2010-8644. Solid Urea From the Russian Federation: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on solid urea from the Russian Federation. The review covers one producer/exporter of the subject merchandise, MCC EuroChem (EuroChem). The period of review (POR) is July 1, 2008, through June 30, 2009. We preliminarily determine that, during the POR, EuroChem sold the subject merchandise at less than normal value.

We invite interested parties to comment on these preliminary results. Parties who submit argument in this proceeding are requested to submit with the argument (1) a statement of the issue and (2) a brief summary of the argument.

EFFECTIVE DATE:

April 15, 2010.

FOR FURTHER INFORMATION CONTACT:

Dustin Ross or Minoo Hatten, AD/CVD Operations, Office 5, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On July 14, 1987, the Department published the antidumping duty order on solid urea from the Union of Soviet Socialist Republics (Soviet Union). See Antidumping Duty Order; Urea From the Union of Soviet Socialist Republics, 52 FR 26367 (July 14, 1987). Following the break-up of the Soviet Union, the antidumping duty order on solid urea from the Soviet Union was transferred to the individual members of the Commonwealth of Independent States. See Solid Urea From the Union of Soviet Socialist Republics; Transfer of the Antidumping Order on Solid Urea From the Union of Soviet Socialist Republics to the Commonwealth of Independent States and the Baltic States and Opportunity to Comment, 57 FR 28828 (June 29, 1992). The rate established in the less-than-fair-value investigation for the Soviet Union was applied to each new independent state, including the Russian Federation (Russia).

Pursuant to section 751(a)(1) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.213(b), the Ad Hoc Committee of Domestic Nitrogen Producers and its individual urea-producing members, CF Industries, Inc., and PCS Nitrogen (collectively, the Ad Hoc Committee), requested an administrative review of the antidumping duty order on solid urea from Russia with respect to EuroChem on July 31, 2009. On August 25, 2009, in accordance with 19 CFR 351.221(c)(1)(i), we published a notice of initiation of administrative review of the order. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 74 FR 42873 (August 25, 2009). We are conducting the administrative review of the order in accordance with section 751(a) of the Act.

Scope of the Order

The merchandise subject to the order is solid urea, a high-nitrogen content fertilizer which is produced by reacting ammonia with carbon dioxide. The product is currently classified under the Harmonized Tariff Schedules of the United States (HTSUS) item number 3102.10.00.00. Previously such merchandise was classified under item number 480.3000 of the Tariff Schedules of the United States. Although the HTSUS subheading is provided for convenience and customs purposes, the written description of the merchandise subject to the order is dispositive.

Sales Analyzed

During the review we learned from the respondent that liquidation of entries of EuroChem's subject merchandise was not suspended due to the importer's misclassification of entries during the POR. EuroChem stated that it requested U.S. Customs and Border Protection (CBP) to do a post-entry adjustment to suspend liquidation. After querying CBP's system, we are satisfied that there is one suspended entry on which to assess collectable duties. See memo to file dated March 29, 2010, which is on file in the Central Records Unit (CRU) of the main Commerce building, room 1117. Therefore, pursuant to section 751(a)(2)(C) of the Act, we have calculated the weighted-average margin using all of EuroChem's sales of solid urea during the POR. For details on our methodology for assessing duties for entries in this POR, see “Assessment Rates” section below.

Fair-Value Comparisons

To determine whether EuroChem's sales of solid urea from Russia were made in the United States at less than normal value, we compared the constructed export price (CEP) to the normal value as described in the “Constructed Export Price” and “Normal Value” sections of this notice.

When making this comparison in accordance with section 771(16) of the Act, we considered all products sold in the home market as described in the “Scope of the Order” section of this notice, above, that were in the ordinary course of trade for purposes of determining appropriate product comparisons to the U.S. sales of subject merchandise. We compared the U.S. sales to home-market sales of identical merchandise that were most contemporaneous with the U.S. sales in accordance with 19 CFR 351.414(e). Pursuant to section 777A(d)(2) of the Act, we compared the CEP of each U.S. transaction to the weighted-average price of sales of the foreign like product for the calendar month that corresponds most closely to the calendar month of the individual export sale.

Product Comparisons

We compared U.S. sales to weighted-average prices of home-market contemporaneous sales of the foreign like product. Wherever possible, we compared U.S. sales with sales of the foreign like product in the home market. Specifically, in making our comparisons, if an identical home-market model was reported as described by the characteristics listed below, we made comparisons to weighted-average home-market prices of that model. We calculated the weighted-average home-market prices on a level of trade-specific basis. If there were no contemporaneous sales of an identical model, we identified the most similar home-market model. We found contemporaneous sales of identical merchandise in the home market for all U.S. sales in accordance with section 771(16) of the Act.

In accordance with section 771(16) of the Act, we compared products produced by EuroChem and sold in the U.S. and home markets on the basis of the comparison product which met the physical characteristics of the product sold in the United States. In order of importance, these characteristics are form, grade, nitrogen content, size, urea-formaldehyde content, other additive/conditioning agent, coating agent, and biuret content.

Date of Sale

Section 351.401(i) of the Department's regulations states that, normally, the Department will use the date of invoice, as recorded in the producer's or exporter's records kept in the ordinary course of business, as the date of sale. The regulation provides further that the Department may use a date other than the date of the invoice if the Secretary is satisfied that a different date better reflects the date on which the material terms of sale are established. The Department has a long-standing practice of finding that, where shipment date precedes invoice date, shipment date better reflects the date on which the material terms of sale are established. See Notice of Final Determination of Sales at Less Than Fair Value and Negative Final Determination of Critical Circumstances: Certain Frozen and Canned Warmwater Shrimp From Thailand, 69 FR 76918 (December 23, 2004), and accompanying Issues and Decision Memorandum at Comment 10; see also Notice of Final Determination of Sales at Less Than Fair Value: Structural Steel Beams From Germany, 67 FR 35497 (May 20, 2002), and accompanying Issues and Decision Memorandum at Comment 2.

For all U.S. sales, EuroChem reported shipment dates which preceded the date of invoice. For each of these sales, EuroChem reported the date of invoice as the date of sale. The date of invoice is the date on which the final invoice is printed for the U.S. customer following the transfer of subject urea from the ocean vessel to the barge at the U.S. port. Based on record evidence, all material terms of sale are established at the time of shipment, with provisions between customer and producer for variance between agreed-upon price and quantity and final measured price and quantity at the U.S. port of unloading. Consistent with our normal practice, for all U.S. sales EuroChem reported we used the date of shipment as the date of sale.

With respect to EuroChem's home-market sales, shipment date and invoice date are the same for every transaction. Therefore, we use invoice date as the date of sale for all home-market sales.

Constructed Export Price

In accordance with section 772(b) of the Act, we used CEP for EuroChem because the subject merchandise was sold in the United States by a U.S. seller affiliated with the producer and export price was not otherwise indicated.

We calculated CEP based on the free-on-board or delivered price to unaffiliated purchasers in, or for exportation to, the United States. We also made deductions for any movement expenses in accordance with section 772(c)(2)(A) of the Act. In accordance with section 772(d)(1) of the Act, we calculated the CEP by deducting selling expenses associated with economic activities occurring in the United States, which includes direct selling expenses and indirect selling expenses. Finally, we made an adjustment for profit allocated to these expenses in accordance with section 772(d)(3) of the Act.

Normal Value

In order to determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating normal value (i.e., the aggregate volume of home-market sales of the foreign like product is five percent or more of the aggregate volume of U.S. sales), we compared the volume of EuroChem's home-market sales of the foreign like product to the volume of its U.S. sale of subject merchandise in accordance with section 773(a)(1)(C) of the Act. Based on this comparison, we determined that EuroChem had a viable home market during the POR. Consequently, we based normal value on home-market sales to unaffiliated purchasers made in the usual quantities in the ordinary course of trade and sales made to affiliated purchasers where we find prices were made at arm's length, described in detail below.

We based normal value on the starting prices to home-market customers. Pursuant to section 773(a)(6)(B)(ii) of the Act, we deducted inland-freight expenses EuroChem incurred on its home-market sales. Pursuant to section 773(a)(6)(B)(i) of the Act, we deducted home-market packing costs. We made deductions for direct selling expenses, as appropriate.

The Department may calculate normal value based on a sale to an affiliated party only if it is satisfied that the price to the affiliated party is comparable to the price at which sales are made to parties not affiliated with the exporter or producer, i.e., sales were made at arm's-length prices. See 19 CFR 351.403(c). We excluded from our analysis sales to affiliated customers for consumption in the home market that we determined not to be arm's-length prices. To test whether these sales were made at arm's-length prices, we compared the prices of sales of comparable merchandise to affiliated and unaffiliated customers, net of all rebates, movement charges, direct selling expenses, and packing. Pursuant to 19 CFR 351.403(c) and in accordance with our practice, when the prices charged to an affiliated party were, on average, between 98 and 102 percent of the prices charged to unaffiliated parties for merchandise comparable to that sold to the affiliated party, we determined that the sales to the affiliated party were at arm's-length prices. See Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186 (November 15, 2002). We included in our calculation of normal value those sales to affiliated parties that were made at arm's-length prices.

Level of Trade

To the extent practicable, we determined normal value for sales at the same level of trade as the U.S. sales. When there were no sales at the same level of trade, we compared U.S. sales to home-market sales at a different level of trade. The normal-value level of trade is that of the starting-price sales in the home market. To determine whether home-market sales are at a different level of trade than U.S. sales, we examined stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer.

In the home market, EuroChem reported a single channel of distribution. Within this single channel of distribution, EuroChem reported a single level of trade for all three customer types (i.e., distributors, traders, and end-users). EuroChem states that, within this single level of trade, greater selling functions are performed for end-users relative to distributors or traders. After analyzing the data on the record with respect to these functions, we find that EuroChem made all home-market sales at a single marketing stage (i.e., one level of trade) in the home market.

In the U.S. market, EuroChem had only CEP sales through its affiliated reseller to unaffiliated customers through a single channel of distribution and, thus, a single level of trade. See section 772(b) of the Act. We found that there were significant differences between the selling activities associated with the CEP level of trade and those associated with the home-market level of trade. For example, the CEP level of trade involved little or no sales-strategic and economic planning, distributor/dealer training, procurement/sourcing service, order input/processing, and freight/delivery service. Therefore, we considered the CEP level of trade to be different from the home-market level of trade and at a less advanced stage of distribution than the home-market level of trade. Consequently, we could not match U.S. sales to sales at the same level of trade in the home market nor could we determine a level-of-trade adjustment based on EuroChem's home-market sales of the foreign like product. Because the data available do not provide an appropriate basis to determine a level-of-trade adjustment and the home-market level of trade is at a more advanced stage of distribution than the CEP, we have made a CEP-offset adjustment to normal value in accordance with section 773(a)(7)(B) of the Act. The CEP offset is the sum of indirect selling expenses incurred on the home-market sales up to the amount of indirect selling expenses incurred on the U.S. sales.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that a dumping margin of 20.92 percent exists for EuroChem for the period July 1, 2008, through June 30, 2009.

Disclosure and Public Hearing

We will disclose the calculations used in our analysis to parties to this review within five days of the date of publication of this notice. See 19 CFR 351.224(b). Any interested party may request a hearing within 30 days of the publication of this notice in the Federal Register. See 19 CFR 351.310(c). If a hearing is requested, the Department will notify interested parties of the hearing schedule.

Interested parties are invited to comment on the preliminary results of this review. Interested parties may submit case briefs within 30 days of the date of publication of this notice. See 19 CFR 351.309(c). Rebuttal briefs, which must be limited to issues raised in the case briefs, may be filed not later than 35 days after the date of publication of this notice. See 19 CFR 351.309(d). Parties who submit case briefs or rebuttal briefs in this review are requested to submit with each argument (1) a statement of the issue and (2) a brief summary of the argument with an electronic version included.

We intend to issue the final results of this administrative review, including the results of our analysis of issues raised in the case briefs, within 120 days after the date on which the preliminary results are published. See 19 CFR 351.213(h)(1).

Assessment Rates

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212, we have calculated an importer/customer-specific assessment rate for these preliminary results of review. We divided total dumping margins for the reviewed sales by the entered value of the single suspended entry for this POR. For detailed explanation of our method for assessing duties, see “2008-2009 Administrative Review of the Antidumping Duty Order on Solid Urea from Russia - Preliminary Results Analysis Memorandum for EuroChem” on file in the CRU of the main Commerce building, room 1117. We will instruct CBP to assess the importer/customer-specific rate on the suspended entry of subject merchandise made by the importer during the POR.

The Department clarified its “automatic assessment” regulation on May 6, 2003. This clarification applies to entries of subject merchandise during the POR produced by EuroChem where EuroChem did not know that its merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries EuroChem-produced merchandise at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. For a full discussion of this clarification, see Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).

The Department intends to issue assessment instructions directly to CBP 15 days after the date of publication of the final results of this administrative review.

Cash-Deposit Requirements

The following deposit requirements will be effective upon publication of the notice of final results of administrative review for all shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication, as provided by section 751(a)(1) of the Act: (1) the cash-deposit rate for EuroChem will be the rate established in the final results of this review; (2) for previously reviewed or investigated companies not listed above, the cash-deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the less-than-fair-value investigation but the manufacturer is, the cash-deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; (4) if neither the exporter nor the manufacturer is a firm covered in this review, the cash-deposit rate will be 64.93 percent, the all-others rate established in Urea From the Union of Soviet Socialist Republics; Final Determination of Sales at Less Than Fair Value, 52 FR 19557 (May 26, 1987). These deposit requirements, when imposed, shall remain in effect until further notice.

Notification to Importer

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: April 9, 2010.

Ronald K. Lorentzen,

Deputy Assistant Secretary for Import Administration.