[Federal Register Volume 66, Number 246 (Friday, December 21, 2001)]
[Notices]
[Pages 65877-65886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31509]
[[Page 65877]]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[A-427-818]
Notice of Final Determination of Sales at Less Than Fair Value:
Low Enriched Uranium From France
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final determinations of sales at less than fair
value.
-----------------------------------------------------------------------
EFFECTIVE DATE: December 21, 2001.
FOR FURTHER INFORMATION CONTACT: Victoria Schepker or Edward Easton, at
(202) 482-1756 or (202) 482-3003, respectively; AD/CVD Enforcement,
Office 5, Group II, Import Administration, Room 1870, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
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 Department of Commerce (Department)
regulations refer to the regulations codified at 19 CFR part 351 (April
2000).
Final Determination
We determine that low enriched uranium (LEU) from France is being
sold, or is likely to be sold, in the United States at less than fair
value (LTFV), as provided in section 735 of the Act. The estimated
margins of sales at LTFV are shown in the Continuation of Suspension of
Liquidation section of this notice.
Case History
The preliminary determination in this investigation was published
on July 13, 2001. See Notice of Preliminary Determination of Sales at
Less Than Fair Value and Postponement of Final Determination: Low
Enriched Uranium from France, 66 FR 36743 (July 13, 2001) (Preliminary
Determination). The petitioners \1\ and the respondent, Eurodif, S.A.
(Eurodif), the sole producer of the subject merchandise, and its owner,
Compagnie Generale des Matieres Nucleaires (Cogema) (collectively,
Cogema/Eurodif or the respondent), filed case briefs on antidumping
methodological issues on September 28, 2001, and rebuttal briefs on
October 9, 2001. A rebuttal brief was also filed by the Ad Hoc
Utilities Group (Ad Hoc Utilities Group or AHUG).\2\ A public hearing
on the antidumping methodological issues was held on October 23, 2001.
---------------------------------------------------------------------------
\1\ The petitioners in this investigation are USEC, Inc., and
its wholly-owned subsidiary, United States Enrichment Corporation
(collectively USEC); and the Paper Allied-Industrial, Chemical and
Energy Workers International Union, AFL-CIO, CLC, Local 5-550 and
Local 5-689 (collectively PACE).
\2\ The members of the Ad Hoc Utilities Group are: Arizona
Public Service Co., Carolina Power & Light Co., Dominion Generation,
Duke Energy Corp., DTE Energy, Entergy Services, Inc., Exelon
Corporation, First Energy Nuclear Operating Co., Florida Power
Corp., Florida Power and Light Co., Nebraska Public Power District,
Nuclear Management Co. LLC ( on behalf of certain member companies),
PPL Susquehanna LLC, PSEG Nuclear LLC, South Texas Project, Southern
California Edison, Southern Nuclear Operating Co., Union Electric
Company, and Wolf Creek Nuclear Operating Corp.
---------------------------------------------------------------------------
On October 22 and 23, 2001, the petitioners, respondent, and the Ad
Hoc Utilities Group filed briefs on common scope issues in the
antidumping and countervailing duty investigations of low enriched
uranium from France, Germany, the Netherlands and the United Kingdom.
Rebuttal briefs on these common scope issues were filed on October 29,
2001, and a public hearing on the common scope issues was held on
October 31, 2001. In response to a September 28, 2001 submission by the
European Commission to Mr. Grant Aldonas, Under Secretary for
International Trade, regarding the antidumping duty (AD) and
countervailing duty (CVD) investigations of LEU from France, Germany,
the Netherlands, and the United Kingdom, and Mr. Aldonas' November 7,
2001 reply to this letter and the November 22, 2001 submission from the
European Commission, the petitioners, respondent and the Ad Hoc
Utilities Group filed briefs that addressed the content of this
correspondence.
This final determination was originally scheduled to be issued on
November 26, 2001. On November 6, 2001, the Department tolled the final
determination deadlines, until December 13, 2001, to accommodate a
delayed verification and briefing and hearing schedule in the companion
countervailing duty investigation, due to the events of September 11,
2001.
Amended Scope of Investigation
For purposes of this investigation, the product covered is all low
enriched uranium (LEU). LEU is enriched uranium hexafluoride
(UF6) with a U\235\ product assay of less than 20 percent
that has not been converted into another chemical form, such as
UO2, or fabricated into nuclear fuel assemblies, regardless
of the means by which the LEU is produced (including LEU produced
through the down-blending of highly enriched uranium).
Certain merchandise is outside the scope of this investigation.
Specifically, this investigation does not cover enriched uranium
hexafluoride with a U\235\ assay of 20 percent or greater, also known
as highly enriched uranium. In addition, fabricated LEU is not covered
by the scope of this investigation. For purposes of this investigation,
fabricated uranium is defined as enriched uranium dioxide
(UO2), whether or not contained in nuclear fuel rods or
assemblies. Natural uranium concentrates (U3O8)
with a U\235\ concentration of no greater than 0.711 percent and
natural uranium concentrates converted into uranium hexafluoride with a
U\235\ concentration of no greater than 0.711 percent are not covered
by the scope of this investigation.
Also excluded from these investigations is LEU owned by a foreign
utility end-user and imported into the United States by or for such
end-user solely for purposes of conversion by a U.S. fabricator into
uranium dioxide (UO2) and/or fabrication into fuel
assemblies so long as the uranium dioxide and/or fuel assemblies deemed
to incorporate such imported LEU (i) remain in the possession and
control of the U.S. fabricator, the foreign end-user, or their designed
transporter(s) while in U.S. customs territory, and (ii) are re-
exported within eighteen (18) months of entry of the LEU for
consumption by the end-user in a nuclear reactor outside the United
States. Such entries must be accompanied by the certifications of the
importer and end user.
The merchandise subject to this investigation is classified in the
Harmonized Tariff Schedule of the United States (HTSUS) at subheading
2844.20.0020. Subject merchandise may also enter under 2844.20.0030,
2844.20.0050, and 2844.40.00. Although the HTSUS subheadings are
provided for convenience and customs purposes, the written description
of the merchandise subject to this proceeding is dispositive.
Scope Clarification
For further details, see Comment 2 of the ``Issues and Decision
Memorandum for the Antidumping Duty Investigation of Low Enriched
Uranium from France'' (Decision Memorandum) from Bernard T. Carreau,
Deputy Assistant Secretary
[[Page 65878]]
for Import Administration, to Faryar Shirzad, Assistant Secretary for
Import Administration, dated concurrently with this notice.
Goods Versus Services
Applicability of AD/CVD Law
The Preliminary Determination
In the preliminary determinations in the LEU investigations, we
determined that all LEU entering the United States from Germany, the
Netherlands, the United Kingdom, and France is subject to the AD and
CVD investigations on LEU regardless of the way in which the sales for
such merchandise were structured. See, e.g., Notice of Preliminary
Determination of Sales at Less Than Fair Value: Low Enriched Uranium
from Germany and the Netherlands; and Postponement of Final
Determinations, 66 FR 36748, 36750 (July 13, 2001). We based our
preliminary determinations on several factors. First, we found, and no
party disputed, that LEU entering the United States constitutes a good,
the tangible yield of a manufacturing operation. Moreover, under the
U.S. Customs regulations, we recognized that any item within a tariff
category for the Harmonized Tariff System constitutes merchandise for
customs purposes. See 19 CFR 141.4 (2000). In this case, LEU is
normally classified under HTSUS 2844.20.0020, but also satisfies three
other HTSUS classifications described as enriched uranium compounds,
enriched uranium, and radioactive elements, isotopes, and compounds.
Second, in our preliminary determinations we found it to be a well-
established fact that the enrichment process is a major manufacturing
operation for the production of LEU, and that enrichment is a required
operation in order to produce LEU. We found that no party disputes that
the enrichment process constitutes substantial transformation of the
uranium feedstock. We, therefore, preliminarily concluded that the LEU
enriched and exported from Germany, the Netherlands, the United Kingdom
and France are products of those respective countries, and are subject
to these investigations.
Third, we found that there are significant volumes of LEU sold
pursuant to contracts that expressly provide separate prices for SWU
and feedstock (i.e., contracts for enriched uranium product (EUP)), and
that no party disputes that such sales constitute sales of subject
merchandise. Rather, it is only those transactions in which utility
companies obtain LEU through separate purchases of SWU and feedstock
from separate entities that the Ad Hoc Utilities Group (AHUG) contends
cannot be subject to the antidumping law. We preliminarily determined
that there was little substantive commercial difference between the two
types of transactions. We found that, simply because an unaffiliated
customer purchases subject merchandise through two transactions,
instead of a single transaction, does not mean that the merchandise
entering the United States is not subject to the antidumping law.
Fourth, we preliminarily determined that, contrary to respondents'
arguments, the tolling regulation does not provide a basis to exclude
merchandise from the scope of an investigation. Rather, we found that
the purpose of the tolling regulation is to identify the seller of the
subject merchandise for purposes of establishing export price,
constructed export price, and normal value. Thus, under the tolling
regulation, the issue is not whether the LEU in question is subject to
the antidumping law, but rather who is the seller of the subject
merchandise for determining U.S. price and normal value or, more
specifically, what is the appropriate way in which to value subject
merchandise and foreign like product. To the extent that sales of
subject merchandise are structured as two transactions, we stated that
we would combine such transactions to obtain the relevant price of the
subject merchandise.
Fifth, we preliminarily determined that enrichers are the sellers
of LEU in both types of transactions--either as an exchange of SWU and
uranium feedstock for cash, or as an exchange of SWU for cash and a
swap of uranium feedstock. We preliminarily determined that regardless
of whether the utility company pays in cash or in kind for the natural
uranium content, the LEU is delivered under essentially the same
contract terms, including warranties and guarantees pertaining to the
complete LEU product. Second, enrichers do not use the uranium
feedstock provided by the utility companies. Instead, the natural
uranium is typically delivered shortly before, or even after, delivery
of the LEU, making the delivery of such uranium a payment in kind for
the natural uranium component of the LEU. Third, the utility company
does not have control over the process used to produce the LEU that the
utility company receives. Rather, the enricher controls the manufacture
of LEU, as demonstrated by the fact that the product assay under the
contract (transactional assay) differs from the product assay produced
and delivered by the enricher (operational assay). The enricher makes
the decision of the particular product based upon its own operational
requirements and inputs costs. We preliminarily determined that, taken
together, these facts indicate that enrichers are in effect selling LEU
under both types of contractual arrangements.
Discussion
For these final determinations, we have concluded that all LEU from
the investigated countries entering the United States for consumption
is subject to the AD and CVD laws. We have carefully considered all
comments received on this issue in response to our preliminary
determinations and, for the reasons stated below, do not find
persuasive the arguments that the LEU at issue is exempt from the AD
and CVD laws.
For these final determinations, respondents and AHUG are joined by
the EC in raising again the issue of whether the AD and CVD laws can be
applied to goods sold pursuant to contracts for the provision of
enrichment. Respondents and AHUG contend that, under such contracts,
LEU is not sold to, or in, the importing country. Respondents contend
that, for these transactions, enrichment companies sell enrichment
services, which is a component of LEU. Accordingly, for those entries
of LEU, sold pursuant to SWU contracts, these parties assert that the
AD and CVD laws are not applicable because respondents are not selling
subject merchandise and because there is no sale of subject merchandise
in the United States.
In our view, respondents and AHUG have confused fundamental
concepts concerning the application of the unfair trade laws. The AD
and CVD laws were enacted to address trade in goods. Thus, respondents
and AHUG have confused what is being sold in a particular transaction
with what is being introduced into the commerce of the United States.
The Department finds that the issue of whether merchandise entering the
United States is subject to the AD and CVD laws depends upon whether
the merchandise produced in, and exported from, a foreign country is
introduced into the commerce of the United States.
In particular, the language of section 735(a)(1) of the Act states
that ``the administering authority shall make a final determination of
whether the subject merchandise is being, or is likely to be, sold in
the United States at less than fair value.'' See also section 731(1) of
the Act. We have consistently interpreted these provisions to pertain
to merchandise from the investigated
[[Page 65879]]
country, and not to companies. See Jia Farn Mfg. Co. v. United States,
817 F. Supp. 969, 973 (CIT 1993) (``LTFV determinations and antidumping
duty orders are rendered upon the subject merchandise from a certain
country under the investigation.''). In other words, AD and CVD cases
proceed in rem (i.e., against the good as entered), rather than in
personam (i.e., against the parties to the import transaction).
Similarly, in conducting countervailing duty investigations,
section 701(a)(1) of the Act requires the Department to impose duties
if, inter alia, ``the administering authority determines that the
government of a country or any public entity within the territory of a
country is providing, directly or indirectly, a countervailable subsidy
with respect to the manufacture, production, or export of a class or
kind of merchandise imported, or sold (or likely to be sold) for
importation, in the United States.'' We believe the statute is clear
that, where merchandise from an investigated country enters the
commerce of the United States, the law is applicable to such imports.
In these investigations, no party disputes that the LEU entering
the United States constitutes merchandise. As the product yield of a
manufacturing operation, the Department continues to find that LEU is a
tangible product. Second, it is well established, and no party
disputes, that the enrichment process is a major manufacturing
operation for the production of LEU, and that enrichment is a required
operation in order to produce LEU. Thus, we find that the enrichment
process constitutes substantial transformation of the uranium
feedstock. We continue to find, therefore, that the LEU enriched in and
exported from Germany, the Netherlands, the United Kingdom and France
is a product of those respective countries.
Finally, we find, and no party disputes, that the LEU at issue
enters into the commerce of the United States. Thus, the question of
whether enrichers sell enrichment processing, as compared to LEU, is
not relevant to the issue of whether the AD and CVD law is applicable.
Rather, it is only relevant in these investigations for purposes of
determining how to calculate the dumping margin and how to determine
who is the producer/seller of subject merchandise.
In seeking to equate what is being sold with a service that is
beyond the scope of the AD and CVD laws, respondents and AHUG assert
that the enrichment of uranium is akin to the cleaning of a suit.\3\
They contend that a person who takes a suit to a cleaner and picks up a
clean suit is merely paying for the service of cleaning. In the case of
enrichment, they assert, a person provides natural uranium to an
enricher who returns enriched uranium and is paid for the services.
---------------------------------------------------------------------------
\3\ See Respondents' Joint Case Brief, at 38, 39; see also
Petitioners' Rebuttal Brief at 26.
---------------------------------------------------------------------------
We agree that a cleaner merely provides a service for which one is
paid. However, we disagree with the appropriateness of the analogy used
for purposes of understanding what is occurring in these cases. In the
case of cleaning services, the cleaner merely returns to its customer a
cleaned suit; no substantial transformation takes place, and no
merchandise is being produced. Enrichment of uranium, however, is a
critical step in the production of nuclear fuel. The production of
uranium in the nuclear fuel cycle consists of five stages: mining,
milling, conversion, enrichment, and fabrication. A distinct product is
produced at each stage. Milled uranium is converted into uranium
hexafluoride. Uranium hexafluoride is used to produce enriched uranium.
Enriched uranium is used to produce fuel rods. And fuel rods are used
in nuclear-generating facilities to produce electricity. In the case of
enrichment, it is uncontested that enrichment results in the production
of two separate products: low enriched uranium and uranium tails (or
depleted uranium which can be re-enriched to produce enriched uranium).
Respondents' and AHUG's reference to the term ``services'' in their
arguments mischaracterizes the nature of the enrichment operations, and
attempts to place a major manufacturing operation which produces
merchandise squarely outside the realm of trade in goods, based solely
upon the way in which particular sales of such merchandise are
structured. We find, however, that regardless of whether the sale is
structured as one of enrichment processing or LEU, in all cases the
trade in LEU is a trade in goods, as the transactions in question
result in the introduction of LEU into the commerce of the United
States. Accordingly, the Department determines that all LEU produced in
the investigated countries and entering the United States for
consumption is subject to these investigations.
AHUG and respondents insist that the AD and CVD laws can only be
applied where the sale of LEU occurs in a specific way (i.e., where the
merchandise is sold in a single transaction). AHUG further insists that
the law is inapplicable because the utility companies cannot be
considered the sellers of subject merchandise since they do not sell
LEU, but instead sell electricity to U.S. consumers. Accordingly, AHUG
and respondents conclude that the law cannot apply because no entity
sells the subject merchandise.
We disagree. It does not matter whether the producer/exporter sold
subject merchandise as subject merchandise, or whether the producer/
exporter sold some input or manufacturing process that produced subject
merchandise, as long as the result of the producer/exporter's
activities is subject merchandise entering the commerce of the United
States. The first, and threshold, question we must ask is whether the
merchandise entering the United States is subject merchandise. All else
flows from this. The second question is what transaction does the
Department look at to determine export price.
Further, we believe Congress intended the law to be applicable
where the subject merchandise enters the commerce of the United States,
even where the transaction for such merchandise does not take the form
of a simple, single chain of commerce involving a solitary
manufacturer/exporter, a single sales price, and a single unaffiliated
purchaser in the United States. Congress enacted specific provisions
that demonstrate a clear intent to make merchandise entering the United
States subject to the law even though the sale by the exporter to the
first unaffiliated purchaser is not a sale of subject merchandise. In
constructed export price transactions involving further manufacturing,
for example, subject merchandise enters the United States, but through
a process of further manufacturing, is often sold to the first
unaffiliated purchaser in the form of non-subject merchandise. The form
of the sale, however, does not prohibit the application of the law. To
the contrary, to address those situations Congress enacted special
provisions that require the Department to determine whether there are
dumping margins and to apply duties, as appropriate, to such
merchandise. See section 772(b) of Act. Even where the first sale to an
unaffiliated purchaser is far removed from the subject merchandise that
enters the commerce of the United States, such merchandise is covered
under the law, and Congress enacted a specific provision establishing a
basis for calculating export price. For example, where rollerchain
constitutes the subject merchandise and enters the United States, but
the first sale to an
[[Page 65880]]
unaffiliated purchaser is the sale of a motorcycle that contains the
rollerchain, the law is applicable to such entries of rollerchain. See
section 772(e). See also SAA at 825.
While there is no specific statutory provision that dictates how
the Department is to calculate the value of subject merchandise and the
export price in the circumstances in these LEU investigations, the
absence of such a provision does not render the law inapplicable where
the facts demonstrate that the product in question enters into the
commerce of the United States, as in this case.
Use of the Term ``Enrichment Services'' in Other Legal Contexts
In seeking to demonstrate that for the transactions at issue the
enrichment companies provide enrichment services, perform a value-added
service, and do not sell the subject merchandise, respondents contend
that the U.S. government has advocated on behalf of USEC before U.S.
domestic courts that enrichment contracts are contracts for services,
and accordingly, that the Uniform Commercial Code (UCC), which only
pertains to goods, does not apply to such contracts. Moreover, the
parties contend that U.S. courts have ruled in USEC's favor, finding
that the UCC did not apply to such transactions because they were sales
contracts for services, not for goods. The parties conclude, therefore,
that because the U.S. government has recognized that the sales in
question are sales of services, to be consistent, the Department cannot
apply the AD or CVD law to these transactions.
We do not view those determinations as relevant to the issue of
whether LEU that enters the commerce of the United States is subject to
the AD and CVD laws. The respondents and AHUG are mixing two entirely
different statutory regimes, which play different roles and have
different purposes. Other legal or regulatory regimes are not
determinative of how the Department is to treat such transactions under
the AD and CVD laws. For example, the court's finding in Florida Power
& Light Co. v. United States that the transfer of title of uranium
feedstock ``does not rise to the level of `procurement' or `disposal'
of property'' was made in the specific context of determining the
applicability of the Contract Disputes Act to government contracts and
is not relevant, much less binding, for purposes of the application of
the AD and CVD laws.\4\ In Barseback Kraft AB and Empress Nacional Del
Urnaio, S.A. v. United States, the court ruled that the UCC did not
apply to the contracts at issue because the UCC does not apply to
government contracts.\5\ Moreover, the UCC addresses the rights and
obligations of the parties to a specific contract, and is therefore not
determinative of whether the overall trade is one involving goods or
services. As a general principle, different terms can have different
meanings under different statutes, and parties are entitled to make
their claims pursuant to the case law and precedent of the particular
relevant statute, even where those claims appear to be at odds with
other claims made pursuant to the case law and precedent of another
statute that has an entirely different purpose.
---------------------------------------------------------------------------
\4\ 49 Fed. C1. 656 (2001) (No. 96-644C).
\5\ 36 Fed. C1. 691 (1996), aff'd 121 F.3d 1475 (Fed. Cir.
1997).
---------------------------------------------------------------------------
Tolling
Respondents and AHUG also seek to obtain an exemption under the law
for the LEU at issue through the application of the Department's
tolling regulation, set forth at 19 CFR 351.401(h).
We disagree with respondents'suggested interpretation for several
reasons. First, we do not interpret section 351.401(h) of the
Department's regulations to be relevant or applicable in determining
whether merchandise entering the United States is subject to the AD
and/or CVD laws. Instead, section 351.401, including subsection (h) on
tolling, was intended to ``establish certain general rules that apply
to the calculation of export price, constructed export price and normal
value,'' and not for purposes of determining whether the AD and/or CVD
laws are applicable. See 19 CFR 351.401(a) (2000). Our interpretation
that the tolling regulation is intended solely for purposes of
calculating dumping margins is further supported by the absence of any
parallel provision on tolling in the CVD regulations.
Furthermore, in practice, we have never applied, nor relied upon,
section 351.401(h) to exempt merchandise from AD proceedings, nor have
we ever applied the provision in CVD proceedings. Moreover, our
application of the tolling regulation in SRAMs from Taiwan does not
support AHUG's or respondents' claim for exemption from the AD and CVD
laws.\6\ In that case, we applied the tolling regulation, seeking to
determine which party made the relevant sale of subject merchandise. We
found that the U.S. design house made sales of subject merchandise to
unaffiliated purchasers in the United States, and therefore based our
determination of U.S. price and normal value upon the transactions made
by the U.S. design house. In that case, we applied AD duties to all
entries of SRAMs from Taiwan, regardless of whether the U.S. design
house or the Taiwan exporter made the sale of subject merchandise.
Therefore, our decision in SRAMs from Taiwan establishes no basis for
excluding the LEU in question from these investigations. Further
analysis of the tolling regulation in these antidumping investigations
for purposes of determining EP, CEP and NV is provided below.
---------------------------------------------------------------------------
\6\ Static Random Access Memory Semiconductors From Taiwan:
Redetermination on Remand, (May 2, 2000). The text of this
determination can be found on the Department's Internet site at
http://ia.ita.doc.gov/remands/00-48.htm.
---------------------------------------------------------------------------
Temporary Import Bonds, Foreign Trade Zones, and American Goods
Returned
Respondents also cite the Department's treatment of subject
merchandise entering the United States under Temporary Import Bonds
(TIBs), into Foreign Trade Zones (FTZs), and as American Goods
Returned, as examples of where subject merchandise enters the United
States without being subject to duties, and to support their claim that
the Department is not authorized to impose duties on subject
merchandise unless there is a sale of such merchandise. However, these
provisions cited by respondents are not instances in which the
merchandise enters the United States for consumption without the
imposition of AD and countervailing duties. By operation of law, goods
entered under TIBs are prohibited from entering the United States for
consumption. For FTZs, where the merchandise enters the United States
for consumption, antidumping and countervailing duties are imposed. See
15 CFR 400.33(b)(2)(2000). The Department's treatment of goods entering
FTZs or under TIBs is, therefore, consistent with the practice that the
AD and CVD laws apply to goods that enter the commerce of the United
States.
With respect to American Goods Returned (AGR), this provision is
only applicable to merchandise that has not been substantially
transformed in another country. AGR only applies to U.S. merchandise
that is further manufactured in minor respects in another country, such
that the product that is returned to the United States is not
substantially transformed. As discussed below, this provision is not
applicable in this case.
[[Page 65881]]
Substantial Transformation and Country of Origin
Respondents also argue that the Department's country-of-origin
rationale in this case is contrary to federal and international
regulation of transactions involving uranium and enrichment services.
Respondents state that the enrichment process does not wipe away the
country of origin of the uranium; rather it remains the same for
materials tracking purposes after enrichment as it was before
enrichment. Respondents conclude that it is irrelevant that enrichment
is a major manufacturing process and that the enrichment process
constitutes substantial transformation of the uranium feedstock.
Accordingly, respondents contend that the Department's conclusion as to
the country of origin of the enrichment cannot be used to establish the
country of origin of the unitary LEU, because LEU itself has two
countries of origin, namely the country of origin of the uranium and
that of the separative work unit.
We disagree. The Department's country-of-origin determinations are
made pursuant to the agency's authority to determine the scope of its
investigations and AD/CVD orders. In contrast, the federal and
international regulation of transactions in uranium referred to by
respondents reflect requirements adopted for purposes of non-
proliferation. Thus, the Nuclear Regulatory Commission (NRC) tracks the
origin of natural feedstock for the purpose of tracing the worldwide
movement and ultimate disposition of the feedstock, while the U.S.
Customs Service and the Department determine the country of origin for
the merchandise entering the United States for purposes of tracking
international commercial transactions and assessing duties. The NRC has
no role in determining the country of origin for customs duty purposes.
Moreover, the Department and the Customs Service make country-of-origin
determinations for the product entering the United States, which in
this case is LEU, not feedstock and SWU, as respondents suggest.
Indeed, the Department has in the past determined in other proceedings
covering uranium that the process of enrichment constitutes substantial
transformation of the uranium, and therefore, that enrichment confers
country of origin upon the product entering the United States for AD
purposes.
In the current case, petitioners have indicated, and no party has
disputed, that the enrichment of uranium accounts for approximately 60
percent of the value of the LEU entering the United States. We find
that enrichment processing adds substantial value to the natural
uranium and creates a new and different article of commerce and
therefore confers a different country of origin upon the product for
purposes of the AD and CVD law.
As a final matter, the unfair trade laws must be applicable to
merchandise produced through contract manufacturing, just as they are
applicable to merchandise manufactured by a single entity. To do
otherwise would contravene the intent of Congress by undermining the
effectiveness of the AD and CVD laws, which are designed to address
practices of unfair trade in goods, as well as have profound
implications for the international trading system as a whole. To the
extent that contract manufacturing can be used to convert trade in
goods into trade in so-called ``manufacturing services,'' the
fundamental distinctions between goods and services would be
eliminated, thereby exposing industries to injury by unfair trade
practices without the remedy of the AD and CVD laws.
While the term ``enrichment services'' is common in the industry,
the enrichment of uranium feedstock is no more a ``service,'' as that
term is normally understood in the international trading community,
than a production process that results in the manufacture of textiles,
semiconductors, or corrosion-resistant steel. An importer of textiles
who provides yarn to a textile manufacturer may view the transaction as
nothing more than the purchase of ``weaving services.'' An importer of
semiconductors who provides a patented design mask to a foundry to be
pressed into a wafer for purposes of making a microchip may view such a
transaction as nothing more than the purchase of ``pressing services.''
Similarly, an importer of corrosion-resistant steel who provides hot-
rolled steel to a rolling mill may view the transaction as nothing more
than the purchase of ``rolling and coating services.''
Yet, no matter what the purchaser chooses to call the transaction,
and no matter what terms may be common in the industry, nothing can
change the fundamental facts associated with all of these transactions.
In each of these three cases, the purchaser has contracted out for a
major production process that adds significant value to the input and
that results in the substantial transformation of the input product
into an entirely different manufactured product. We simply do not
consider a major manufacturing process to be a ``service'' in the same
sense that activities such as accounting, banking, insurance,
transportation and legal counsel are considered by the international
trading community to be services. Instead, we have always considered
the output from manufacturing operations that result in subject
merchandise being introduced into the commerce of the United States to
be a good. The only questions we have grappled with in all these
instances is who is the appropriate producer/seller of the merchandise
and how to calculate export price and constructed export price.
While respondents and AHUG note that the practice in the uranium
industry with respect to the transactions at issue was established long
before the Department initiated these investigations, in the
Department's view, the issue we are addressing is unfair trade
practices. In the Department's view, nothing in the statute in any way
indicates that Congress did not intend the AD and CVD laws to be
applicable to merchandise based upon the way in which parties structure
their transactions for such goods entering the commerce of the United
States.
In sum, the application of the AD and CVD laws does not depend upon
whether a producer/exporter sells an input to the subject merchandise,
or the subject merchandise itself, but rather whether the activities of
the producer/exporter result in the subject merchandise being
introduced into the commerce of the United States.
Calculating Export Price, Constructed Export Price and Normal Value
Comments of the Parties
Respondents and AHUG contend that the Department must base its
evaluation of dumping upon sales of the subject merchandise, which
should reflect all elements of the merchandise's value. In terms of EP
and CEP, these parties contend that the statute refers to the price at
which the merchandise is sold by the producer or exporter. In addition,
AHUG and respondents cite to the agency's decision in SRAMs from
Taiwan, where the Department determined that the relevant sale under
the tolling regulation must be the sale of subject merchandise
reflecting the full value of such merchandise.
AHUG and respondents contend that the principles for determining
which sales are relevant, as embodied in the tolling regulation and
applied in the SRAMs case, are directly pertinent to deciding whether
the sale of enrichment services by the respondents, and sales of
services in general, can be treated as relevant for purposes of the AD
law.
[[Page 65882]]
These parties assert that the Department should determine that: (1) The
enrichment companies do not produce or take title to the uranium
feedstock; rather it is supplied to them in bailment; (2) the sale of
enrichment does not constitute the relevant sale for purposes of
determining EP and CEP because the sales in question do not reflect the
full value of the subject merchandise; and (3) the respondents are not
in a position to set the price of the product because such companies
have no control over the full cost of LEU for the transactions at
issue.
Petitioners respond that the respondents and AHUG place heavy
emphasis on the Department's ``relevant sale'' discussion in the SRAMs
case, which petitioners contend was not intended to provide the guiding
precedent in a case where the U.S. customer obtains the raw materials
in one transaction and exchanges them for finished goods in another
transaction, as in these investigations. The petitioners state that the
respondents' and AHUG's position is erroneous in claiming that the
Department's redetermination in SRAMs compels the conclusion that the
enricher does not make the ``relevant sale'' because its price does not
include all of the cost components of the finished product. Moreover,
they add, even if SWU transactions were tolling transactions, the
Department's tolling precedent does not establish that tolling
transactions are outside the scope of the AD law.
Petitioners further contend that the fact that enrichers have
control over the production process used to produce LEU under SWU
contracts is relevant to the Department's determination with respect to
the relevant sale, and contrary to the arguments raised by respondents
and AHUG. Petitioners add that the issue of who controls the production
of the finished product is a key factor in determining whether a party
is a producer or toller.
With respect to the sales contracts, in their case brief,
petitioners argued that the enrichers are actually sellers of LEU under
both SWU and EUP contracts because in both arrangements the LEU is
produced at an operating tails assay determined by the enricher, and
therefore the enricher determines the amount of feed used, the amount
of SWU actually applied, and the assay of the tails that will be
produced. Petitioners further noted that, although a customer may
designate a transactional tails assay in a SWU contract, but not in an
EUP contract, there is not a significant difference. To illustrate this
point, petitioners note that, by designating a transactional tails
assay in a SWU contract, the customer determines only the amount of
uranium feedstock it must provide to the enricher, and the amount per
SWU the customer will pay. However, the customer's designation of the
transactional tails assay does not determine the amount of uranium
feedstock used by the enricher or the amount of SWU actually used by
the enricher. Petitioners maintain that this is determined by the
operational tails assay used by the enricher in the production of LEU.
Petitioners assert that enrichers operate in essentially the same
manner when they produce LEU under contracts where the customers supply
the uranium feedstock as they do when they produce LEU from their own
uranium feedstock.
Respondents reject petitioners' assertion that enrichers are
actually sellers of LEU based upon the utility's delivery of uranium
feed material as a payment-in-kind of uranium for the natural uranium
component of the LEU. Respondents contend that enrichment services
contracts contain detailed payment terms, and establish a price for the
enrichment services sold, but do not contain any provisions for a
payment of uranium in any form. Respondents add that it is virtually
impossible for a payment-in-kind to occur because title does not pass
to the enricher while the uranium is being enriched. Moreover, they
explain that if a payment of uranium were occurring, the enricher would
have to recognize it as a payment in its financial statements, which
they assert does not occur, as the Department verified. Finally,
respondents note that, by adopting the payment-in-kind theory, the
Department would create a contractual arrangement between parties that
completely differs from the contract itself.
Respondents further dispute the petitioners' conclusion that the
enricher's return of different uranium rather than the exact material
provided by the customer turns the transaction into a payment-in-kind.
Respondents argue that, in determining whether a service is being
performed, one must look at the essence of the transaction, and what
the customer contracted to purchase, not what material is given back to
the utility company. Furthermore, they state, because uranium is
fungible, it makes no sense to require firms to identify each atom of
uranium transported or processed. They note that, in a previous
submission by the petitioners, USEC explicitly stated that uranium is a
fungible commodity and that a fabricator may use its own inventory of
enriched uranium or have enriched uranium delivered by other utility
companies.
In addition, respondents contend that the Department did not base
its dumping margin calculations upon the number of SWUs or the price
per SWU, but instead treated the sale as if it were a sale of LEU.
Respondents note that the Department's price calculation is based upon
the quantity of uranium and the quantity of SWUs involved, which has no
correlation with the agreed upon price per SWU. Respondents contend
that in doing so the Department is changing the material terms fixed on
the date of sale into one in which the terms are not fixed until a
later date, and then unilaterally, by notification from the customer.
Respondents contend that this violates the statutory requirement that
the Department base its calculation on the actual costs reflected in
the respondent's books and records, ignores the long-standing practice
of making AD comparisons on a production or process-neutral basis, and
uses a methodology that is completely contrary to the date of sale
methodology applied by the Department in the same cases.
Respondents also note that the Department assigned a value to the
natural uranium in the Preliminary Determinations where no price was
provided, notwithstanding that the uranium provided by the utility
company was not a cost to the enricher, and was not charged to the
customer at all. Respondents contend that the surrogate uranium cost
that the Department used violated the statutory requirement that it
base its calculation on the actual costs incurred. They reiterate that
the cost of the uranium to the enricher is zero. The respondents add
that, although the uranium is processed, it is never paid for by the
enricher, nor is it considered revenue, nor does it appear in the
enricher's books. Therefore, they contend, uranium may not be treated
as a cost when calculating constructed value.
AHUG also contends that the SWU contracts are unequivocally
contracts for services, arguing that the enrichers hold the LEU as
bailees for their utility customers, and if a particular delivery of
LEU does not contain the exact same physical feed as that delivered by
the utility, it contains feed delivered to the enricher by another
utility. Therefore, AHUG asserts, the fungibility of the feed does not
alter the actual commercial terms of the contracts or the nature of the
transaction.
AHUG also disagrees with the Department's preliminary determination
that there is little commercial difference between EUP and enrichment
contracts. AHUG contends that enrichment
[[Page 65883]]
contracts require payment for enrichment services, and therefore, the
contract does not reflect all elements of the value of the LEU
delivered, as do the EUP contracts. Furthermore, AHUG contends that LEU
production is usually arranged through three, not two transactions: the
purchase of U3O8, a contract for conversion services, and a contract
for enrichment services. In addition, AHUG argues that the Department
proposes that U.S. utility contracts for the purchase of each of these
components can be cumulated to derive an unfair price even in the
absence of a sale of that LEU in the U.S. market that reflects all
elements of its value. AHUG argues that this theory seems to state that
when utility companies arrange for the production of LEU through these
separate contracts, they are selling LEU to themselves. AHUG asserts
that the Department is simultaneously attempting to attribute the
utilities' transactions with the mining companies and the conversion
service providers to the enrichers, even though the enrichers are not
parties to those other transactions, have no control over the process,
and receive none of the revenue from such sales. AHUG claims this
theory cannot be supported.
Petitioners respond that, contrary to respondents' and AHUG's
contentions, the contractual obligation of a customer in a SWU
transaction to supply converted uranium is properly viewed as part of
the quid pro quo that the customer must provide in order to obtain LEU
from the enricher. Petitioners add that there can be no question that
provision of the natural uranium is like the payment of the cash price
for the SWU, a contractual obligation that must be met by a utility
purchaser under a SWU contract in order to acquire a wholly new
product, i.e, LEU from the enricher.
Petitioners note that, in the preliminary determinations, the
Department identified three factors that petitioners had cited in
support of its position. First, with respect to warranties and
guarantees, LEU and EUP are delivered under essentially the same type
contract. Second, the enrichers do not use the specific feedstock
supplied by a particular customer to produce LEU for that customer.
Third, the enrichers, not the utility companies, control the process
used to produce the LEU under either type of contract. Petitioners
state that, contrary to respondents' criticism of the ``essentially
identical'' language in the preliminary determinations, the Department
was not saying that SWU and EUP contracts were identical in every
respect, nor is it necessary for the Department to so find.
Respondents reject petitioners' arguments on whether the enricher
controls the production process, arguing that the relevant question is
not whether enrichers own and control the production process for LEU,
but rather whether the customer is purchasing a service. Respondents
add that, because the quantity of uranium feedstock to be supplied by
the customer is set pursuant to the contract, for a specified tails
assay, the customer, not the enricher, has the control over its cost of
supplying uranium feedstock.
Discussion
For these final determinations, we find that the enrichment
companies are the only producers and exporters of the subject
merchandise in these cases and, therefore, are the appropriate
respondents for determining EP, CEP and NV. We will address the
application of the Department's tolling regulation first, and then the
nature and substance of the sales contracts at issue.\7\
---------------------------------------------------------------------------
\7\ This discussion addresses the concepts of export price, CEP,
and who is the producer/exporter of the subject merchandise--all
issues that are relevant under the antidumping law. We note that,
under the countervailing duty law, section 771(5)(E)(iv) defines as
a benefit the purchase of goods for more than adequate remuneration.
Because we have determined that SWU contracts involve the purchase
of LEU, we determine that these transactions constitute the purchase
of goods.
---------------------------------------------------------------------------
Tolling
In establishing general rules for calculating EP, CEP and NV, we
promulgated section 351.401(h) of our regulations to address the
treatment of subcontractors and tolling operations under the AD law.\8\
The purpose of the regulation is to enable the Department to identify
the appropriate seller of subject merchandise and foreign like product
for purposes of calculating EP, CEP and NV. SRAMS from Taiwan (``The
company that is the first ``price setter'' for subject merchandise is
also the company that is the producer of the merchandise.''). To that
end, the tolling regulation states that the Department will not
consider a toller or subcontractor to be a manufacturer or producer
where the toller or subcontractor (i) does not acquire ownership of the
subject merchandise; and (ii) does not control the sale of subject
merchandise. 19 CFR 351.401(h) (2000).
---------------------------------------------------------------------------
\8\ Antidumping Duties; Countervailing Duties; Final Rule, 62 FR
27295, 27411 (May 19, 1997).
---------------------------------------------------------------------------
Department Precedents
In SRAMs from Taiwan, the key case relied upon by the respondents
and AHUG, we addressed the issue of whether producer status should be
conferred upon the U.S. design house or the Taiwan foundry. In that
case, the issue for the Department was which sale--the sale by the
design house or the sale by the foundry--should be used to calculate EP
and CEP. The Department stated that ``the ``relevant sale'' must be a
sale by the company that owns the merchandise entirely, including all
essential components, can dispose of the merchandise at its own
discretion and, thus, controls the pricing of the merchandise and not
merely the pricing of certain portions of production.'' Id. at 4.
In making the distinction between the sale by the foundry and the
sale by the U.S. design house, we examined the role played by the
foundries and design houses in the production of subject SRAMs, as well
as the nature of the product produced. We found that the design was not
only an important component of the product, but in fact defined the
essence of the finished product. Because the design house not only
developed the design, but also controlled how it was used in production
by the foundry and the way that the products incorporating it were
distributed in the marketplace, the Department concluded that the
design house directed the production of the subject merchandise. Id. at
5. In our view, the role played by each entity as well as the nature of
the product produced are important considerations in identifying the
appropriate party as the producer of the subject merchandise.
In addition, since the enactment of the tolling regulation, the
Department has also recognized that the regulation ``does not purport
to address all aspects of an analysis of tolling arrangements.''
Polyvinyl Alcohol from Taiwan: Final Results of Antidumping Duty
Administrative Review, 63 FR 32810, 82813 (June 16, 1998). In that
case, we acknowledged that, in assessing whether a company is a
producer, we are not restricted to the four corners of the sales
contract. Moreover, we emphasized that we will make our decision as to
whether a party is a producer or manufacturer for purposes of
determining EP, CEP and NV based upon the totality of the
circumstances. Id. In Polyvinyl Alcohol from Taiwan, we further
recognized that, while examining the production activities of a party
may not be decisive in every case, whether a party has engaged directly
or indirectly in some aspect of production is an important
consideration in identifying the appropriate party as the producer. Id.
at 32814.
[[Page 65884]]
Enrichment Companies Are Producers/Exporters of LEU
In this case, we have determined that the enrichment companies are
the producers and exporters of the subject merchandise for purposes of
establishing EP, CEP and NV for several reasons. First, the enrichment
process is such a significant operation that it establishes the
fundamental character of LEU. Second, the enrichers control the
production process to such an extent that they cannot be considered
tollers in the traditional sense under the regulation. Third, utility
companies do not maintain production facilities for the purpose of
manufacturing subject merchandise. Finally, we find that the overall
arrangement, even under the SWU contracts, is an arrangement for the
purchase and sale of LEU. Each element is discussed further below.
While no single factor is dispositive of our determination, on balance
we have determined that the enrichment companies are the producers and
exporters of the subject merchandise.
First, in this case it is the enricher who creates the essential
character of the LEU. The enrichment process is not merely a finishing
or completion operation, but is instead the most significant
manufacturing operation involved in the production of LEU. Enrichment
raises to a specified assay the level of U235 contained in the product.
While the types of advanced technology used to perform this operation
vary, without the enrichment process, one would not be able to separate
the molecules necessary to produce LEU. Like the design mask in SRAMs,
the enrichment process establishes the essential features of the LEU,
creating a clearly distinct product from uranium feedstock. Moreover,
the enrichment process imparts the essential character of the product,
LEU, and delineates the purpose for which the product is to be used. As
noted above, LEU is a product for which there is virtually no
alternative commercial use but as part of the nuclear fuel cycle.
Without the enrichment of natural uranium, LEU could not be produced.
There are currently two technologies in use to enrich feedstock,
gaseous diffusion and centrifuge. Each method requires a huge financial
investment in facilities and a technically skilled work force. In fact,
the centrifuge technology has been years in the making and has required
millions of dollars in research. So highly specialized is it, and so
expensive to develop, that three major European governments combined
their resources to develop the technology and create Urenco. While
there are hundreds of nuclear facilities around the world that require
LEU for fabrication into fuel rods in order to operate their reactors,
there are only five major enrichers in the world. This underscores the
technological sophistication and expense required to enrich uranium
into LEU. Adding to the expense and complexity of establishing an
enrichment operation is an intricate web of national and international
regulatory regimes and oversight commissions.
Enrichment facilities are similar to design houses in the
semiconductor industry. It is the patented design of the mask that
incorporates the intellectual property, accounts for a substantial
portion of the value, and constitutes the essence of the microchip. The
design is what makes the chip and what gives it its unique function:
storing memory and thus enabling a computer to operate. Just as the
design imparts the essential characteristics of a microchip, enrichment
imparts the essential characteristics of LEU.
Second, we find that enrichers not only have complete control over
the enrichment process, but in fact control the level of usage of the
natural uranium provided by the utility company. We are aware that SWU
is universally defined as the standard measure of enrichment services.
However, the definition of SWU further provides that it is the effort
expended in separating a specified amount of feed into a specified
amount of enriched uranium at a specified product assay and a specified
amount of waste at a specified assay. In each of the contracts, while
the amount of LEU being purchased is not expressly stated (unless it is
an EUP contract) the product assay, tails assay, and number of SWU are
specified. It is the precise combination of the product assay order and
the number of SWUs specified in the SWU contract that results in an
exact amount of LEU to be delivered over the life of the contract. The
most important factor in determining whether the contract is fulfilled
is whether the utilities receive the precise amount of LEU that results
from the application of the SWU equation that is explicitly spelled out
and agreed upon in the SWU contract. And it is this bottom line (i.e.,
a precise amount of LEU delivered over the life of the contract) that
forms the fundamental nature of the agreement between buyer and seller
in a SWU contract. With this understanding in mind, the enricher then
has extraordinary leeway in determining the precise combination of SWU
and feedstock to be used in the production of the LEU required by the
SWU contract. The enricher's decision will depend upon such factors as
the relative costs of electricity, feedstock, even the market price of
``SWU,'' which, for all intents and purposes, trades like a commodity.
As the record reflects, enrichers therefore run their facilities in a
manner that they determine is most efficient.
For example, an enricher, in fulfillment of a SWU contract, may
actually use more or less natural uranium and more or less SWU than is
provided for in the contract (and by the utility customer). The
enricher has complete control over these important production
decisions. The utility company, on the other hand, provides the
specifications and receives a product, as specified in the contract
through the application of the SWU equation. Thus, the utility company
obtains no more control over the production process than any customer
who orders custom-made merchandise would obtain. In our view, the
enricher has extensive control over the production process, and
complete control over the amount of SWU or feed to be used in any given
transaction. The extensive control further demonstrates that the
enricher is not acting in a tolling capacity for the transactions at
issue.
Third, in this case, the U.S. utility companies do not maintain
production facilities for the purpose of manufacturing subject
merchandise. Unlike the U.S. design house in SRAMs from Taiwan, but
like the U.S. importer in Polyvinyl Alcohol from Taiwan, the U.S.
utility companies perform no manufacturing function whatsoever with
respect to the production of LEU. These companies have no LEU
manufacturing operations; no capital investment in production
facilities; no employees dedicated to manufacturing LEU; and add no
value to the product through the performance of manufacturing
operations. Most important, we find that the utility companies are the
only purchasers of LEU and can only obtain LEU from enrichment
companies. By contrast, enrichment companies' sole activity is to
produce LEU for use by utility companies.
Finally, we find that the overall arrangement under both types of
contracts is, in effect, an arrangement for the purchase and sale of
LEU. The parties have made a comprehensive comparison of the terms of
the contracts for SWU and EUP, arguing that the terms of the contract
demonstrate that the contracts designated as SWU sales are not, in
fact, sales of LEU. While we recognize that the provision of uranium
feedstock may not be a payment-in-kind in the formal sense under these
[[Page 65885]]
contracts, we maintain that the arrangement between buyer and seller in
a SWU contract nonetheless is dedicated to the delivery of LEU, and
critical to the trade in LEU. In reaching this conclusion, we have
looked beyond the four corners of the contract and have examined the
totality of the circumstances surrounding the transactions in deciding
which sale is a valid representation of subject merchandise.
The Nature of the SWU Contract
In this case, based upon the way in which the industry produces and
sells LEU, we find that the overall arrangement between the parties
indicates that enrichment companies are engaged in selling, and utility
companies are engaged in purchasing, LEU. These transactions may be
construed differently in other contexts, such as for purposes of
taxation, or for purposes of establishing the liabilities of the
parties to the contract. However, for purposes of calculating a price
for LEU, based upon our examination of the overall circumstances of the
arrangement under both types of contracts, we find that the contracts
designated as SWU contracts are functionally equivalent to those
designated as EUP transactions.
First, both types of transactions have one fundamental objective--
the delivery of LEU at a specific time and location, with a specific
product assay, as agreed upon in the contract, under the same
warranties and guarantees that apply to all LEU delivered by
respondents. Second, utility customers are not concerned with how LEU
is produced or the amount of work expended (SWU) to produce such LEU.
Instead, utility customers are interested in obtaining a specific
quantity of a standardized product at a specified product assay. This
pertains to both types of transactions. Indeed, SWU contracts are based
upon a set formula that provides the utility company with a fixed
quantity of LEU over the life of the contract.
Further, under both types of contracts, because the LEU is produced
at an operating tails assay determined by the enricher, the enricher
ultimately determines how much uranium feed is used, the amount of SWU
actually applied, and the assay of the tails that will be produced.
Thus, it is clear that enrichers not only exercise the same level of
control over the production process for both types of contracts, but
also perform the exact same manufacturing operations, regardless of
whether the sale was made under a SWU contract or an EUP contract.
In addition, there are provisions in SWU contracts that further
demonstrate that the underlying arrangement is designed to operate in
much the same manner, regardless of the type of contract, and that
whether the enricher or the utility company provides the uranium
feedstock does not substantially alter that arrangement. These
provisions are proprietary. See, e.g., Urenco Business Proprietary
Section A Response, Volume 1, Tab B1, Contract section F.3.
Furthermore, for both types of contracts ownership of the LEU is only
transferred to the utility customer upon delivery of the LEU.
Consistent with this provision, for both types of transactions, the
enricher incurs the risk of loss with respect to the LEU. In light of
the above, therefore, we believe, as a practical matter, that the
arrangement between the utility company and the enricher under a SWU
contract is functionally equivalent to the arrangement under an EUP
contract for purposes of determining EP and CEP.
Moreover, as discussed above, the enrichment companies engage in
the most significant portion of the production of LEU, and thus the
value of enrichment is beyond question the most significant element of
value in determining the price of LEU. In addition, LEU, the subject
merchandise, is the merchandise resulting from this production
operation. Accordingly, we believe the pricing behavior of the
enrichment companies in these transactions is relevant to the
Department's determination of whether the LEU in question is introduced
into the commerce of the United States at less than fair value.
Therefore, because the pricing behavior of the enrichers in these
transactions is relevant to the Department's determination and because
the arrangement between the utility company and the enricher under a
SWU contract is functionally equivalent to the arrangement under an EUP
contract for purposes of determining EP and CEP, we have included these
sales in our determination of EP and CEP in these investigations.
In assigning a specific monetary value to the natural uranium
component, we estimated the market value using the average price the
enrichers charged their customers for natural uranium for LEU
contracts. For SWU contracts, when comparing U.S. Price with Normal
Value based on constructed value, we valued natural uranium using
exactly the same value for both sides of the equation. For example, for
any given shipment pursuant to a SWU contract we determined the
quantity (i.e. kgs) of associated feed uranium by applying the industry
standard formula for product and tails assay specified in the contract.
We valued this quantity using POI average per-kg price for natural
uranium charged by enrichers. This exact same amount was included in
normal value.
Period of Investigation
The period of investigation (POI) is October 1, 1999, through
September 30, 2000. This period corresponds to the four most recent
fiscal quarters prior to the month of the filing of the petition (i.e.,
December 2000).
Verification
As provided in section 782(i) of the Act, we conducted verification
of the sales information submitted by Cogema/Eurodif from July 23
through July 27, 2001, in France, and from August 13 through August 16,
2001, in the United States. We conducted verification of the
constructed value (CV) information submitted by Cogema/Eurodif from
July 30 through August 3, 2001. We used standard verification
procedures including examination of relevant accounting and production
records, and original source documents provided by the respondent.
Analysis of Comments Received
All issues raised in the case and rebuttal briefs by parties to
this antidumping proceeding are listed in the Appendix to this notice
and addressed in the Decision Memorandum for this investigation, dated
December 13, 2001, which is hereby adopted by this notice. The Decision
Memorandum for this case is on file in room B-099 of the main
Department of Commerce building. In addition, a complete version of the
Decision Memorandum can be accessed directly on the World Wide Web at
http://ia.ita.doc.gov/frn/summary/list.htm. The paper and electronic
versions of the Decision Memorandum are identical in content.
Changes Since the Preliminary Determination
Based on our findings at verification and analysis of comments
received, we have made adjustments to the calculation methodology in
calculating the final dumping margins in this proceeding. These
adjustments are discussed in detail in the Calculation Memorandum,
dated December 13, 2001. For the final determination, we made the
following revisions:
(1) We adjusted the transportation insurance amounts to account for
the respondent's clerical errors.
(2) We adjusted movement expenses and U.S. duty charges for certain
[[Page 65886]]
deliveries to correct the respondent's clerical errors.
(3) We revised the inventory carrying costs for various U.S.
deliveries to account for the respondent's clerical errors.
(4) We adjusted the total cost of manufacturing reported in the
U.S. sales database to be consistent with changes made to the total
cost of manufacturing in the constructed value (CV).
(5) To reflect the opportunity cost of a particular contract
provision exercised by one customer, we calculated an imputed expense
and applied it to the indirect selling expense ratio of that customer,
for all deliveries to the customer.
(6) Based on the respondent's revised calculation from
verification, we adjusted the home market indirect selling expense
ratio used to calculate indirect selling expenses added to CV.
(7) We recalculated the defluorination expenses included in CV
based on the tails produced during the POI.
(8) We excluded purchased LEU from the calculation of the weighted-
average cost of LEU produced in the POI.
(9) We recalculated the financial expense rate based on the
financial statements of CEA Industrie, the entity that consolidates
Cogema's accounts.
(10) We recalculated selling, general and administrative expenses
to include certain research and development expenses.
Final Determination of Investigation
We determine that the following weighted-average percentage dumping
margins exist for the period October 1, 1999, through September 30,
2000:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Cogema/Eurodif............................................... 19.57
All Others................................................... 19.57
------------------------------------------------------------------------
Continuation of Suspension of Liquidation
Pursuant to section 735(c)(1)(B) of the Act, we are instructing the
U.S. Customs Service to continue to suspend liquidation of all entries
of LEU from France that are entered, or withdrawn from warehouse, for
consumption on or after July 13, 2001 (the date of publication of the
Preliminary Determination in the Federal Register). The Customs Service
shall continue to require a cash deposit or the posting of a bond equal
to the estimated amount by which the normal value exceeds the U.S.
price as shown above. The suspension of liquidation instructions will
remain in effect until further notice.
International Trade Commission Notification
In accordance with section 735(d) of the Act, we have notified the
International Trade Commission (ITC) of our determination. As our final
determination is affirmative, the ITC will determine, within 45 days,
whether imports of subject merchandise are causing material injury, or
threaten material injury, to an industry in the United States. If the
ITC determines that material injury or threat of injury does not exist,
the proceedings 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 order directing Customs
Service officials to assess antidumping duties on all imports of the
subject merchandise entered, or withdrawn from warehouse, for
consumption on or after the effective date of the suspension of
liquidation.
This determination is issued and published in accordance with
sections 735(d) and 777(i)(1) of the Act.
Dated: December 13, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
Appendix--Issues in Decision Memorandum
1. Common antidumping and countervailing duty scope issues
2. Amendment of the scope to exclude imported enriched uranium
consumed in the conversion or fabrication of exported uranium
3. Double-counting the subsidy in the calculation of the dumping
margin
4. Treatment of ``blended price'' contracts
5. Calculation of the less than fair value (LTFV) margin based on
delivered and undelivered sales
6. Valuation of electricity as a component of low enriched (LEU)
7. Whether to collapse Eurodif and Cogema
8. Whether defluorination costs are at arm's length
9. Accrual for tails disposal
10. Calculation of a constructed export price (CEP) offset
11. Recalculation of inventory carrying costs
12. Imputing certain expenses to Cogema/Eurodif
13. Selling, general and administrative (SG&A) expenses
14. Financial expenses
15. Purchased product
16. Constructed value (CV) profit
[FR Doc. 01-31509 Filed 12-20-01; 8:45 am]
BILLING CODE 3510-DS-P