraine have increased dramatically in the first two quarters of 2000 
as compared to prior years. If only the second and third quarters were 
examined, the petitioner alleges that the Department would have a much 
more limited number of sales on which to make its determination.
    The Department is considering the petitioner's arguments on this 
matter and will make a determination on whether to expand the normal 
POI as established by section 351.204(b) of the Department's 
regulations, April 1 through September 30, 2000, as the investigation 
proceeds.

Determination of Industry Support for the Petition

    Section 732(b)(1) of the Act requires that a petition be filed on 
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 Act directs the 
Department to look to producers and workers who account for production 
of 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 domestic like product, such differences do 
not render the decision of either agency contrary to the law.\1\
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    \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 Petitions, 56 
FR 32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product that 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 in ``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.
    The domestic like product referred to in the petition is the single 
domestic like product defined in the Scope of Investigation section 
above. The Department has no basis on the record to find this 
definition of the domestic like product to be inaccurate. The 
Department, therefore, has adopted this dometsic like product 
definition.
    The Department has determined that the petition contains adequate 
evidence of industry support; therefore, polling is unnecessary. See 
Initiation Checklist at Industry Support. To the best of the 
Department's knowledge, the producers who support the petition account 
for more than 50 percent of the production of the domestic like 
product. Additionally, no interested party pursuant to section 
771(b)(A), (C), (D), (E) or (F) of the Act has expressed opposition on 
the record to the petition. 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

    The following is a description of the allegation of sales at less 
than fair value upon which our decision to initiate this investigation 
is based. Should the need arise to use any of this information in our 
preliminary or final determination for purposes of facts available 
under section 776 of the Act, we may re-examine the information and 
revise the margin calculations, if appropriate.
    The petitioner identified four potential Ukrainian exporters and 
producers of solid agricultural grade ammonium nitrate. The petitioner 
based export price on official U.S. import statistics for the period 
January through June 2000. From these starting prices, the petitioner 
deducted foreign inland freight and foreign brokerage and handling. The 
petitioner based foreign inland freight on Indian rail rates as 
referenced by the Department at its online Document Library (Index of 
Factor Values). The foreign brokerage and handling charges were also 
based on the Department's Index of Factor Values. Both the inland 
freight and brokerage and handling rates were adjusted for inflation 
using the Indian Wholesale Price Index (``WPI'') as published in the 
International Financial Statistics of the International Monetary Fund.
    The petitioner asserts that the Department considers Ukraine to be 
a nonmarket economy country (``NME'') and, therefore, constructed 
normal value based on the factors of production (``FOP'') methodology 
pursuant to section 773(c) of the Act. In previous cases, the 
Department has determined that Ukraine is an NME. See, e.g., Certain 
Cut-to-Length Carbon Steel Plate from Ukraine, 62 FR 61754 (November 19 
1997) and Steel Concrete Reinforcing Bars from Austria, Belarus, 
Indonesia, Japan, Latvia, Moldova, the People's Republic of China, 
Poland, the Republic of Korea, the Russian Federation, Ukraine, and 
Venezuela, 65 FR 45754 (July 25, 2000). In accordance with section 
771(18)(C)(i) of the Act, the NME status remains in effect until 
revoked by the Department. As of the date of initiation of this 
proceeding, the NME status of Ukraine has not been revoked by the 
Department and, therefore, remains in effect. Accordingly, the normal 
value of the product appropriately is based on FOP 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

[[Page 66968]]

opportunity to provide relevant information related to the issues of 
Ukraine's NME status and the granting of separate rates to individual 
exporters.
    For the factors of production, the petitioner used publicly 
available factor information from a Russian ammonium nitrate producer 
taken from Ammonium Nitrate from Russia. The petitioner stated that it 
was unable to gain access to any specific information regarding the 
factors of production for any Ukrainian ammonium nitrate producer and 
was, thus, unable to furnish information on Ukrainian FOP.
    According to the petitioner, the use of the Russian producer's 
public factors provides a sound basis for estimation of Ukrainian 
factors because (1) both the Ukrainian and Russian ammonium nitrate 
plants use the same type of production process, and (2) Ukrainian and 
Russian ammonium nitrate plants use the same types of production 
technology. Thus, the petitioner has taken the position that, for 
purposes of the petition, the producers in Ukraine use the same inputs 
in the same quantities as do producers in Russia. Because data 
regarding the quantities of inputs used by Ukrainian producers was not 
reasonably available to the petitioner, and because the petitioner has 
provided information showing that the Russian and Ukrainian ammonium 
nitrate industries are substantially similar, we have accepted the use 
of the Russian factor information.
    The petitioner selected India as the most appropriate surrogate 
market economy. In accordance with section 773(c)(4) of the Act, the 
petitioner valued factors of production, where possible, using Indian 
data. Labor was valued using the regression-based wage rate for Ukraine 
provided by the Department in accordance with section 351.408(c)(3) of 
the Department's regulations. Natural gas and electricity were valued 
using values from a 1998-1999 public annual report of an Indian 
producer of merchandise similar to the subject merchandise. Pursuant to 
the Department's past practice, the petitioner valued synthetic gas, 
purge gas, and hydrogen using ``natural gas equivalents'' (see Ammonium 
Nitrate from Russia) Catalysts and other auxiliary materials were 
valued using United Nations import data for India. One auxiliary 
material, lilamine, for which the petitioner could not find a public 
Indian surrogate value was valued using information from a domestic 
ammonium nitrate producer. For factory overhead, selling, general and 
administrative expenses, and profit, the petitioner applied ratios 
derived from information gathered from the same 1998-1999 public annual 
report that it used to value natural gas and electricity. Where no 
contemporaneous values could be found, the non-contemporaneous values 
used were adjusted to the comparison period to take inflation into 
account.
    Based on a comparison of export price to normal value, as adjusted 
by the Department, the information in the petition and other 
information reasonably available to the Department indicates weighted-
average dumping margins of between 222 and 285 percent. A description 
of the adjustments which the Department made to petitioner's 
calculations are contained in the Initiation Checklist.

Fair Value Comparisons

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

Allegations and Evidence of Material Injury and Causation

    The petition 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 imports of the subject merchandise 
sold at less than normal value. The allegations of injury and causation 
are supported by relevant evidence including U.S. Customs import data, 
ITC data and information gathered during Ammonium Nitrate from Russia, 
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 Initiation Checklist at 4 and 5.

Allegation of Critical Circumstances

    The petitioner has alleged that critical circumstances exist with 
regard to imports of solid, agricultural grade ammonium nitrate from 
Ukraine. To support its allegation, the petitioner provided evidence in 
the petition showing, among other things, a trend of increased imports 
of the subject merchandise during the period January to June 2000. 
Specifically, the petitioner contends that ammonium nitrate imports 
from Ukraine surged from no imports in 1999 to 155,398 short tons 
during the time period from January through June 2000.
    The petitioner also provided evidence suggesting a history of 
dumping, and, alternatively, that the person by whom, or for whose 
account, the merchandise was imported knew, or should have known, that 
the merchandise was being sold at less than fair value and that there 
was likely to be material injury as a result. The petitioner contends 
that, though there is not currently an existing antidumping order on 
Ukrainian ammonium nitrate, the European Union has made a preliminary 
determination that dumping is taking place in the European Union of 
ammonium nitrate from Ukraine. This, in the petitioner's view, provides 
evidence of a history of dumping.
    Additionally, consistent with the Department's practice of 
reviewing the margins supported in the petition as evidence of importer 
knowledge, the petitioner notes that the petition margin of 285% is 
well above the standard 25% threshold. Finally, the petitioner argues 
that the timing of Ukraine's entrance into the U.S. ammonium nitrate 
market (immediately following the Department's January 7, 2000, 
preliminary determination that Russian ammonium nitrate was sold in the 
United States at less than normal value and the rapid decline of 
imports of ammonium nitrate from Russia), along with the significant 
increase in volume of imports and the adverse pricing effects these 
imports had, provides evidence that importers knew, or should have 
known, that Ukrainian ammonium nitrate imports were likely to cause 
injury to the domestic industry.
    Based on these allegations, we will investigate this matter further 
and will make a preliminary critical circumstances determination based 
on available information at the appropriate time in accordance with 
section 351.206 of the Department's regulations. See Initiation 
Checklist at 9.

Request for an Expedited Preliminary Determination

    The petitioner has requested that, in accordance with the 
Department's June 8, 2000, policy bulletin regarding expedited 
antidumping duty investigations, the Department issue an expedited 
preliminary determination in this investigation. See Department Policy 
Bulletin No. 00.1 ``Expedited Antidumping Duty Allegations'' ( ``policy 
bulletin'', which can be found on the Department's web page at http://ia.ita.doc.gov. The policy bulletin lays out specific criteria that the 
Department will consider in deciding whether to expedite an 
investigation, including evidence of an extraordinary surge in imports 
prior to the filing of the petition, evidence of significant import 
penetration, evidence of an unusually high dumping margin or recent 
declines

[[Page 66969]]

in import prices, whether there are prior determinations of dumping 
against the same product (or class of product) from the subject country 
in the United States or in other countries, and whether the 
Department's resources permit it to expedite the preliminary 
determination.
    The petitioner alleges that there has been a surge of ``unfairly 
traded imports'' of ammonium nitrate from Ukraine at ``unprecedented 
levels'' and that Ukrainian producers have captured U.S. market share 
through ``aggressive and persistent underselling.'' The petitioner 
further alleges that, after the U.S. industry received relief in June 
2000 via a suspension agreement in Ammonium Nitrate from Russia, U.S. 
importers simply made Ukraine a ``replacement'' source for Russian 
ammonium nitrate. The petitioner claims that the product is highly 
seasonal and that early relief is needed to avoid losing sales during 
the critical spring 2001 growing season.
    We are setting aside a period for parties to comment on the 
petitioner's request for an expedited preliminary determination. The 
Department encourages all parties to submit such comments no later than 
November 13, 2000. Comments should be addressed to the Import 
Administration's Central Records Unit at Room 1870, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230. We intend to make a determination on the petitioner's request 
for an expedited preliminary determination by November 16, 2000.

Initiation of Antidumping Investigation

    Based on our examination of 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 agricultural grade ammonium nitrate from 
Ukraine 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 determination 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 the government of Ukraine.

International Trade Commission Notification

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

Preliminary Determination by the ITC

    The ITC will determine by November 27, 2000, whether there is a 
reasonable indication that an industry in the United States is 
materially injured, or is threatened with material injury, by reason of 
imports of solid fertilizer grade ammonium nitrate from Ukraine. 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 in accordance with section 777(i) of the 
Act.

    Dated: November 3, 2000.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-28683 Filed 11-7-00; 8:45 am]
BILLING CODE 3510-DS-M