[Federal Register Volume 60, Number 61 (Thursday, March 30, 1995)]
[Notices]
[Pages 16431-16437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7775]



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[[Page 16432]]

DEPARTMENT OF COMMERCE

International Trade Administration
[A-823-806]


Notice of Final Determination of Sales at Less Than Fair Value: 
Pure Magnesium From Ukraine

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

EFFECTIVE DATE: March 30, 1995.

FOR FURTHER INFORMATION CONTACT:
Ellen Grebasch, Dorothy Tomaszewski or Erik Warga, Office of 
Antidumping Investigations, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-3773, (202) 482-0631 or (202) 482-0922, respectively.

Final Determination

    We determine that imports of pure magnesium from Ukraine are being, 
or are likely to be, sold in the United States at less than fair value 
(``LTFV''), as provided in section 733 of the Tariff Act of 1930, as 
amended (``the Act''). The estimated margins are shown in the 
``Continuation of Suspension of Liquidation'' section of this notice.

Case History

    Since the preliminary determination on October 27, 1994 (59 FR 
55420, November 7, 1994), the following events have occurred:
    In December 1994, we issued sections A and C of our antidumping 
questionnaire\1\ to exporters Greenwich Metals and Hochschild Partners. 
These companies provided responses to these questionnaires in December 
1994 and January 1995.

    \1\Section A requested general information on each company; and 
section C requested information on, and a listing of, U.S. sales 
made during the period of investigation (``POI'').
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    Verifications were conducted at the Chicago, Illinois, facilities 
of MG Metals from December 6 to December 7, 1994; at Gerald Metals' 
Lausanne, Switzerland, offices from December 13 to December 14, 1994, 
and at its Stamford, Conn., offices on January 24 and January 25, 1995; 
at Concern Oriana's (formerly Concern Chlorvinyl) facilities in Kalush, 
Ukraine; and at the Greenwich, Conn., facilities of Greenwich Metals 
from January 30 to January 31, 1995.
    On January 31, 1995, we amended our preliminary determination to 
correct for certain ministerial errors (60 FR 7519, February 8, 1995).
    Respondents Concern Oriana, Gerald Metals, Greenwich Metals, 
Hochschild Partners, as well as petitioners,\2\ filed case and rebuttal 
briefs. A public hearing was held on February 24, 1995.

    \2\Magnesium Corporation of America; Dow Chemical; International 
Union of Operating Engineers, Local 564; and United Steel Workers of 
America, Local 8319.
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Scope of Investigation\3\

    \3\The scope of this investigation has been modified since the 
preliminary determination in order to clarify the distinctions 
between pure magnesium and alloy magnesium. See Comment 5 in the 
``Interested Party Comments'' section of this notice, below, for a 
discussion of the scope modification. For a detailed definition of 
alloy magnesium, see the ``Scope of Investigation'' section of the 
concurrent investigations of alloy magnesium from the People's 
Republic of China and the Russian Federation.
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    The product covered by this investigation is pure primary magnesium 
regardless of chemistry, form or size, unless expressly excluded from 
the scope of this investigation. Primary magnesium is a metal or alloy 
containing by weight primarily the element magnesium and produced by 
decomposing raw materials into magnesium metal. Pure primary magnesium 
is used primarily as a chemical in the aluminum alloying, 
desulfurization, and chemical reduction industries. In addition, pure 
primary magnesium is used as an input in producing magnesium alloy.

    Pure primary magnesium encompasses:
    (1) products that contain at least 99.95% primary magnesium, by 
weight (generally referred to as ``ultra-pure'' magnesium);
    (2) products containing less than 99.95% but not less than 99.8% 
primary magnesium, by weight (generally referred to as ``pure'' 
magnesium); and
    (3) products (generally referred to as ``off-specification 
pure'' magnesium) that contain 50% or greater, but less than 99.8% 
primary magnesium, by weight, and that do not conform to ASTM 
specifications for alloy magnesium.

    ``Off-specification pure'' magnesium is pure primary magnesium 
containing magnesium scrap, secondary magnesium, oxidized magnesium or 
impurities (whether or not intentionally added) that cause the primary 
magnesium content to all below 99.8% by weight. It generally does not 
contain, individually or in combination, 1.5% or more, by weight, of 
the following alloying elements: aluminum, manganese, zinc, silicon, 
thorium, zirconium and rare earths.
    Excluded from the scope of this investigation are alloy primary 
magnesium, primary magnesium anodes, granular primary magnesium 
(including turnings and powder), and secondary magnesium.
    Granular magnesium, turnings, and powder are classifiable under 
Harmonized Tariff Schedule of the United States (HTSUS) subheading 
8104.30.00. Magnesium granules and turnings (also referred to as chips) 
are produced by grinding and/or crushing primary magnesium and thus 
have the same chemistry as primary magnesium. Although not susceptible 
to precise measurement because of their irregular shapes, turnings or 
chips are typically produced in coarse shapes and have a maximum length 
of less than 1 inch. Although sometimes produced in larger sizes, 
granules are more regularly shaped than turnings or chips, and have a 
typical size of 2mm in diameter or smaller.
    Powders are also produced from grinding and/or crushing primary 
magnesium and have the same chemistry as primary magnesium, but are 
even smaller than granules or turnings. Powders are defined by the 
Section Notes to Section XV, the section of the HTSUS in which 
subheading 8104.30.00 appears, as products of which 90 percent or more 
by weight will pass through a sieve having a mesh aperture of 1mm. (See 
HTSUS, Section XV Base Metals and Articles of Base Metals, Note 6(b).) 
Accordingly, the exclusion of magnesium turnings, granules and powder 
from the scope includes products having a maximum physical dimension 
(i.e., length or diameter) of 1 inch or less.
    The products subject to this investigation are classifiable under 
subheadings 8104.11.00, 8104.19.00 and 8104.20.00 of the HTSUS. 
Although the HTSUS subheadings are provided for convenience and customs 
purposes, our written description of the scope is dispositive.

Period of Investigation

    The period of investigation (``POI'') is October 1, 1993, through 
March 31, 1994.

Fair Value Comparisons

A. Participating Respondents

    To determine whether sales of pure magnesium from Ukraine to the 
United States by Gerald Metals, Hochschild Partners, and MG Metals were 
made at less than fair value, we compared the United States price 
(``USP'') to the foreign market value (``FMV''), as specified in the 
``United States Price'' and ``Foreign Market Value'' sections of this 
notice.
    Verification revealed that, for its POI sales to U.S. companies, 
there were no instances where Greenwich Metals' role in the sales 
process was that of being the [[Page 16433]] first company to sell 
Ukraine-produced pure magnesium to a U.S. customer. That is, all 
subject merchandise purchased by Greenwich was done so on terms that 
made Greenwich the U.S. customer of its supplier. Accordingly, 
Greenwich will be subject to the ``Ukraine-wide'' deposit rate.

B. All Other Companies

    All companies to which a questionnaire was issued are considered 
mandatory respondents in this proceeding. Several companies in Ukraine 
either failed to respond to either our initial requests for information 
about U.S. sales, or failed to respond to our request for permission to 
verify. These companies include: Zaporozhye Titanium-Magnesium Plant, a 
Ukrainian producer; and Alex, Mages, and Intreid, Ukrainian exporters. 
Accordingly, we have based the ``Ukraine-wide'' duty deposit rate--
applicable to all companies except those that (1) made POI U.S. sales 
of subject merchandise, and (2), participated in this investigation--on 
the best information available (``BIA'').
    In determining what to use as BIA, the Department follows a two-
tiered methodology, whereby the Department normally assigns lower 
margins to respondents that cooperated in an investigation and margins 
based on more adverse assumptions for those respondents, like the non-
participating respondents in this investigation, which did not 
cooperate in an investigation. As outlined in Coumarin,\4\ where, as 
here, a company refuses to provide the information requested in the 
form required, or otherwise significantly impedes the Department's 
investigation, it is appropriate for the Department to assign to that 
company the higher of (1) the highest calculated rate of any respondent 
in the investigation, (2) the highest margin alleged in the petition, 
or (3) the margin from the preliminary determination for that firm. 
Accordingly, we have set the Ukraine-wide deposit rate at 104.27 
percent, ad valorem. This margin represents the highest margin in the 
petition, as recalculated by the Department for purposes of initiating 
this proceeding and as further adjusted to account for factors of 
production listed in the petition that were not valued at the time of 
initiation, but for which information is on the record upon which to 
base a surrogate value.

    \4\Final Determination of Sales at Less Than Fair Value: 
Coumarin from the People's Republic of China (59 FR 66895, December 
28, 1994).
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United States Price

    We based USP for third-country exporters Gerald Metals and 
Hochschild on purchase price, in accordance with section 772(b) of the 
Act, because the subject merchandise was sold directly by the exporters 
to unrelated parties in the United States prior to importation into the 
United States and because exporter's sales price (``ESP'') methodology 
was not indicated by other circumstances.
    For Gerald Metals and Hochschild, we calculated purchase price 
based on packed, CIF, delivered, or FOT warehouse prices to unrelated 
purchasers in the United States. For Gerald Metals, we made the 
following deductions (where appropriate): ocean freight; foreign 
brokerage; U.S. Brokerage and handling charges; U.S. duty; and U.S. 
inland freight. For Hochschild Partners, we made the following 
deductions (where appropriate) for foreign brokerage; ocean freight; 
marine insurance; and U.S. inland freight.
    We based USP for MG Metals, a third-country exporter, on ESP, in 
accordance with section 772(c) of the Act, because the subject 
merchandise was sold to the first unrelated purchaser after importation 
into the United States.
    We calculated ESP based on packed delivered prices. For MG Metals, 
we made the following deductions (where appropriate) for ocean freight; 
marine insurance; foreign brokerage; U.S. inland freight; U.S. inland 
insurance, U.S. duties; U.S. brokerage and handling; and additional 
packing costs.
    From each exporter's U.S. price, we continued to deduct foreign 
inland freight between the factory and the reported intermediate 
destination (e.g., Rotterdam) using the per-ton foreign inland freight 
figure reported in the petition in order to account for this movement 
charge from producer to the intermediate destination.
    Minor adjustments were made to the reported U.S. sales of these 
exporters pursuant to our findings at verification (see Final 
Calculation Memorandum, on file in room B-099 of the Main Commerce 
Department Building, for details of adjustments).

Foreign Market Value

A. Surrogate Country Selection

    Section 773(c) of the Act requires the Department to value the 
factors of production, to the extent possible, in one or more market 
economy countries that are at a level of economic development 
comparable to that of the non-market-economy country and that are 
significant producers of comparable merchandise.
    In our preliminary determination, we selected Indonesia as our 
primary surrogate country and resorted to Egypt for certain surrogate 
values where values in Indonesia were either unavailable or out of 
date. These countries are appropriate surrogate countries for the 
reasons set forth in our preliminary determination. Since we find no 
compelling reason to change this selection, we have continued to base 
FMV on the values of the appropriate factors of production as valued in 
Indonesia or Egypt.

B. Factors of Production

    In accordance with section 773(c) of the Act, we calculated FMV, 
with regard to the exporters' U.S. sales of magnesium produced by 
Concern Oriana, based on factors of production cited in the preliminary 
determination, making adjustments based on verification findings (see 
Final Calculation Memorandum). With regard to the exporters' U.S. sales 
of magnesium produced by the other Ukraine manufacturer. Zaporozhye 
Titanium-Magnesium Plant (from which we did not receive factors of 
production data), we did not calculate FMV; instead, we assigned an 
uncooperative BIA margin which equalled the highest adjusted alleged 
margin cited in our initiation notice (as indicated in our amended 
preliminary determination).
    The factors used to produce pure magnesium include materials, 
labor, and energy. To calculate FMV, the reported quantities were 
multiplied by the appropriate surrogate values for the different 
inputs. (For a complete analysis of surrogate values, see our Final 
Calculation Memorandum.) An imputed factory overhead figure was also 
included in the FMV calculation based on a percentage of materials, 
labor and energy. We granted a by-product offset against the cost of 
manufacturing (i.e., the sum of materials, labor, energy and factory 
overhead). We then added the statutory minimum imputed amounts for 
general expenses and profit. We followed the same methodology for 
packing costs used at the preliminary determination; however, adjusted 
the packing material cost so as not to double count certain materials. 
Additionally, we used the Indonesian unskilled labor rate for packing 
labor.
    We have used the same surrogate values used in the preliminary 
determination with the exception of certain corrections made based on 
verification or interested party comments. Based on verification, we 
adjusted the values of magnesium [[Page 16434]] chloride and chlorine 
to reflect the actual purity used in the production (or yielded as a 
by-product) of subject merchandise. We recalculated certain reported 
inland freight distances between factory and input supplier based on 
verified distances. We used labor rates from Indonesia specific to 
skilled and unskilled labor. One material input, considered a direct 
material for the preliminary determination, has not been accounted for 
in our final determination because it was discovered at verification to 
be an indirect material.

Verification

    As provided in Section 776(b) of the Act, we verified the 
information submitted by respondents for use in our final 
determination. We used standard verification procedures, including 
examination of relevant accounting and production records and original 
source documents provided by respondents.

Interested Party Comments

Comment 1: BIA for Refusal to Permit Verification

    Petitioners argue that the Department should assign a margin based 
on total BIA to all companies that reported having made no POI sales of 
subject merchandise, but that did not indicate in their response to the 
Department's inquiry that they would permit verification of this 
information.
DOC Position
    We agree with petitioners and have assigned a margin based on total 
BIA to those companies that either refused verification or did not 
respond to our request to verify a report of no sales.

Comment 2: Surrogate Value for Magnesium Chloride

    Concern Oriana asserts that the surrogate value used for magnesium 
chloride in the preliminary determination was aberrational and 
unrealistic because: (1) The surrogate value is almost five times 
greater on a per-unit basis than the Brazil value of hydrated 
carnallite provided in the petition, of which magnesium chloride is but 
one cost component; (2) the UN Trade Commodity Statistics show an 
export value for Indonesia which is one third that of the import value; 
and (3) values for imports of magnesium chloride into other potential 
surrogate countries vary more than 500 percent, demonstrating that the 
value used for the preliminary determination is inherently unreliable.
    Concern Oriana requests that the Department use the value of 
hydrated carnallite from the petition as a more realistic and accurate 
surrogate for the value of magnesium chloride used in the production of 
magnesium.
    Petitioners counter that the Department should not use a surrogate 
value for hydrated carnallite, a completely different material, when a 
nonaberrational price is available for a commodity category containing 
the actual materials used in the production process. Specifically, 
petitioners contend that the Indonesian price for magnesium chloride 
and the petition's price for hydrated carnallite cannot be compared. 
Petitioners also contend that the range of import prices for magnesium 
chloride from other potential surrogate countries ($159 to $1,000/per 
metric ton) demonstrates that the price used in the preliminary 
determination ($152.89 per metric ton) is conservative rather than 
aberrational. Petitioners note as well that the Indonesian import price 
fits into the high preference category of the Department's hierarchy 
for surrogate values: it is publicly available information, it is non-
export value, and it is contemporaneous to the POI, unlike the petition 
value for a totally different product suggested by respondents.
DOC Position
    We agree with petitioners that the record does not support a 
finding that the surrogate value for magnesium chloride is aberrational 
or otherwise inappropriate. First, it is not accurate to characterize 
magnesium chloride as ``but one cost component'' of hydrated 
carnallite. The fact that hydrated carnallite is processed to obtain 
magnesium chloride (rather than vice versa) makes a higher price for 
magnesium chloride logical. Second, although import prices in other 
surrogate countries vary, Concern Oriana has not demonstrated that this 
variance should be construed as evidence that the value used here is 
unreliable. Third, we have specifically expressed a preference for 
import values over export values when both are available (see PRC 
Pencils\5\).

    \5\Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cased Pencils from the People's Republic of China (60 
FR 55625, November 8, 1994)
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Comment 3: Basis for Greenwich Metals' Deposit Rate

    Petitioners assert that verification revealed that Greenwich's 
reported U.S. sales of subject merchandise were entirely of merchandise 
that it had purchased from a European trader that was aware that the 
merchandise was destined for the United States. Consequently, 
petitioners request that the Department assign Greenwich the ``Ukraine-
wide'' rate and assign the European trader the BIA rate for not 
participating in this investigation.
    Greenwich counters that it properly reported the sales in question 
as its own U.S. sales. Greenwich argues that the European trader did 
not know the ultimate destination of the merchandise because Greenwich 
did not inform the European trader where to ship the merchandise until 
after the terms of sale were fixed. Greenwich also argues that the 
European trader did not know the ultimate destination of subject 
merchandise at the time the terms of the sale were fixed because 
Greenwich bought the merchandise on a ``duty-unpaid'' basis--leaving 
Greenwich the option of selling the merchandise in either the U.S. 
market or in a third country.
DOC Position
    We agree with petitioners. First, the record does not support 
Greenwich's claim that it did not inform the European trader where to 
ship the merchandise until after the terms of sale were fixed. Rather, 
as verification revealed, the contract setting the terms of sale 
included as identification of the shipment destination. Second, the 
fact that sales terms are ``duty unpaid'' is far outweighed by the fact 
that the merchandise was shipped to the United States and the absence 
of any indication that the seller could legitimately expect such sales 
not to enter the U.S. market. Accordingly, we have not calculated a 
company-specific margin for Greenwich because we find that it did not 
make any U.S. sales of the subject merchandise during the POI. Instead, 
Greenwich and its European supplier will both be subject to the 
``Ukraine-wide'' rate.

Comment 4: Completeness of Ukraine Magnesium Industry's Response

    Petitioners argue that, as state owned entities, Zaporozhye and 
Concern Oriana comprise the consolidated magnesium industry in Ukraine. 
According to petitioners, total BIA should be assigned to this 
consolidated Ukrainian industry because the industry as a whole failed 
to report complete sales information (i.e., Zaporozhye did not provide 
a complete response to the questionnaire). They also claim that total 
BIA should also be assigned to third-country exporters because of the 
Ukrainian industry's non-cooperation.
    If the Department elects not to apply total BIA to all third-
country exporters in this proceeding, then petitioners contend that the 
Department should base FMV for the exporters' U.S. sales (1) wholly on 
BIA, disregarding Concern [[Page 16435]] Oriana's factors of 
production, or (2) on a simple average of Concern Oriana's calculated 
FMV and a BIA-based FMV for Zaporozhye, or that the Department should 
link individual exporters' applicable deposit rate to the specific 
producer which supplies subject merchandise.
    Gerald Metals counters that Concern Oriana's magnesium production 
process is similar to that of Zaporozhye and, therefore, the Department 
should use only verified information from Concern Oriana to calculate 
FMV in its LTFV analyses.
DOC Position
    If an antidumping duty order is issued in this proceeding, any 
direct sales from Ukraine will be subject to a deposit rate based on 
total BIA. (See discussion of ``All Other Companies'' in the ``Fair 
Value Comparisons'' section of this notice, above).
    As to the third-country exporters, we have continued to follow the 
approach set out in the preliminary determination. We have based FMV 
for those companies' reported U.S. sales of Concern-Oriana-produced 
merchandise on Concern Oriana's factors of production; we have not 
calculated FMV for reported sales of Zaporozhye-produced merchandise, 
but instead have assigned an uncooperative BIA margin. This approach is 
consistent with the approach that we have taken in other NME cases, 
such as Coumarin, Pencils, and PRC Sulfur Dyes\6\, where the Department 
based FMV for an exporter not controlled by the central government only 
on the factors of production of the producer or producers which 
supplied subject merchandise to that exporter. Under this approach, 
individual transaction margins are then weight averaged to arrive at a 
single, exporter-specific deposit rate. Further, in a situation like 
that created here by Zaporozhye's failure to respond, where FMV 
information needed to calculate a margin is not available, the 
Department has, as here, resorted to partial BIA and plugged into the 
weighted-average calculations BIA margins for individual transactions. 
(See, e.t., Pencils.)

    \6\Final Determination of Sales at Less Than Fair Value: Sulfur 
Dyes, Including Sulfur Vat Dyes, from the People's Republic of China 
(58 FR 7543, February 8, 1993)
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Comment 5: Scope

    Petitioners contend that the Department should clarify the scope in 
this proceeding. Petitioners argue that ``off-specification'' pure 
magnesium (i.e., magnesium that is less than 99.8% pure magnesium but 
that otherwise can be and is considered pure magnesium by consumers) 
should be considered as within the scope. Petitioners propose a revised 
scope to achieve this end.
    Greenwich argues that the proposed revised scope is flawed because 
it appears to include secondary magnesium (i.e., magnesium that has 
been remelted and recast) as subject merchandise.
DOC Position
    We agree with petitioners that some magnesium is produced which, 
despite not meeting the normal definition (based on magnesium content) 
of pure magnesium, nevertheless may be used in applications that 
normally require pure magnesium. In fact, the records in the concurrent 
antidumping investigations of pure and alloy magnesium from the 
People's Republic of China show sales of such magnesium were supplied 
to fulfill an order for pure magnesium.
    We therefore have revised the scope to include this off-
specification pure magnesium within the definition of pure magnesium. 
Off-specification pure magnesium is described as any product (1) that 
is 50 percent or more primary magnesium, and (2) that does not meet any 
ASTM definition of alloy magnesium (based on specific percentages of 
one or more alloying agents).
    We note that our consultations with the Bureau of Mines established 
that the industry standards for alloy magnesium are ASTM standards. 
(See Final Calculation Memorandum). Consequently, we have not adopted 
scope language proposed by petitioners that refers to alloy magnesium 
defined by ``other industry standards'' in illustrating products that 
are not off-specification pure magnesium. Although ASTM standards 
define pure magnesium as not less than 99.8 percent magnesium, we 
believe that metal with a primary magnesium content below that level 
should be captured in the scope if it cannot legitimately be defined as 
a specific ASTM alloy magnesium.
    The fact that the scope encompasses only merchandise with primary 
magnesium content of 50 percent or greater means that merchandise 
composed of 50 percent or more secondary magnesium is excluded.

Comment 6: By-Product Offset Methodology

    Petitioners contend that the Department's decision to permit an 
offset to material surrogate values to account for the chlorine by-
product of the magnesium production process was erroneous for the 
following reasons: (1) the producers were unable to demonstrate for the 
record that any economic benefit accrued to the firm and that such 
benefit was linked to the production of the subject merchandise; (2) 
the surrogate value used was incorrect in that it did not correspond to 
the actual purity level of the by-product produced and was not 
calculated net of transportation and processing costs; and (3) any 
adjustment determined to be appropriate should have been made to the 
cost of manufacture rather than cost of materials so as not to 
understate factory overhead, general expenses, and profit.
    Concern Oriana argues that the cost of manufacturing magnesium 
should be reduced by the value of chlorine by-product.
DOC Position
    We agree with petitioners in part. First, because the by-product 
results from the production process and is either used by the magnesium 
producer or sold for use by some other company in the NME country, it 
is a factor whose value must be taken into account in our calculation 
of the fair value against which to test U.S. prices. Second, we have 
adjusted the by-product's surrogate CIF import value to reflect 
concentration differences. However, no adjustment to value for 
transportation costs is appropriate; for by-products, as for material 
factors of production consumed in the production process, we consider 
the import values used to be surrogates for ex-factory, freight-
exclusive prices from suppliers to consumers. Third, we agree with 
petitioners that the proper adjustment is a reduction in the cost of 
manufacture. This adjustment increases overhead amount commensurately 
with the value of the by-product, thereby eliminating the need for 
valuing any additional processing-related elements. Additionally, an 
adjustment to cost of manufacture is consistent with Department 
practice in other NME investigations (see, e.g., Coumarin).

Comment 7: Surrogate General Expenses and Profit

    Petitioners argue that an amount should be included in FMV 
calculations in order to reflect general expenses incurred and profit 
realized by each reseller involved in the sales process. Petitioners 
argue that, because the responding resellers failed to provide their 
selling expenses (despite a Departmental request to do so in the 
questionnaire), the Department should add an amount based on financial 
statements submitted by resellers. [[Page 16436]] 
    Greenwich, Hochschild, and Gerald Metals, assert that petitioners 
have provided no convincing rebuttal to the Department's recent 
rejection of such a request in Coumarin, and note that the 
questionnaires they received did not contain section D, the section 
dealing with general expenses.
DOC Response
    We agree with respondents that an addition to FMV of actual 
reseller general expenses and profit would be inappropriate. Given that 
Ukraine is an NME and the Ukrainian magnesium industry has not been 
found to be market oriented, section 773(c) of the Act requires that 
the Department measure U.S. prices against the factors of production 
(materials, labor, energy, and overhead) used in producing the 
merchandise, valued in an appropriate surrogate country, plus general 
expenses, profit and containers. The Act's only specific guidance as to 
the valuation of general expenses, profit and containers is to 
establish minima for the first two. Our regulations, meanwhile, 
instruct us to ``include in this calculation of constructed value an 
amount for general expenses and profit, as required by section 
773(e)(1)(B) of the Act. (19 CFR 353.52(c)) The Department has not 
interpreted the Act and the regulations as requiring use of actual 
expenses and profit for these FMV components when FMV is based on 
factors of production; the Department has also explicitly rejected such 
adjustments in prior NME proceedings (see, e.g., Coumarin and 
Sparklers\7\). Moreover, to do so simply does not make sense because it 
amounts to a comparison of apples and oranges. In NME proceedings, the 
FMV is normally based completely on factors valued in a surrogate 
country (without regard to, for example, actual selling expenses) on 
the premise that the actual experience cannot be meaningfully 
considered. Were the question simply one of ``traditional'' dumping by 
trading companies, the market-economy price-to-price or price-to-CV 
methodology would appropriately be employed; actual selling expenses 
would have been accounted for on both U.S. prices and foreign market 
prices (or, if appropriate, constructed value, in which case other 
general expenses and profit would also have been taken into account). 
Accordingly, we have continued to value general expenses and profit by 
simply applying to the surrogate-based cost of manufacture the greater 
of either appropriate surrogate percentages or the statutory minima.

    \7\Final Determination of Sales at Less Than Fair Value: 
Sparklers from the People's Republic of China (56 FR 20588, May 6, 
1991)
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Command 8: Surrogate Value of Labor

    Petitioners challenge the Department's use of an unskilled labor 
value in the preliminary determination to account for both skilled and 
unskilled labor. Petitioners assert that, if the Department cannot 
locate specific skilled and unskilled labor values from the chosen 
surrogate countries, the Department should employ labor rates from the 
petition as BIA.
DOC Position
    We have obtained and used Indonesian wage data for 1992 for skilled 
and unskilled labor (see PRC Lighters\8\). Because Indonesia is our 
primary surrogate country, we do not need to address the question of an 
appropriate alternative source of values for these factors.

    \8\Preliminary Determination of Sales at Less Than Fair Value: 
Disposable Pocket Lighters from the People's Republic of China (59 
FR 64191, December 13, 1994)
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Comment 9: Unreported Material.

    Petitions assert that the Department should include in Concern 
Oriana's FMV the value for a material which was not included in the 
preliminary determination. In its questionnaire response, Concern 
Oriana did not provide usage information for this material, claiming 
that its value was not significant. Petitioners contend that the value 
in Ukraine is not relevant since the input would be valued in a 
surrogate country. Therefore, as BIA, petitioners advocate use of an 
average of all other direct input values as the value for this input.
DOC Position
    We disagree. Verification confirmed that this factor was properly 
omitted since it was a waste product of the magnesium production 
process for which only a very small fraction was recycled into the 
production process. Therefore, it is appropriate not to value this 
input in the FMV calculation.

Comment 10: Concentration/Purity Levels of Material Inputs

    Petitioners contend that appropriate adjustments should be made for 
differences in concentration or purity between surrogate values on the 
one hand and materials used in production on the other hand. However, 
petitioners also argue that the Department should not assume that 
surrogate values represent 100 percent concentration and therefore 
should make no adjustment where the concentration applicable to a 
surrogate value cannot be determined.
DOC Position
    Where we have been able to determine the purity or concentration 
applicable to a surrogate value, we have adjusted for differences, if 
any, between the surrogate and the actual material. Otherwise, we have 
attempted no adjustment for purity or concentration.

Continuation of Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to continue to suspend liquidation of all entries of 
pure magnesium from Ukraine that are entered, or withdrawn from 
warehouse, for consumption on or after November 7, 1994, which is the 
date of publication our notice of preliminary determination in the 
Federal Register. The Customs Service shall require a cash deposit or 
posting of a bond equal to the estimated amount by which the FMV 
exceeds the USP as shown below. These suspension of liquidation 
instructions will remain in effect until further notice.
    Consistent with our practice in investigations involving imports 
from NME countries, we have calculated a single, ``Ukraine-wide'' 
deposit rate applicable to all exporters in Ukraine, as well as any 
exporters in third countries that have not been assigned a company-
specific margin. As is discussed under ``All Other Companies'' in the 
``Fair Value Comparisons'' section of this notice, the record in this 
investigation indicates that Ukraine exporters of magnesium may not 
have responded to our questionnaire; therefore, the ``Ukraine-wide'' 
deposit rate has been calculated based on total BIA.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
               Manufacturer/producer exporter                   margin  
                                                              percentage
------------------------------------------------------------------------
Gerald Metals..............................................       103.27
MG Metals..................................................        79.87
Hochschild Partners........................................        92.21
Ukraine-Wide Rate..........................................       104.27
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. As our final determination is affirmative, 
the ITC will within 45 days determine whether imports the subject 
merchandise are materially injuring, or threaten material injury to, 
the U.S. industry. If the ITC determines that material injury, or 
threat of material injury does not exist, [[Page 16437]] the 
investigation will be terminated and all securities posted will be 
refunded or canceled. If the ITC determines that such injury does 
exist, the Department will issue an antidumping duty order directing 
Customs officials to assess antidumping duties on all imports of the 
subject merchandise entered for consumption on all after the effective 
date of the suspension of liquidation.
    This determination is published pursuant to section 735(d) of the 
Act and 19 CFR 353.20(a)(4).

    Dated: March 22, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-7775 Filed 3-29-95; 8:45 am]
BILLING CODE 3510-DS-P