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###### Department of Commerce

###### International Trade Administration 

          - [A-307-820, A-533-823, and A-834-807]

# AGENCY:

Import Administration, International Trade Administration, Department of Commerce. 

# ACTION:

Initiation of antidumping duty investigations.

# EFFECTIVE DATE:

May 3, 2001. 

# FOR FURTHER INFORMATION CONTACT:

Sally Gannon (India), Robert James (Venezuela), and Jean Kemp (Kazakhstan) at (202) 482-0162, (202) 482-0649, and (202) 482-4037, respectively; Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. 

## Initiation of Investigations 

### 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 (2000). 

### The Petition 

On April 6, 2001, the Department of Commerce (the Department) received a petition filed in proper form by the following parties: Eramet Marietta Inc. (Eramet) and the Paper, Allied-Industrial, Chemical and Energy Workers International Union, Local 5-0639 (collectively, the petitioners). The Department received from the petitioners information supplementing the petition throughout the 20-day initiation period. 

In accordance with section 732(b) of the Act, the petitioners allege that imports of silicomanganese from Kazakhstan, India, and Venezuela 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 petitioners filed this petition on behalf of the domestic industry because they are interested parties as defined in sections 771(9)(C) and 771(9)(D) of the Act and have demonstrated sufficient industry support with respect to each of the antidumping investigations that they are requesting the Department to initiate (                        *see*                         the                         *Determination of Industry Support for the Petitions*                         section below).                     

### Scope of Investigations 

For purposes of these investigations, the products covered are all forms, sizes and compositions of silicomanganese, including silicomanganese briquettes, fines and slag. Silicomanganese is a ferroalloy composed principally of manganese, silicon and iron, and normally contains much smaller proportions of minor elements, such as carbon, phosphorous and sulfur. Silicomanganese is sometimes referred to as ferrosilicon manganese. Silicomanganese is used primarily in steel production as a source of both silicon and manganese. Silicomanganese generally contains by weight not less than 4 percent iron, more than 30 percent manganese, more than 8 percent silicon and not more than 3 percent phosphorous. Silicomanganese is properly classifiable under subheading 7202.30.0000 of the Harmonized Tariff Schedule of the United States (HTSUS). Some silicomanganese may also be classified under HTSUS subheading 7202.99.5040. This petition covers all silicomanganese, regardless of its tariff classification. Although the HTSUS subheadings are provided for convenience and U.S. Customs purposes, our written description of the scope remains dispositive. 

During our review of the petition, we discussed the scope with the petitioners 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 27323), we are setting aside a period for parties to raise issues regarding product coverage. The Department encourages all parties to submit such comments by May 17, 2001. 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, 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 the preliminary determinations. 

### Determination of Industry Support for 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.[1] 

                        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, the petitioners do not offer a definition of domestic like product distinct from the scope of the investigation.                     

                        In this case, “the article subject to investigation” also is substantially similar to the scope of the Department's antidumping duty order involving silicomanganese published in 1994.                         *See Notice of Antidumping Duty Order: Silicomanganese From the People's Republic of China (PRC)*, 59 FR 66003 (December 22, 1994). Thus, based on our analysis of the information                               ( print page 22210)                            presented to the Department above and the information obtained and reviewed independently by the Department, we have determined that there is a single domestic like product which is defined in the                         *Scope of Investigations*                         section above, and have analyzed industry support in terms of this domestic like product.                     

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. The sole U.S. producer of the domestic like product, and the trade union which represents its workers, are petitioners in this case. Furthermore, the Department received no opposition to the petition. Therefore, we conclude that the domestic producers or workers who support the petition account for 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. Thus, the requirements of section 732(c)(4)(A)(ii) are also met. 

                        Accordingly, the Department determines that the petitions were filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.                         *See*                         the                         *Import Administration AD Investigation Checklist*, April 26, 2001 (                        *Initiation Checklist*) (public version on file in the Central Records Unit of the Department of Commerce, Room B-099).                     

### Export Price and Normal Value 

                        The following are descriptions of the allegations of sales at less than fair value upon which the Department has based its decision to initiate these investigations. The sources of data for the deductions and adjustments relating to home market price, U.S. price, constructed value (CV) and factors of production (FOP) are detailed in the                         *Initiation Checklist*. Where the petitioners obtained data from foreign market research, we contacted the researcher to establish its credentials and to confirm the validity of the information being provided.                         *See*                         Memorandum to the File,                         *Contacts with Source of Market Research for Antidumping Petition Regarding Imports of Silicomanganese from India and Kazakhstan*, April 23, 2001 (                        *Market Research for India and Kazakhstan*), and                         *see also*                         Memorandum to the File,                         *Contacts with Source of Market Research for Antidumping Petition Regarding Imports of Silicomanganese from Venezuela*, April 23, 2001 (                        *Market Research for Venezuela*). Should the need arise to use any of this information as facts available under section 776 of the Act in our preliminary or final determinations, we may re-examine the information and revise the margin calculations, if appropriate. The anticipated period of investigation (POI) for the market economy countries is April 1, 2000, through March 31, 2001, while the anticipated POI for Kazakhstan, the non-market economy (NME) country, is October 1, 2000, through March 31, 2001.                     

                        Regarding the investigation involving the NME, the Department presumes, based on the extent of central government control in an NME, that a single dumping margin, should there be one, is appropriate for all NME exporters in the given country.                         *See, e.g., Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the PRC*, 59 FR 22585 (May 2, 1994). In the course of these investigations, all parties will have the opportunity to provide relevant information related to the issues of Kazakhstan's NME status and the granting of separate rates to individual exporters.                     

                        Lastly, export price (EP) was based on the data published by the U.S. International Trade Commission's dataweb, at                         *http://dataweb.usitc.gov/​scripts/​REPORT.asp (dataweb)*. This data, as presented, is FOB customs value. Specifically, the petitioners calculated the average unit values (AUVs) of silicomanganese entering the United States from India, Kazakhstan, and Venezuela during the respective POIs, excluding February and March 2001, and made the applicable adjustments to the AUVs. The margins calculated using this methodology are as follows: India, 5.89 to 86.98 percent; Kazakhstan, 164.29 percent; and Venezuela, 20.38 to 47.14 percent.                     

Because the Department considers the country-wide import statistics to calculate estimated margins to be sufficient for purposes of initiation, we have initiated these investigations based on the country-wide import statistics for the POI, excluding February and March 2001, for which data was not available, for each country, respectively. 

## India 

### Export Price 

                        The petitioners based EP on the AUV of silicomanganese imported from India under the applicable HTSUS subheading, for the POI, excluding February and March 2001, based on the data published by the U.S. International Trade Commission's                         *dataweb*. This data, as presented, is FOB customs value. Net U.S. price was calculated by deducting foreign inland freight and brokerage and handling charges, which were based on foreign market research and inflated appropriately.                     

### Normal Value 

                        With respect to normal value (NV), the petitioners provided a home market price that was obtained from foreign market research for a grade,                         *i.e.,*                         silicon and carbon content, that is comparable or identical to that of the products exported to the United States which serve as the basis for EP. The petitioners state that the home market price quotation was ex-factory, and, therefore, they did not make any deductions for movement expenses from this price.                     

Although the petitioners provided information on home market prices, they also provided information demonstrating reasonable grounds to believe or suspect that sales of silicomanganese in the home market were made at prices below the fully absorbed cost of production (COP), within the meaning of section 773(b) of the Tariff Act, and requested that the Department conduct a country-wide sales-below-cost investigation. 

                        Pursuant to section 773(b)(3) of the Tariff Act, COP refers to the total cost of producing the foreign-like product which includes the cost of manufacturing (COM), selling, general and administrative expenses (SG&A), and packing expenses. The petitioners calculated COM based on their own production experience, adjusted for known differences between costs incurred to produce silicomanganese in the United States and India, using publicly available data, foreign market research, and price quotes from suppliers. To calculate SG&A, petitioners relied upon the aggregate financial and cost data for the metals and chemicals sector in India published by the Reserve Bank of India (RBI). Based upon the comparison of the prices of the foreign like product in the home market to the calculated COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made at prices below the COP, within the meaning of section 773(b)(2)(A)(i) of the Tariff Act. Accordingly, the Department is initiating a country-wide cost investigation.                         *See Initiation of Cost Investigations*                         section below.                     

                        Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Tariff Act, petitioners                               ( print page 22211)                            based NV for sales in India on CV. The petitioners calculated CV using the same COM and SG&A used to compute Indian home market costs. Consistent with section 773(e)(2) of the Tariff Act, petitioners included in CV an amount for profit. The petitioners calculated a profit amount using the data published by the RBI for the metals and chemicals processing and manufacturing sector.                     

The estimated dumping margin for India based on a comparison between EP and home market price is 5.89 percent. Based upon the comparison of EP to CV, the petitioners calculated an estimated dumping margin of 86.98 percent. 

## Kazakhstan 

### Export Price 

                        The petitioners identified Joint Stock Corporation Yermak Ferro-Alloys (Yermak) and Temirtau Chemical and Metal Works (Temirtau) as the only producers of subject merchandise in Kazakhstan. The petitioners were unable to obtain specific sales or offers for sale of subject merchandise in the United States. Therefore, petitioners based EP on the AUVs for one ten-digit category of the HTSUS (7202.30.0000) on imports from Kazakhstan for the POI (excluding February and March 2001 because data were not available at the time of the petition filing). For the HTSUS category under examination, the petitioners calculated the import AUVs using the reported quantity and Customs value for imports as recorded in the U.S. Census Bureau's official IM-145 import statistics. We note that Customs import value as defined by Technical Documentation for US Exports and Imports of Merchandise on CD-ROM excludes U.S. import duties, freight, insurance and other charges incurred in bringing the merchandise to the United States. The petitioners calculated a net U.S. price by deducting from EP foreign inland freight to the port of exportation and brokerage and handling charges at the port of exportation. In order to calculate foreign inland freight, the petitioners determined that the distance by rail between each of the factories and the port exceeds 1,525 kilometers, and then applied an Indian rail rate as a surrogate. We note that the distance from both factories to the port of exportation appears to exceed 1,525 kilometers. For brokerage and handling charges at the port of exportation, petitioners used an Indian brokerage and handling rate as a surrogate. Both of these surrogate value rates, which were adjusted for inflation, were used in the Department's most recent final results of review in the Silicomanganese from the People's Republic of China antidumping case.                         *See Silicomanganese From the People's Republic of China: Notice of Final Results of Antidumping Administrative Review*, 65 FR 31514 (May 18, 2000) (Silicomanganese from the PRC).                     

### Normal Value 

                        The petitioners allege that Kazakhstan is an NME country, and in all previous investigations, the Department has determined that Kazakhstan is an NME.                         *See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Beryllium Metal and High Beryllium Alloys from the Republic of Kazakhstan*, 62 FR 2648, 2649 (January 17, 1997). Kazakhstan will be treated as an NME unless and until its NME status is revoked. Pursuant to section 771(18)(C)(i) of the Tariff Act, because Kazakhstan's status as an NME remains in effect, the petitioners determined the dumping margin using a factors of production (FOP) analysis.                     

                        For NV, the petitioners based the FOP, as defined by section 773(c)(3) of the Tariff Act, on the consumption rates of Eramet's silicomanganese plant in the United States, adjusted for known differences in electricity and electrode consumption. The petitioners assert that information regarding either Kazakhstan producers' consumption rates is not available, and have therefore assumed, for purposes of the petition, that producers in Kazakhstan use the same inputs in the same quantities as the petitioners use, except where a variance from the petitioners' cost model can be justified on the basis of available information. The petitioners argue that the use of the petitioners' FOP is conservative for the following reasons: (1) They have not made adjustments to Eramet's FOP for the increases in certain FOP by the Kazakh producers; and (2) they have used a certain surrogate value. Because this information is proprietary,                         *see*                         the                         *Initiation Checklist*                         (proprietary version) for details. Based on the information provided by the petitioners, we believe the petitioners' FOP methodology represents information reasonably available to the petitioners and is appropriate for purposes of initiating this investigation.                     

The petitioners assert that India is the most appropriate surrogate country for Kazakhstan because, pursuant to section 773(c), the Department calculates normal value in an NME antidumping investigation by valuing the FOP using values in a surrogate, market-economy country that (1) is at a comparable level of economic development to the NME and (2) is a significant producer of comparable merchandise. Also, petitioners state that Indian data are available for nearly all FOP used to manufacture silicomanganese. Based on the information provided by the petitioners, we believe that the petitioners' use of India as a surrogate country is appropriate for purposes of initiating this investigation. 

                        In accordance with section 773(c)(4) of the Tariff Act, the petitioners valued FOP, where possible, on reasonably available, public surrogate data from India. Raw and process materials were primarily valued based on price quotes from an Indian supplier, foreign research conducted in India (including using Eramet's cost methodology for valuing silicomanganese fines), and Indian import statistics from the Monthly Statistics of the Foreign Trade of India, Volume II: Imports. (We note that petitioners did not directly value electrode paste but instead treated electrode paste as part of factory overhead, citing                         *Silicomanganese from the PRC*, in which the Department concluded that electrode paste may have been already included in the “stores and spares” overhead category.                         *See Issues and Decision Memorandum for the Antidumping Duty Administrative Review of Silicomanganese from the People's Republic of China—December 1, 1997 through November 30, 1998*                         (May 8, 2000). Also, we note that petitioners believe the correct approach is to directly value electrode paste because it is a direct input and to include “stores and spares” expenses in the numerator in the calculation of the factory overhead rate.) Labor was valued using the regression-based wage rate for Kazakhstan provided by the Department, in accordance with 19 CFR 351.408(c)(3). Electricity was valued using the rate for India published in a quarterly report of the OECD's International Energy Agency. For overhead, SG&A and profit, the petitioners, at the request of the Department, applied rates derived from the RBI for the Indian metals and chemicals sector. All surrogate values which fell outside the POI were adjusted for inflation based on the currency in which the source data were reported. The Indian wholesale price index, as published by the International Monetary Fund's International Financial Statistics, was used for these adjustments. Based on the information provided by the petitioners, we believe their surrogate values represent information reasonably available to the petitioners and are acceptable for                               ( print page 22212)                            purposes of initiation of this investigation.                     

Based upon the comparison of EP to CV, the petitioners calculated an estimated dumping margin of 164.29 percent. 

## Venezuela 

### Export Price 

                        The petitioners based EP on the AUV of silicomanganese imported from Venezuela under the applicable HTSUS subheading, for the POI, excluding February and March 2001, based on the data published by the U.S. International Trade Commission's                         *dataweb*. This data, as presented, is FOB customs value. Net U.S. price was calculated by deducting foreign inland, which was based on foreign market research.                     

### Normal Value 

                        Petitioners used data obtained from a foreign market researcher to determine the price charged in the home market. The price quote obtained by the researcher represents a selling price (exclusive of taxes) in U.S. dollars during the last half of 2000 and January and February 2001. Terms of sale were delivered. Petitioners then deducted an amount for inland freight. Information regarding inland freight charges in Venezuela was also obtained from the foreign market researcher.                         *See Initiation Checklist*.                     

Petitioners provided information demonstrating reasonable grounds to believe or suspect that sales of silicomanganese in the home market were made at prices below COP, within the meaning of section 773(b) of the Tariff Act, and requested that the Department conduct a sales-below-cost investigation for Venezuela. 

                        As indicated above, pursuant to section 773(b)(3) of the Tariff Act, COP consists of the COM, SG&A, and packing. Petitioners calculated COM based on their own production experience, adjusted for known differences between cost incurred to produce silicon manganese in the United States and Venezuela using publicly available data and foreign market research. To calculate SG&A, petitioners relied on data obtained from the financial statement of HEVENSA, a Venezuelan steel producer. Based upon the comparison of the prices of the foreign like product in the home market to the calculated COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made at prices below the COP, within the meaning of section 773(b)(2)(A)(i) of the Tariff Act. Accordingly, the Department is initiating a cost investigation for Venezuela.                         *See Initiation of Cost Investigations*                         section below.                     

Given the evidence of below-cost sales, petitioners also based NV on CV pursuant to sections 773(a)(4), 773(b) and 773(e) of the Tariff Act. The petitioners calculated CV using the same COM and SG&A used to compute Venezuelan home market costs. The petitioners did not include in CV an amount for profit. However, petitioners point out that, consistent with section 773(e)(2) of the Tariff Act, the Department has to include an amount for profit in its NV and CV calculations during the investigation. 

The estimated dumping margin for Venezuela, based on a comparison between EP and home market price, is 20.38 percent. The estimated dumping margin for price-to-CV comparisons is 47.14 percent. 

### Initiation of Cost Investigations 

                        As noted above, pursuant to section 773(b) of the Act, the petitioners provided information demonstrating reasonable grounds to believe or suspect that sales in the home markets of India and Venezuela were made at prices below the fully absorbed COP and, accordingly, requested that the Department conduct country-wide sales-below-COP investigations in connection with the requested antidumping investigations for these countries. The Statement of Administrative Action (SAA), submitted to the U.S. Congress in connection with the interpretation and application of the URAA, states that an allegation of sales below COP need not be specific to individual exporters or producers. SAA, H. Doc. 103-316, at 833(1994);                         *see also*19 CFR 351.301(d)(2). The SAA, at 833, states that “Commerce will consider allegations of below-cost sales in the aggregate for a foreign country, just as Commerce currently considers allegations of sales at less than fair value on a country-wide basis for purposes of initiating an antidumping investigation.”                     

                        Further, the SAA provides that “new section 773(b)(2)(A) retains the current requirement that Commerce have ‘reasonable grounds to believe or suspect’ that below cost sales have occurred before initiating such an investigation. ‘Reasonable grounds’ * * * exist when an interested party provides specific factual information on costs and prices, observed or constructed, indicating that sales in the foreign market in question are at below-cost prices.”                         *Id.*                         Based upon the comparison of the adjusted prices from the petition for the representative foreign like products to their COPs, we find the existence of “reasonable grounds to believe or suspect” that sales of these foreign like products in the markets of India and Venezuela were made at prices below their respective COPs within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating the requested country-wide cost investigations.                     

### Fair Value Comparisons 

Based on the data provided by the petitioners, there is reason to believe that imports of silicomanganese from India, Kazakhstan, and Venezuela are being, or are likely to be, sold at less than fair value. 

### Allegations and Evidence of Material Injury and Causation 

                        The petitioners allege that the U.S. industry producing the domestic like product is being materially injured, or is threatened with material injury, by reason of the individual and cumulated imports of the subject merchandise sold at less than NV. The petitioners contend that the industry's injured condition is evident in the declining trends in net operating profits, net sales volumes, profit-to-sales ratios, and capacity utilization. The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, lost sales, and pricing information. We have assessed the allegations and supporting evidence regarding material injury and causation, and have determined that these allegations are properly supported by accurate and adequate evidence and meet the statutory requirements for initiation (                        *see Initiation Checklist*).                     

### Initiation of Antidumping Investigations 

                        Based upon our examination of the petitions on silicomanganese, and the petitioners' responses to our supplemental questionnaire clarifying the petitions, as well as our conversations with the foreign market researcher who provided information concerning various aspects of the petition, we have found that it meets the requirements of section 732 of the Act.                         *See Initiation Checklist, Market Research for India and Kazakhstan*, and                         *Market Research for Venezuela*. Therefore, we are initiating antidumping duty investigations to determine whether imports of silicomanganese from India, Kazakhstan, and Venezuela 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                               ( print page 22213)                            than 140 days after the date of this initiation.                     

### Distribution of Copies of the Petitions 

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 governments of India, Kazakhstan, and Venezuela. 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 Determinations by the ITC 

The ITC will determine, no later than May 21, 2001, whether there is a reasonable indication that imports of silicomanganese from India, Kazakhstan, and Venezuela are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination for any country will result in the investigation being terminated with respect to that country; otherwise, these investigations will proceed according to statutory and regulatory time limits. 

This notice is issued and published pursuant to section 777(i) of the Act. Effective January 20, 2001, Bernard T. Carreau is fulfilling the duties of the Assistant Secretary for Import Administration. 

Dated: April 26, 2001.

Bernard T. Carreau,

Deputy Assistant Secretary, Import Administration.

# Footnotes

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).                        
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[FR Doc. 01-11149 Filed 5-2-01; 8:45 am] 

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