[Federal Register Volume 63, Number 251 (Thursday, December 31, 1998)]
[Notices]
[Pages 72255-72268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34704]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-851]
Notice of Final Determination of Sales at Less Than Fair Value:
Certain Preserved Mushrooms from the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: December 31, 1998.
FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Kate Johnson,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230; telephone: (202) 482-4136 or (202) 482-4929,
respectively.
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (``the Act''), are references to the provisions
effective January 1, 1995, the effective date of the amendments made to
the Act by the Uruguay Round Agreements Act (``URAA''). In addition,
unless otherwise indicated, all citations to the Department of Commerce
(``Department'') regulations are to the regulations at 19 CFR Part 351
(April 1998).
Final Determination
We determine that certain preserved mushrooms (``mushrooms'') from
the People's Republic of China are being 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 ``Suspension of
Liquidation'' section of this notice.
Case History
Since the preliminary determination (Preliminary Determination of
Sales at Less Than Fair Value: Certain Preserved Mushrooms from the
People's Republic of China, 63 FR 41794, August 5, 1998), the following
events have occurred:
The respondent exporters in this investigation, China Processed
Food Import & Export Company (``China Processed'') and its affiliate
Xiamen Jiahua Import & Export Trading Company, Ltd. (``Xiamen
Jiahua''), Shenzhen Cofry Cereals, Oils, & Foodstuffs Company, Ltd.
(``Shenzhen Cofry''), and Tak Fat Trading Corporation Co. (``Tak
Fat''), submitted revisions and corrections to their questionnaire
responses in August 1998. An importer of the subject merchandise,
Gerber Food (Yunnan) Co., Ltd. (``Gerber''), submitted shipment data on
August 12, 1998.
On August 7, 1998, the petitioners in this investigation, L.K.
Bowman, Inc., Modern Mushroom Farms, Inc., Monterey Mushrooms, Inc.,
Mount Laurel Canning Corp., Mushroom Canning Company, Southwood Farms,
Sunny Dell Foods, Inc., and United Canning Corp., requested a public
hearing. An importer of the subject merchandise, Hop Chong Trading
Company, Inc. (``Hop Chong''), and the respondents subsequently
requested a public hearing on August 17 and August 25, 1998,
respectively.
We issued supplemental questionnaires to the respondents, the China
Chamber of Commerce of Importers and Exporters of Foodstuffs, Native
Produce and Animal By-Products (``China Chamber''), and the PRC
Ministry of Foreign Trade and Economic Cooperation (``MOFTEC'') on
August 7 and 10, 1998. We received responses to these questionnaires
from the respondents and the China Chamber on August 21, 1998, and from
MOFTEC on September 2, 1998.
In August and September 1998, we conducted verifications of the
respondents' questionnaire responses, including information provided by
the producers who supplied the subject merchandise during the POI--
Dongya Food Company Ltd. (``Dongya''), Longhai Cannery Inc.
(``Longhai''), Mei Wei Foods Industrial Co. Ltd. (``Mei Wei''), Fujian
Province Putian Cannery (``Putian Cannery''), Fujian Zhaoan Canned Food
Factory (``Zhaoan''); and Fujian Zishan Group Co., Ltd. (``Zishan'')--
as well as Zhaoan's affiliated can producer Zhangzhou
[[Page 72256]]
Ruida Can Making Co., Ltd. (``Zhangzhou Ruida''). We issued reports on
our findings of these verifications during September and October 1998.
The respondents submitted additional surrogate value data on
October 1, 1998, and petitioners' responded to this submission on
October 13, 1998.
The petitioners, respondents, Hop Chong, and importer Liberty Gold
Fruit Co. Inc. (``Liberty Gold'') submitted case briefs on October 23,
1998, and rebuttal briefs on October 30, 1998. We held a public hearing
on November 4, 1998.
Scope of Investigation
For purposes of this investigation, the products covered are
certain preserved mushrooms whether imported whole, sliced, diced, or
as stems and pieces. The preserved mushrooms covered under this
investigation are the species Agaricus bisporus and Agaricus bitorquis.
``Preserved mushrooms'' refer to mushrooms that have been prepared or
preserved by cleaning, blanching, and sometimes slicing or cutting.
These mushrooms are then packed and heated in containers including but
not limited to cans or glass jars in a suitable liquid medium,
including but not limited to water, brine, butter or butter sauce.
Preserved mushrooms may be imported whole, sliced, diced, or as stems
and pieces. Included within the scope of the investigation are
``brined'' mushrooms, which are presalted and packed in a heavy salt
solution to provisionally preserve them for further processing.
Excluded from the scope of this investigation are the following:
(1) all other species of mushroom, including straw mushrooms; (2) all
fresh and chilled mushrooms, including ``refrigerated'' or ``quick
blanched mushrooms''; (3) dried mushrooms; (4) frozen mushrooms; and
(5) ``marinated,'' ``acidified'' or ``pickled'' mushrooms, which are
prepared or preserved by means of vinegar or acetic acid, but may
contain oil or other additives.
The merchandise subject to this investigation is classifiable under
subheadings 2003.10.0027, 2003.10.0031, 2003.10.0037, 2003.10.0043,
2003.10.0047, 2003.10.0053, and 0711.90.4000 of the Harmonized Tariff
Schedule of the United States (``HTS''). Although the HTS subheadings
are provided for convenience and Customs purposes, the Department's
written description of the merchandise under investigation is
dispositive.
Period of Investigation
The period of this investigation (``POI'') comprises each
exporter's two most recent fiscal quarters prior to the filing of the
petition. For all exporters, this period was July 1 through December
31, 1997.
Nonmarket Economy Country
The Department has treated the PRC as a nonmarket economy (``NME'')
country in all past antidumping investigations (see, e.g., Final
Determination of Sales at Less Than Fair Value: Silicon Carbide from
the People's Republic of China, 59 FR 22585, May 2, 1994) (``Silicon
Carbide'') and Final Determination of Sales at Less Than Fair Value:
Furfuryl Alcohol from the People's Republic of China, 60 FR 22545, May
8, 1995) (``Furfuryl Alcohol'')). As discussed in the preliminary
determination, the respondents claimed that economic changes in the PRC
warrant revocation of PRC's NME status. We determined that the
information proffered by the respondents provided insufficient support
for their claim for market economy status and did not address a number
of important factors for determining market economy status (see
Memorandum from the Team to Lou Apple, dated July 27, 1998). No further
information has been provided for the record since the preliminary
determination. Therefore, in accordance with section 771(18)(C) of the
Act, we have continued to treat the PRC as an NME in this
investigation.
Market Oriented Industry Claim
Shortly before the preliminary determination, the respondents
claimed that their material inputs were acquired at market prices and
that, accordingly, the Department should determine that the PRC
mushroom industry is a market-oriented industry (``MOI'') and should
rely on the actual PRC prices for valuing these inputs. We did not have
sufficient time to analyze this claim for the preliminary
determination. Subsequent to the preliminary determination, we obtained
additional information from the respondents, China Chamber, and MOFTEC,
and conducted verifications that included examination of the
respondents' claims. Based on our analysis, as discussed in detail
below in Comment 1 of the ``Interested Party Comments'' section of this
notice, we have determined that the respondents have failed to
establish that the preserved mushrooms industry is a MOI. Therefore, we
have continued to calculate normal value using the factors of
production methodology, in accordance with section 773(c) of the Act.
Separate Rates
Each respondent exporter has requested a separate company-specific
rate. China Processed is wholly owned by China National Cereals, Oils,
& Foodstuffs Import & Export Corp., which in turn is owned by ``the
whole people.'' Its affiliated exporter Xiamen Jiahua is a domestic
joint venture between China National Cereals, Oils & Foodstuffs Corp.
and Xiamen Special Economic Trade Group Cereals, Oils, & Foodstuffs
Import & Export Company. Both of these companies are also owned by
``the whole people.'' Shenzhen Cofry is a limited liability company
owned by the China Ocean Helicopter Company and the Anhui Cereals,
Oils, & Foodstuffs Import & Export Group, which, in turn, are both
owned by ``the whole people.'' Tak Fat is a Hong Kong trading company
which is wholly-owned by Hong Kong entities; therefore, we determined
that no separate rates analysis is required for this exporter.
As stated in Silicon Carbide and Furfuryl Alcohol, ownership of the
company by ``all the people'' does not require the application of a
single rate. Accordingly, the above-mentioned companies named as
mandatory respondents as well as the companies who submitted a Section
A response are eligible for consideration of a separate rate.
The Department's separate rate test is not concerned, in general,
with macroeconomic/border-type controls, e.g., export licenses and
quotas and minimum export prices, particularly if these controls are
imposed to prevent dumping. The test focuses, rather, on controls over
the investment, pricing, and output decision-making process at the
individual firm level. See Certain Cut-to-Length Carbon Steel Plate
from Ukraine: Final Determination of Sales at Less than Fair Value, 62
FR 61754, 61757, November 19, 1997; Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, from the People's Republic of China:
Final Results of Antidumping Duty Administrative Review, 62 FR 61276,
61279, November 17, 1997; and Honey from the People's Republic of
China: Preliminary Determination of Sales at Less than Fair Value, 60
FR 14725, 14726, March 20, 1995 (``Honey'').
To establish whether a firm is sufficiently independent from
government control to be entitled to a separate rate, the Department
analyzes each exporting entity under a test arising out of the Final
Determination of Sales at Less Than Fair Value: Sparklers from the
People's Republic of China, 56 FR 20588, May 6, 1991, and amplified
[[Page 72257]]
in Silicon Carbide. Under the separate rates criteria, the Department
assigns separate rates in NME cases only if respondents can demonstrate
the absence of both de jure and de facto governmental control over
export activities.
1. Absence of De Jure Control
The respondents have placed on the record a number of documents to
demonstrate absence of de jure control, including the ``Foreign Trade
Law of the People's Republic of China'' and the ``Law of the People's
Republic of China on Industrial Enterprises Owned By the Whole
People.''
In prior cases, the Department has analyzed these laws and found
that they establish an absence of de jure control. (See, e.g., Notice
of Final Determination of Sales at Less Than Fair Value: Certain
Partial-Extension Steel Drawer Slides with Rollers from the People's
Republic of China, 60 FR 54472, October 24, 1995); see also Furfuryl
Alcohol.) We have no new information in this proceeding which would
cause us to reconsider this determination.
As discussed in the preliminary determination, exports of mushrooms
are also affected by quota allocations under a December 17, 1997,
Notice Regarding Printing and Distributing ``List of Commodities
Subject Export License Administration and Issuance of Licenses at
Different Levels'' and Relevant Issues issued by MOFTEC (``Notice'').
We noted that, in past cases, the Department has determined that there
is an absence of government control over export pricing and marketing
decisions of firms even though there may be some government involvement
with respect to the export of products subject to investigation. See
Honey at 14727. In this investigation, the involvement of the PRC
government under this law is negligible with regard to a determination
of separate rates. Accordingly, we determined that, within the
preserved mushroom industry, there is an absence of de jure government
control over exporting pricing and marketing decisions of firms.
2. Absence of De Facto Control
As stated in previous cases, there is some evidence that certain
enactments of the PRC central government have not been implemented
uniformly among different sectors and/or jurisdictions in the PRC. See
Silicon Carbide and Furfuryl Alcohol. Therefore, the Department has
determined that an analysis of de facto control is critical in
determining whether respondents are, in fact, subject to a degree of
governmental control which would preclude the Department from assigning
separate rates.
During verification, our examination of correspondence and sales
documentation revealed no evidence that any of the respondent
exporters' export prices are set, or subject to approval, by any
governmental authority, other than the export quota system identified
above. That these exporters have the authority to negotiate and sign
contracts and other agreements independent of any government authority
was evident from our examination of correspondence and written
agreements and contracts. Finally, we have determined that the
responding exporters have autonomy from the central government in
making decisions regarding the appointment of management. We also noted
that the responding exporters retained proceeds from their export sales
and made independent decisions regarding disposition of profits and
financing of losses, based on our examination of financial records and
purchase invoices (see, e.g., China Processed October 16, 1998,
verification report at pages 3-4).
Consequently, we determine that the respondent exporters in this
investigation have met the criteria for the application of separate
rates.
Margins for Exporters Whose Responses Were Not Analyzed
As discussed in the preliminary determination, for the responding
companies that provided all the questionnaire responses requested of
them and otherwise fully cooperated with the Department's
investigation, but nonetheless, were not fully analyzed by the
Department due to limited resources, we are assigning the weighted-
average of the rates of the three fully analyzed exporting companies,
or a non-adverse facts available rate. Companies receiving this rate
are identified by name in the ``Suspension of Liquidation'' section of
this notice.
PRC-Wide Rate
As stated in the preliminary determination, U.S. import statistics
indicate that the total quantity and value of U.S. imports of mushrooms
from the PRC is greater than the total quantity and value of mushrooms
reported by all PRC exporters that submitted responses in this
investigation. Given this discrepancy, it appears that not all
exporters of PRC mushrooms responded to our questionnaire. Accordingly,
we are applying a single antidumping deposit rate--the PRC-wide rate--
to all exporters in the PRC, other than those specifically identified
below under the ``Continuation of Suspension of Liquidation'' section
of this notice, based on our presumption that the export activities of
the companies that failed to respond to the Department's questionnaire
are controlled by the PRC government (see, e.g., Notice of Final
Determination of Sales at Less Than Fair Value: Bicycles from the
People's Republic of China, 61 FR 19026, April 30, 1996)
(``Bicycles'').
As explained in the preliminary determination, this PRC-wide
antidumping rate is based on adverse facts available, in accordance
with Section 776 of the Act. As adverse facts available, we are
assigning the highest margin in the petition, 198.63 percent, because
the margins in the petition (as recalculated by the Department at
initiation) were higher than any of the calculated margins.
Section 776(c) of the Act provides that where the Department
selects from among the facts otherwise available and relies on
``secondary information,'' such as the petition, the Department shall,
to the extent practicable, corroborate that information from
independent sources reasonably at the Department's disposal. The
Statement of Administrative Action accompanying the URAA, H.R. Doc. No.
316, 103d Cong., 2d Sess. (1994) (hereinafter, the ``SAA''), states
that ``corroborate'' means to determine that the information used has
probative value. See SAA at 870. As discussed in the preliminary
determination at 41798, we determined that the calculations set forth
in the petition have probative value.
Fair Value Comparisons
To determine whether sales of the subject merchandise by China
Processed/Xiamen Jiahua, Tak Fat, and Shenzhen Cofry to the United
States were made at LTFV, we compared the export price (``EP'') to the
normal value (``NV''), as described in the ``Export Price'' and
``Normal Value'' sections of this notice, below. In accordance with
section 777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-
average EPs to weighted-average NVs.
Export Price
China Processed/Xiamen Jiahua
We used EP methodology in accordance with section 772(a) of the
Act, because the subject merchandise was sold directly to unaffiliated
customers in the United States prior to importation and constructed
export price (``CEP'') methodology was not otherwise indicated. We
calculated EP
[[Page 72258]]
based on the same methodology applied in the preliminary determination,
with the following exceptions:
We made corrections to the reported billing adjustments on
certain China Processed sales, as identified in the September 18, 1998,
pre-verification submission.
We corrected the starting price for certain sales made by
Xiamen Jiahua to reflect the price from its affiliated trading company
to unaffiliated customers, as identified in the September 14, 1998,
submission (see Comment 15).
Tak Fat
We used EP methodology in accordance with section 772(a) of the Act
because the subject merchandise was sold directly to unaffiliated
customers in the United States prior to importation and CEP methodology
was not otherwise indicated. We calculated EP based on the same
methodology applied in the preliminary determination, with the
following exception:
We included certain sales in our calculations that were
excluded in the preliminary determination because they appeared to have
been made by another exporter. We determined at verification that, in
fact, these sales were made by Tak Fat.
Shenzhen Cofry
We used EP methodology in accordance with section 772(a) of the
Act, because the subject merchandise was sold directly to unaffiliated
customers in the United States prior to importation and CEP methodology
was not otherwise indicated. We calculated EP based on the same
methodology applied in the preliminary determination, with the
following exceptions:
We recalculated the international freight expenses paid to
a market-economy supplier based on our verification findings.
We made revisions to the reported billing adjustment
amounts based on our verification findings.
As Shenzhen Cofry's supplier, Zhaoan, used its own trucks
to transport the finished merchandise to port, according to our
verification findings, we made no deduction for foreign inland freight.
Normal Value
A. Surrogate Country
Section 773(c)(4) of the Act requires the Department to value the
NME producer's factors of production, to the extent possible, in one or
more market economy countries that: (1) Are at a level of economic
development comparable to that of the NME, and (2) are significant
producers of comparable merchandise. The Department has determined that
India, Pakistan, Sri Lanka, Egypt, and Indonesia are countries
comparable to the PRC in terms of overall economic development (see
Memorandum on Nonmarket Economy Status and Surrogate Country Selection
from Jeff May, Director, Office of Policy, to Louis Apple, Office
Director, AD/CVD Enforcement Group II, Office 5, dated February 23,
1998). According to the available information on the record and as
stated in our preliminary determination, we have determined that both
India and Indonesia meet both statutory requirements for an appropriate
surrogate country for the PRC. In the final determination, we have
continued to rely on India as the surrogate country, based on the
quality and contemporaneity of the currently available data.
Accordingly, we have calculated NV using Indian surrogate values for
the PRC producers' factors of production, except in those instances
where an input was sourced from a market economy and paid for in a
market economy currency, such as glass jars consumed by Longhai and
labels consumed by Mei Wei. We have obtained and relied upon publicly
available information (``PAI'') wherever possible.
The selection of the surrogate values applied in this determination
was based on the quality, specificity, and contemporaneity of the data.
As appropriate, we adjusted input prices to make them delivered prices.
For those values not contemporaneous with the POI and quoted in a
foreign currency, we adjusted for inflation using wholesale price
indices published in the International Monetary Fund's International
Financial Statistics. For a complete analysis of surrogate values, see
the Final Determination Valuation Memorandum from the Team to the File
(``Valuation Memorandum''), dated December 18, 1998. In addition, the
selection of many of these surrogate values is discussed below in the
``Interested Party Comments'' section.
B. Factors of Production
In accordance with section 773(c) of the Act, we calculated NV
based on factors of production reported by the companies in the PRC
which produced mushrooms for the exporters which sold mushrooms to the
United States during the POI. As in the preliminary determination, we
calculated NV based on the factors of production reported by the
respondents.
To calculate NV, the verified per-unit factor quantities, adjusted
where appropriate, were first multiplied by the surrogate values; the
resulting products were then summed. We then added amounts for
overhead, selling, general, and administrative expenses (including
interest) (``SG&A''), and profit, and packing expenses incidental to
placing the merchandise in packed condition and ready for shipment to
the United States. We calculated NV based on the same methodology used
in the preliminary determination with the following exceptions:
For all respondents: we did not value separately the reported
factors for salt, ascorbic acid, vitamin C, chlorine, and monosodium
glutamate because the surrogate value for factory overhead includes
these factors and we were not able to separate these factors from the
factory overhead percentage (see Comment 5). We have also reclassified
labels from a direct material expense to a packing expense (see Comment
14).
China Processed/Xiamen Jiahua
We used corrected factor data reported by Zishan in its
September 18, 1998, submission and resubmitted on November 20, 1998.
We applied revised packing factors for Longhai and Zishan,
as reported in the September 18, 1998, submission.
We applied revised supplier distances for certain Longhai
inputs, as reported in the September 18, 1998, submission.
For Dongya, Longhai, and Zishan, we corrected consumption
factor data for various inputs, as identified in each company's
verification report. However, we did not use all of the corrected data
in our calculations because some of the consumption factors are not
classified as part of factory overhead (see Comment 5).
Shenzhen Cofry
For Zhaoan, we made revisions to the reported electricity,
packing material, and packing labor consumption factors based on our
verification findings.
Because Zhaoan used its own trucks to transport cartons
and labels from the suppliers to the factory, according to our
verification findings, we did not add an input freight value for these
factors.
Tak Fat
We valued paper labels consumed by Mei Wei based on the
market economy price paid for this market economy-sourced input by the
affiliated exporter Tak Fat.
[[Page 72259]]
We revised several of the packing material weights used in
our valuation calculations based on measurements taken at the Mei Wei
verification.
C. Surrogate Values
We valued fresh mushrooms using the average of (a) the unit value
for fresh mushroom purchases derived from the 1996-1997 annual report
from an Indian preserved mushroom producer, and (b) a published
September 1996 wholesale price quote for fresh mushrooms (see Comment 3
and the Valuation Memorandum). We were unable to identify an
appropriate surrogate value for brined (provisionally preserved)
mushrooms; thus, as in the preliminary determination, we used the fresh
mushroom value to value brined mushroom consumption but adjusted the
reported brined mushroom consumption factor to an amount equivalent to
a fresh mushroom consumption factor using an industry standard ratio
(see Comment 4). For tin cans and lids, we used values derived from the
average unit price paid by an Indian preserved mushrooms producer, Agro
Dutch Foods (India) (``Agro Dutch'') (see Comment 6). For glass jars,
and labels, we used Indian import values from Monthly Statistics of the
Foreign Trade of India (``Monthly Statistics'').
For Longhai, which resold scrap can material, we made a deduction
to the surrogate cost of production using an average unit value for tin
waste and scrap derived from 1997 U.S. import statistics. As in the
preliminary determination, use of this U.S. value was necessary because
we were unable to identify an appropriate surrogate value from a
surrogate country. As in the preliminary determination, we have not
made a deduction for scrap mushrooms not consumed in the canning/
jarring process because no party has proffered an appropriate surrogate
value and this factor does not appear to have a significant impact on
the calculation of NV.
We valued labor based on a regression-based wage rate, in
accordance with 19 CFR 351.408(c)(3).
As in the preliminary determination, we valued electricity using
the 1996 electricity rates reported in an article ``All Charged Up Over
the Cost of Power in India'' published in Business World in August
1996. We based the value of coal on the import values from the Monthly
Statistics. We revised the valuation of diesel fuel to rely on the
average of the prices reported in a December 1997 issue of Economic
Times of India (see Comment 9 and the Valuation Memorandum).
We based our calculation of factory overhead (which includes
several materials valued separately in the preliminary determination),
SG&A expenses, and profit on data contained in the financial reports of
Agro Dutch (see Comment 5).
As in the preliminary determination, we valued truck freight rates
using a 1994 rate from The Times of India. As we were unable to
identify a surrogate value for inland water transportation, we valued
boat and barge transportation using the surrogate value for truck
freight. With regard to rail freight, we based our calculation on
information from the Indian Railway Conference Association.
The CAFC's decision in Sigma Corp. v. United States, 117 F. 3d 1401
(CAFC 1997) requires that we revise our calculation of source-to-
factory surrogate freight for those material inputs that are based on
CIF import values in the surrogate country. Therefore, we have added to
CIF surrogate values from India a surrogate freight cost using the
shorter of the reported distances from either the closest PRC port to
the factory, or from the domestic supplier to the factory on an import-
specific basis.
For the following reported packing materials: glue, tape, labels,
corrugated paper, wooden pallets, and shrink wrap, we used import
values from the Monthly Statistics. While we used the same source for
the surrogate value for glue, we used a different import category than
that used for the preliminary determination (see Comment 8).
In addition, we have corrected the POI average exchange rate used
to convert all surrogate values in Indian rupees to U.S. dollars
because in the preliminary determination we inadvertently used the
International Monetary Fund's Special Drawing Rights rate rather than a
U.S. dollar rate. For the final determination, we have used the POI
average of the Federal Reserve exchange rates for India. The use of the
POI average rate for conversion of the surrogate values, rather than
the rate on the date of sale under section 773A(a) of the Act, is in
accordance with our policy and practice, as discussed in Final Results
of Antidumping Duty Administrative Review and New Shipper Review and
Determination not to Revoke Order in Part: Tapered Roller Bearings and
Parts Thereof, Finished and Unfinished, from the People's Republic of
China, 63 FR 63842, 63854, November 17, 1998.
Critical Circumstances
We have determined that critical circumstances exist for one of the
mandatory respondents, Tak Fat, and the non-responding exporters. With
regard to the other two mandatory respondents, Shenzhen Cofry and
Xiamen Jiahua, we have determined that critical circumstances do not
exist based on our analysis of updated shipment data. Furthermore, we
have reversed our preliminary critical circumstances finding with
regard to the companies who submitted responses but whose responses
were not analyzed due to the Department's own administrative
constraints. In accordance with Final Determination of Sales at Less
Than Fair Value: Brake Drums and Brake Rotors from the People's
Republic of China, 62 FR 9160, February 28, 1997 (``Brake Drums and
Brake Rotors''), and Notice of Preliminary Critical Circumstances
Determination: Honey from the People's Republic of China, 60 FR 29824,
June 6, 1995 (``Honey Critical Circumstances''), we do not find
critical circumstances for these non-mandatory respondents. For
additional discussion, see Comment 2, below.
Verification
As provided in section 782(i) 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
A. General Issues
Comment 1: Preserved Mushrooms as a Market-Oriented Industry
The petitioners contend that the Department should reject the
respondents' claim that the preserved mushrooms industry should be
treated as a MOI and thus the normal value should be based on
constructed value using the producers' costs for the inputs, because
the PRC industry has failed to participate sufficiently in the
investigation for the Department to determine whether a MOI exists. The
petitioners assert that much of the PRC industry has not responded to
the Department's questionnaires, given that only 13 exporters responded
out of the total of 62 companies to whom the Department issued a
questionnaire. As Department practice requires a response from all
producers, the petitioners assert that this deficiency is a fatal flaw
in the respondents' claim. According to the petitioners, to base the
MOI determination solely on the basis of the information provided by
the PRC entities that chose to respond, as the petitioners suggest that
the respondents
[[Page 72260]]
are contending, would change the MOI analysis in such a way as to
obviate the usefulness and validity of the test, which rightly requires
analysis of the entire industry in question.
In addition, the petitioners contend that the respondents fail to
meet any of the MOI criteria. As stated in the Amendment to Final
Determination of Sales at Less than Fair Value and Amendment to
Antidumping Duty Order: Chrome-Plated Lug Nuts from the People's
Republic of China, 57 FR 15054, April 24, 1992 (``Lug Nuts''), an
affirmative MOI finding requires (1) no state controls over pricing or
production; (2) an industry characterized by private or collective
ownership; and (3) market-determined prices for virtually all inputs.
The petitioners' arguments against the respondents' MOI claim address
all three criteria as follows:
Pricing
The PRC government is involved in the industry by
maintaining and enforcing, through the China Chamber, a minimum price
floor that requires companies to follow the controlled prices.
The PRC government is also involved through the imposition
and enforcement of an export quota, which affects production quantities
since the industry is primarily export-oriented.
Ownership
The Department must determine that the industry is not
characterized by private or collective ownership because many producers
did not respond to the Department's questionnaire and thus are presumed
to be state-controlled.
The limited ownership data provided by respondents relies
on information collected specifically for this proceeding and support
documentation selected by the respondents. This information constitutes
an inadequate and biased sampling from which to determine that the
entire preserved mushroom industry is characterized by private or
collective ownership.
Market Prices for Inputs
The respondents' support for the claim that market-
determined prices are paid is inadequate because it lacks objective
corroboration or is too narrow in scope to be considered as generally
acceptable throughout the PRC.
Prices for salt, electricity, vitamin C, citric acid, and
paper are not market-determined because they are either subject to
price controls or are controlled by state-owned enterprises.
The respondents have failed to establish that prices for
chemicals, coal, labor, real estate, and capital markets, which were
found not to be market oriented in previous cases, are market oriented.
The respondents provided no information to indicate that
suppliers to the preserved mushroom industry paid market-determined
prices for their inputs (e.g., fertilizer and pesticides for mushroom
growing), in accordance with the Department's request as part of the
fourth administrative review of Chrome-Plated Lug Nuts from the PRC.
The respondents hold that the information they have supplied for
the record of this investigation to support their MOI claim for the
preserved mushrooms industry provides sufficient coverage for virtually
the entire industry. The respondents assert that, because the exporters
who responded to the Department's questionnaire account for 89 percent
of POI exports to the United States and the mandatory respondents cover
57 percent, this information should satisfy the ``virtually entire
industry'' test. Moreover, the respondents note that the Department
only issued the MOI questionnaire to the mandatory respondents, the
producers who supplied the merchandise to them, the China Chamber, and
MOFTEC, and these entities responded; thus, they maintain that they
cannot be faulted for not supplying additional information regarding
industry coverage.
With regard to the MOI test, the respondents claim that they meet
all three criteria of this test and point to their submissions and
verification findings to support their position. The respondents make
the following arguments to demonstrate that the industry is a MOI:
Pricing
The PRC government is not involved in setting the prices,
production quantities, or allocation of preserved mushrooms.
``Floor prices'' of preserved mushrooms, to the extent
they exist, were not established by the PRC government but by the
exporters to prevent market disruption in foreign markets; and
notwithstanding this test, examination of the actual sales prices shows
that the exporters did not follow the floor prices consistently, and
there is no evidence that MOFTEC enforced them.
Quota allocations are marketable and can be exchanged
among the PRC exporters, thus lessening any trade distortions and
further demonstrating the market orientation of the industry.
Ownership
There is no state ownership in the preserved mushroom
production or exporting industries, as none of the 52 canneries is
currently run by the state and the exporters are all either privately
owned or collectively owned.
The Department verified the respondents to confirm the
absence of state control over their operations, and reviewed the
business licenses of non-mandatory respondents and producers, thus
establishing that there is no ``substantial state ownership'' in the
PRC preserved mushrooms industry.
The Department cannot presume that the industry is state-
owned due to the failure of some producers to participate in the
investigation because totaling all of the ownership information
submitted and reviewed at verification provides sufficient coverage of
the entire preserved mushroom industry.
Market Prices for Inputs
The respondents have placed substantial evidence on the
record, verified by the Department, that they pay market-determined
prices.
The disparity in input prices reported by the respondents'
suppliers demonstrates the absence of government control in pricing,
except for salt and electricity.
Even though local governments can control salt and
electricity prices, these input prices also vary to the same extent as
the other inputs and, at any rate, these inputs constitute only an
insignificant amount of the total inputs, by value.
The respondent exporters and producers reported and the
Department verified the freedom with which the producers enter and use
capital markets, and buy and sell machinery and land rights.
The petitioners' argument that the input pricing criterion
of the MOI test requires evidence that the inputs used to create the
inputs to the subject merchandise are market oriented is an expansion
of the existing MOI test. If this condition is included as part of the
test, no industry in a NME country would be able to establish MOI
status because of all the input suppliers the Department would be
forced to investigate.
DOC Position:
We disagree with the respondents and have not found the preserved
mushrooms industry in the PRC to be a MOI.
As a threshold matter, we agree with the petitioners that the
respondents
[[Page 72261]]
have not provided information for the record that covers virtually all
of the producers of the industry. As the petitioners note, only 13
exporters responded to the Department's questionnaire and provided at
least some information about their suppliers. The respondents provided
information that there are at least 52 producers of the subject
merchandise in the PRC, but there is no information on the record which
defines how large the universe of preserved mushrooms producers in the
PRC is with any specificity. While the respondents claim that the
exporters who responded to the questionnaire account for 89 percent of
PRC exports to the United States, there is no information on the record
to identify what percentage of preserved mushrooms producers, including
those who do not export to the United States, is covered by the
respondents' data. In addition, the import data on the record indicate
that there are PRC exporters which did not respond to the
questionnaire, as noted in the preliminary determination at 41798. Even
in those cases where the number of investigated firms is limited by the
Department, a MOI allegation must cover all (or virtually all) of the
producers in the industry in question (see Final Determination of Sales
at Less Than Fair Value: Freshwater Crawfish Tail Meat from the PRC, 62
FR 41347, 41353, August 1, 1997). Thus, the record evidence provides
only a partial picture of the preserved mushrooms industry.
Putting aside the coverage problem, the record does not support a
finding that the preserved mushrooms industry has met all three prongs
of the MOI test. As noted above, three conditions must be met for the
Department to determine that a MOI exists: (1) no state controls over
pricing or production; (2) an industry characterized by private or
collective ownership; and (3) market-determined prices for virtually
all inputs. The limited picture available from the record is a positive
one from the standpoint of the first prong of the MOI test. The PRC
preserved mushroom industry appears to consist of a large number of
firms of varying size that do not appear constrained by government
pricing or output mandates. Ownership of firms in the industry appears
diverse, consisting of state-owned enterprises (``SOEs''), joint-
ventures, collectives, ``privately run'' enterprises, and stock
companies (of unknown type). The six producers we verified appear
unconstrained by government pricing, production mandates, or controls
that directly interfere with their business operations or efforts to
make a profit.
Notwithstanding the issue of PRC industry coverage, even if we were
to assume that such operational independence exists for the industry as
a whole, so that the first prong of the MOI test were met, the extent
of private and collective ownership in the industry, under the second
prong of the MOI test, is unclear. First, while the industry is,
indeed, characterized by diverse ownership interests, the number of
private enterprises and collectives in the industry, and the share of
total industry production capacity they account for, is quite small. By
contrast, the largest mushroom cannery in the PRC is a SOE, i.e., a
company owned ``by all the people,'' accounting for almost 7 percent of
total industry production capacity accounted for by the producers
identified by the respondents, and two of the three largest mushroom
canneries are SOEs, accounting for over 12 percent of this production
capacity. The eight SOEs together account for approximately 20 percent
of total industry production capacity accounted for by the identified
producers (see Exhibit 6-A of the China Chamber's August 21, 1998,
submission).
Second, the vast majority of firms in the industry are classified
as ``shareholding'' enterprises. Shareholding enterprises in the PRC
are the result of corporatization and other past and current efforts by
the government to ``invigorate'' SOEs and increase their productive
efficiency, but in the absence of a system of well-defined, enforceable
private property rights (and the social and legal institutions
necessary to support such a system). In the absence of such rights and
the necessary supporting legal and social institutions, it is not at
all clear to what extent effective ownership of these ``new'' (or what
respondents refer to as ``former'') SOEs has changed and how it has
changed. See Forging Reform in China: The Fate of State-Owned Industry,
Edward S. Steinfeld, 1998 (relevant pages included in the record as
part of a December 18, 1998, memorandum to the file). In any case,
these shareholding enterprises in effect remain SOEs; only their labels
have changed.
The status of these shareholding enterprises under the second prong
of the MOI test is therefore unclear. Where shareholders are
predominantly private individuals, private enterprises, collectives, or
foreign-invested enterprises, the shareholding enterprise arguably
should be classified as equivalent to a private enterprise or
collective for purposes of the second prong of the MOI test. However,
where the shareholders are predominantly SOEs (either ``new'' or
``old''), the shareholding enterprise arguably should remain classified
as an SOE for purposes of the second prong of the MOI test.
In this case, the evidence on the record leaves unclear the
ownership status of the large number of shareholding enterprises in the
industry and the Department therefore cannot determine that the second
prong of the MOI test has been met.
With respect to the third prong of the MOI test, the Department
remains fundamentally concerned about the price of certain key inputs,
land and capital, used to produce the subject merchandise. Fresh
mushrooms are the primary raw material input used to make preserved
mushrooms, making the price of fresh mushrooms an important determinant
of the cost and, therefore, the price of the subject merchandise. Since
the price of land is an important determinant of the cost and,
therefore, price of agricultural products, like mushrooms, whether the
price of land in the PRC is market-determined is important from the
standpoint of the third prong of the MOI test.
As stated in respondents' August 21, 1998, MOI questionnaire
responses, land cannot be privately owned in the PRC. That is, there is
no system of well-defined, enforceable, private property rights to
protect the interest of individuals who would sell (lease) and buy
(rent) it with best use and profit in mind. The respondents cite to the
existence of land-use rights in the PRC, how they are negotiable, how
terms and conditions of their transfer are negotiated between buyer and
seller, and how transfer of these rights are not subject to government
limitation so long as they are registered with the government and the
relevant land tax is paid. It may be argued that a system of well-
defined, enforceable land-use rights that are complete and fully
transferable is sufficient to generate market-based outcomes in the
terms of land use and land values. However, in the PRC, at least,
despite the respondents' suggestions, no such system appears to exist.
We note that local trade in land-use rights may be helping to put
the PRC's scarce land resources to better use, and the preserved
mushroom producers may, in fact, benefit from such trade. We also note
the development of secondary land-use rights markets in the PRC, but
this situation should not obscure the fact that non-market factors
still play a significant role in determining how and by whom land in
the PRC is used. That is, land-use rights in the PRC continue
[[Page 72262]]
to be formulated and allocated in large part on an administrative basis
by village/township/local leaders who have both personal and social
objectives in mind, e.g., personal income, grain quotas and tax
collections. The administrative bases upon which land use-rights are
determined are inconsistent, are not well defined and differ by time
and place, from village to village and township to township. See Scott
Rozelle and Guo Li, ``Village Leaders and Land-Rights Formation in
China,'' American Economic Review, May 1998 (included in the record as
part of a December 18, 1998, memorandum to the file).
Based on the above, we conclude that, even though the allocation of
land may, in some cases and in some sense, be consistent with a market-
based outcome, the price or rent paid for the land (or its use) is not.
For example, local leaders of a township might decide that it is better
for their own personal gain (or better for the township) to use a large
plot of land to build a factory than it is to continue farming the
land. It is possible that the use of the large plot of land in this
manner is consistent with the outcome that would arise in a market
economy context in which a businessperson approached a private
landowner with an offer to buy or lease the same large plot of land.
The difference, however, is that in the PRC, there is no true landowner
(protected by well-defined enforceable private property rights) who, in
looking out for his or her best interest as a landowner, seeks to
receive the best possible price. Instead, there is only the local
leader who controls use rights over the land and who therefore can
unilaterally modify and transfer those rights from the farmer to him-
or herself or to the township at what essentially is an arbitrarily
determined price. Thus, we determine that the price of land, an
important factor in calculating the cost of producing the subject
merchandise, is not sufficiently market-based under the third prong of
the MOI test.
With respect to capital costs, we note that preserved mushroom
producers typically invest in different types of equipment that cut/
slice, cook, sterilize, and can mushrooms, as identified in the
production process descriptions included in the questionnaire responses
of the producers. Two respondents also reported meeting a substantial
share of their working capital needs through bank loans. Capital costs
are, therefore, not insignificant in the production of preserved
mushrooms. The respondents reported similar working capital loan rates,
which one respondent explained are set, with upper and lower limits, by
the central government. These rates apply directly to the loans that
banks extend to the producers and other enterprises in the PRC, and
while the central government sets these rates with inflation in mind,
there is no basis to believe that such administratively-set rates are
market-based. In fact, the World Bank has identified the PRC's interest
rate setting practices as one of several key areas of ongoing, but
still incomplete, reform in the banking and finance sectors. See
``Monetary and Exchange Rate System Reform in China: An Experiment in
Gradualism,'' IMF, Occasional Paper 141, September 1996 (included in
the record as part of a December 18, 1998, memorandum to the file).
Thus, we determine that the cost of capital, an important factor in
calculating the cost of producing the subject merchandise, is not
sufficiently market-based under the third prong of the MOI test.
Because we have determined that the preserved mushrooms industry is
not a MOI for the reasons discussed above, we are not using the costs
reported by the respondents in calculating NV. Therefore, the issue
raised by the petitioners--that the cost information is inadequate--is
moot.
Comment 2: Critical Circumstances
The respondents argue that, because the last antidumping case on
the subject merchandise resulted in a negative determination (1983
canned mushrooms case), there is no history of dumping in the United
States and therefore there is no reasonable basis to believe or suspect
that critical circumstances exist under section 733(e)(1) of the Act.
Further, the respondents contend that the Department should examine the
imports of the subject merchandise with a seasonal-trends analysis.
Finally, respondents and importers Liberty Gold and Hop Chong argue
that the Department should not extend its findings to companies which
responded but are not being examined. For those companies, these
parties contend that the Department should either examine the available
company-specific shipment data on the record or follow the practice set
forth in Brake Drums and Brake Rotors and not find critical
circumstances.
Hop Chong further argues that it has been denied due process in
this proceeding because it has not had the opportunity to provide
shipment data for review by the Department, nor to comment on the
import data that may be used eventually by the Department in its final
analysis.
The petitioners contend that critical circumstances exist based on
an established history of dumping--a Brazilian antidumping duty order--
and a massive surge in imports. Because critical circumstances apply to
all of the examined exporters and the import statistics also show a
massive surge in subject merchandise imports, the petitioners assert
that critical circumstances should continue to apply to all exporters,
including those who provided data to the Department that were not
examined. The petitioners claim that the situation in Brake Drums and
Brake Rotors and Honey Critical Circumstances do not apply in this case
because in those cases, the Department did not find critical
circumstances for most of the examined exporters, whereas here, the
Department has found critical circumstances for all of the examined
exporters and has also observed a massive surge in the import
statistics.
DOC Position:
We continue to find critical circumstances for mandatory respondent
Tak Fat as well as all non-responding PRC exporters covered by the PRC-
wide rate. However, in the final determination, we did not find
critical circumstances with respect to mandatory respondents Shenzhen
Cofry and China Processed/Xiamen Jiahua based on updated shipment data,
as described below. In addition, we agree with the respondents, Hop
Chong and Liberty Gold with respect to excluding the non-mandatory
respondents from any affirmative critical circumstances finding, in
accordance with our past practice, as described below.
Section 733(e)(1) of the Act provides that if there is a reasonable
basis to believe or suspect that critical circumstances exist, the
Department will determine whether: (A)(i) there is a history of dumping
and material injury by reason of dumped imports in the United States or
elsewhere of the subject merchandise, or (ii) the person by whom, or
for whose account, the merchandise was imported knew or should have
known that the exporter was selling the subject merchandise at less
than its fair value and that there was likely to be material injury by
reason of such sales, and (B) there have been massive imports of the
subject merchandise over a relatively short period.
As discussed in the preliminary determination, the first critical
circumstances criterion is satisfied for this investigation based on
the fact that Brazil has levied antidumping duties against preserved
mushrooms from the PRC. Brazil's antidumping duty order will be in
force until January 2003. Therefore, we determine that there is a
[[Page 72263]]
history of dumping of mushrooms elsewhere by PRC producers/exporters
and thus the first statutory criterion is met (see section
733(e)(1)(A)(i) of the Act), contrary to the respondents' assertions.
Because we have found that the first statutory criterion is met, we
must consider the second statutory criterion: whether imports of the
merchandise have been massive over a relatively short period. According
to 19 CFR 351.206(h), we consider the following to determine whether
imports have been massive over a relatively short period of time: (1)
volume and value of the imports; (2) seasonal trends (if applicable);
and (3) the share of domestic consumption accounted for by the imports.
When examining volume and value data, the Department typically
compares the export volume for equal periods immediately preceding and
following the filing of the petition. Under 19 CFR 351.206(h), unless
the imports in the comparison period have increased by at least 15
percent over the imports during the base period, we normally will not
consider the imports to have been ``massive.'' To determine whether or
not imports of subject merchandise have been massive over a relatively
short period for the final determination, we compared each mandatory
respondent's export volume for the seven months subsequent to the
filing of the petition (January-July 1998) to that during the seven
months prior to the filing of the petition (June-December 1997). These
periods were selected based on the Department's practice of using the
longest period for which information is available from the filing of
the petition through the effective date of the preliminary
determination.
Based on our analysis, we find that the increase in imports was
greater than 15 percent with respect to Tak Fat. However, with respect
to Shenzhen Cofry and China Processed/Xiamen Jiahua, we find that the
increase in imports was less than 15 percent. Although the respondents
have claimed that these imports should be examined in the context of a
seasonal trend analysis, we are unable to discern a seasonal pattern
for Tak Fat, based on the information on the record.
As both of the statutory criteria for finding critical
circumstances have been met for respondent Tak Fat, we therefore
determined that critical circumstances exist for this exporter. Because
we determined that imports were not massive for Shenzhen Cofry and
China Processed/Xiamen Jiahua, both of the statutory criteria for
finding critical circumstances have not been met for these exporters
and, accordingly, we did not find critical circumstances. For those
companies subject to the PRC-wide rate (i.e., companies which did not
respond to the Department's questionnaire), we determined, based on the
facts available, and making the adverse inference permitted under
section 776(b) of the Act because these entities did not respond to our
questionnaires, that there were massive imports of preserved mushrooms
with respect to these companies. Therefore, we determined that critical
circumstances exist with regard to these companies, consistent with
Brake Drums and Brake Rotors. With regard to the respondents who were
not analyzed in this investigation, we have reconsidered our
preliminary determination finding of critical circumstances. For the
final determination, we are following the practice set forth in Brake
Drums and Brake Rotors at 9165 and Honey Critical Circumstances.
Therefore, because the Department did not analyze company-specific data
for the non-mandatory respondents due to the Department's own
administrative constraints, we do not believe it is appropriate to find
critical circumstances with regard to these companies.
B. Surrogate Value Issues
Comment 3: Valuation of Fresh Mushrooms
The respondents claim that the fresh mushroom surrogate value used
in the preliminary determination--average unit value derived from three
Indian producers' annual reports--is inappropriate because the growing
method used by the Indian producers is completely different from that
used by the PRC growers. Thus, the respondents argue that the
Indonesian value they placed on the record is more appropriate because
it reflects a growing method closer to that of the PRC producers and no
Indian fresh mushroom price is of the same quality in that regard. If
the Department nevertheless relies on Indian data for valuing fresh
mushrooms, the respondents propose a September 1996 wholesale price for
mushrooms quoted in the Indian publication Business Line. The
respondents contend that this price is a more appropriate surrogate
value because the value used in the preliminary determination, derived
from the financial statements of three Indian producers, was based on
transfer prices of vertically-integrated Indian producers and there is
no information on the record indicating that these values reflect arms-
length market prices.
The petitioners contend that India remains the appropriate
surrogate country and thus, consistent with the Department's
regulations and practice, Indian values should be used except where
Indian values are unreliable or inappropriate. The petitioners argue
that the respondents have failed to demonstrate that the Indian values
are inappropriate and, therefore, the Department should continue to use
the value derived from the Indian producers because it represents the
experience of Indian producers over an annual period that is at least
partly contemporaneous with the POI. The petitioners reject the
respondents' characterization of the Indonesian growers' techniques as
``low tech'' and assert that attributing differences in Indian and
Indonesian surrogate values solely to growing techniques is
oversimplified and faulty. The petitioners state that the Indian value
proposed by the respondents is inferior because it reflects experience
in North India, away from the primary Indian mushroom growing area in
South India, and because it is a single price observed prior to the
POI.
DOC Position:
We disagree with the respondents with respect to the use of
Indonesian fresh mushroom prices over Indian prices for the fresh
mushroom surrogate value. Because we have already determined that India
is the appropriate surrogate country, we would use data from Indonesia
only if the Indonesian surrogate value is superior in terms of
specificity, quality, and contemporaneity. The Indonesian mushroom
price proposed by the respondents is not superior in any respect. The
respondents claim that the Indonesian value is more specific to the PRC
factor than the Indian prices because the Indonesian mushrooms
allegedly are produced in a manner more similar to that of the PRC
mushrooms. However, the factor to be valued here is fresh mushrooms,
and based on the information on the record, there is no physical
difference among the mushrooms grown in India, Indonesia, and the PRC,
regardless of the means used to produce them. In other words, there is
no distinguishing physical characteristic that makes an Indonesian
mushroom more similar to a PRC mushroom than an Indian mushroom.
Even if the Department were to consider the production method of an
input as a factor in determining the appropriate surrogate value, the
available evidence does not support the respondents' argument that
Indonesian production methods are ``low tech''
[[Page 72264]]
compared to Indian production methods and thus more similar to PRC
production methods. The respondents rely on the statements in the
Indonesian respondents' April 3, 1998, questionnaire responses that
their mushrooms are grown in ``sheds'' and on other information
indicating that the ambient climate is a factor for the location of
Indonesian farms to conclude that such operations are equivalent to the
PRC grower's ``huts'' which lack climate control (see Respondents' May
28, 1998, submission at pages 5-7 and Exhibit 2). However, the
information on the public record of the companion investigation of
certain preserved mushrooms from Indonesia indicates that the
Indonesian growers are not like the PRC growers and, in fact, are more
like the ``high tech'' Indian growers, as noted by the petitioners at
pages 11-12 and Exhibit 1 of their June 3, 1998, submission. For
example, while the PRC growers used a fixed bed system (May 28, 1998,
submission at page 5), the Indonesian respondents used a tray system
(see P.T. Dieng Djaya/Surya Jaya Abadi Perkasa's (``Dieng/Surya Jaya'')
and P.T. Zeta Agro Corporation's April 23, 1998, responses at pages 51
and 22, respectively 1). Contrary to the respondents'
assertions, the Indonesian growers employ a climate control system
(see, e.g., Dieng/Surya Jaya's June 22, 1998, response at pages 7-9,
respectively). Accordingly, there is no basis to reject the Indian
surrogate values in favor of the Indonesian surrogate values.
---------------------------------------------------------------------------
\1\ Relevant pages from the public versions of the Indonesian
responses have been included in the Valuation Memorandum.
---------------------------------------------------------------------------
With regard to the Indian mushroom prices, we have analyzed further
the average unit values from the three Indian producers to derive the
surrogate value in the preliminary determination. We found that two of
the unit values are based on the producer's sales of fresh mushrooms to
unspecified domestic customers, while the unit value for the third
company, Premier Mushrooms Farms (``Premier''), is based on its
purchases of fresh mushrooms for its canning operations. As the factor
to be valued is fresh mushrooms consumed as an input for preserved
mushrooms, we find the unit value derived from Premier's fresh
mushrooms purchases during 1996-1997 to be more specific for the factor
being valued than the value derived from the other two producers' fresh
mushroom sales.
Moreover, in comparing the Premier mushrooms purchase price to the
Business Line quote, we found no basis to conclude that either price is
superior to the other in terms of quality, specificity, and
contemporaneity. Both prices are equally specific--a wholesale trade
level price to canners of fresh mushrooms grown in India. Both prices
are essentially from the same time period--the price quote is from
September 1996, while the Premier annual report covers the period of
April 1996 through March 1997. Neither source is from the POI, and the
price quote corresponds to the mid-point of the annual report's time
period. Both prices are based on PAI and there is no basis to determine
that one is more reliable than the other. Thus, we find that these
surrogate values are equally valid. Accordingly, we have based the
surrogate value for fresh mushrooms on the simple average of these two
sources for the final determination.
With regard to petitioners' arguments on the price quote, we find
no basis to determine that a surrogate value is inferior simply on the
grounds that it is from a part of the surrogate country that is not the
purported principal production area of the subject merchandise. The
petitioners have provided no evidence that this price is unacceptable
for that reason.
Comment 4: Valuation of Brined (Provisionally Preserved) Mushrooms
The petitioners contend that the Department should value brined
mushrooms used as a material input for the subject merchandise by
adjusting the brined mushroom consumption factor to a fresh mushroom
equivalent, as applied in the preliminary determination. The
petitioners state that this methodology is reasonable because it
accounts for the higher yield and costs associated with brined mushroom
inputs, and there is no alternative surrogate value for brined
mushrooms on the record.
The respondents assert that the Department has already accounted
for the costs of using brined rather than fresh mushrooms as an input
through the higher consumption factors of labor and water used to
debrine mushrooms before canning. The respondents contend that the
increased consumption of these factors serves as an adjustment factor
for the brined mushroom input. Thus, the respondents argue that, if the
Department continues to adjust the brined mushroom factor to a fresh
mushroom factor, it must reduce the labor and water consumption factors
to avoid double-counting these values.
DOC Position:
In the absence of a better methodology, we agree with petitioners
and continue to adjust the brined mushroom input factor to a fresh
mushroom equivalent in the same manner as that in the preliminary
determination. We made the adjustment by applying an industry standard
ratio to the brined mushroom factor. Furthermore, we find no basis on
which to conclude that the alleged increased labor and water factors
for brined mushrooms served as an adjustment factor. There is no
information on the record to demonstrate that brined mushroom inputs
had different labor and water factors associated with them. Our review
of the factors shows no relatively higher consumption factor
corresponding to subject merchandise produced from brined mushrooms.
Accordingly, we have no basis to assume that these factors are double-
counted through the brined mushroom adjustment methodology employed.
Comment 5: Valuation of Overhead, SG&A and Profit
The respondents contend that the ratios used to calculate factory
overhead, SG&A, and profit in the preliminary determination, as derived
from the annual reports of three Indian producers of preserved
mushrooms, are inappropriate for calculating the surrogate values for
these factors. According to the respondents, these Indian producers are
large, vertically integrated, technologically advanced farms/canneries,
while the PRC producers who supply the respondent exporters are canners
who purchase mushrooms from low technology farms. Thus, the respondents
continue, these Indian ratios are based on production costs reflecting
growing costs. The respondents contend that a more appropriate source
for these ratios is the data provided by respondents from the
Indonesian vegetable and fruit canning industry, since this information
reflects the experience of a surrogate country food canning industry.
In the alternative, the respondents state that if the data from Indian
annual reports are to be used, the Department should rely only on the
Agro Dutch Annual Report because the other two companies' reports
reflect a disproportionate amount of non-subject merchandise.
The petitioners respond that the respondents have provided no
evidence that the Indonesian figures are based on data that are more
representative than the Indian data. The petitioners note that the
Indonesian data include data from the production of non-subject
merchandise and there is no evidence that these data relate solely to
canning operations. According to the petitioners, the Indonesian data
may also include fully integrated producers (i.e. producers who grow
the product as well as can it) since the Indonesian
[[Page 72265]]
producers of preserved mushrooms are also mushroom growers. In
addition, while the petitioners concede that one of the three Indian
companies' financial data may be distortive due to a disproportionate
amount of non-subject merchandise, they assert that the other two, Agro
Dutch and Saptarishi Agro, are predominantly producers of preserved
mushrooms. The petitioners argue that, as the respondents have failed
to identify any significant difference in the quality and
representativeness of the data contained in the financial statements of
these latter two companies, the Department should use this financial
data to value the surrogate value percentages.
DOC Position:
We agree with the petitioners with respect to the selection of
Indian financial statement data. As we discussed above, we have
determined that India is the appropriate surrogate country. Thus, we
rely on Indian data unless alternate data is superior in terms of
specificity, quality, and contemporaneity. In this instance, the
Indonesian data offered by the respondents are not superior in any
respect. While both sets of financial data are equivalent in terms of
time period, the Indian data are more specific to the industry under
investigation. While the Department would take into consideration
whether the Indian data included a high proportion of mushroom growing
production over canning operations, we note that there is no basis on
which to conclude that the Indonesian canned vegetable producer data do
not also include growing production data--a point conceded by the
respondents at the Department's hearing (see Transcript of November 4,
1998, hearing at page 77).
However, we have revised our preliminary determination methodology
to base the surrogate values for factory overhead, SG&A, and profit
solely on the data from the Agro Dutch 1996-1997 financial statement.
Although we used the data from all three Indian producers for the
preliminary determination, we have concluded based on further analysis
of the data that only the Agro Dutch data are appropriate for use in
the final determination. As noted by both the respondents and the
petitioners, the Transchem data are based on a higher proportion of
nonsubject merchandise than those of the other two producers. However,
we also note that Saptarishi Agro has accounted for its raw materials
in a manner inconsistent with this investigation. As discussed in more
detail in the Valuation Memorandum, Saptarishi Agro's materials total
is comprised of raw materials and packing materials. The packing
material amount is almost as large as the raw materials amount. The raw
materials schedule does not include cans or jars in the listing of the
major raw materials. Accordingly, we have made the reasonable
assumption that Saptarishi Agro included the costs of containers in the
packing materials amount, and we are unable to break out this amount
further. In turn, we cannot calculate a materials total consistent with
our methodology that would enable us to properly calculate factory
overhead, SG&A, and profit ratios from Saptarishi Agro's data.
Therefore, we have relied solely on the Agro Dutch data.
We also note that the factory overhead ratio calculated using Agro
Dutch's financial statement appears to include the costs for materials
such as salt, water, chlorine, and ascorbic acid (vitamin C). As
discussed in more detail in the Valuation Memorandum, according to the
public versions of Agro Dutch's questionnaire responses in the
companion certain preserved mushrooms from India investigation, raw
materials costs in the financial statement include mushroom growing
costs and cans, but not the other factors. The unspecified materials
appear to be included under ``consumables,'' since water is
specifically identified as being part of this category (see Agro
Dutch's April 21, 1998, public version response at page 59, also
included in the Valuation Memorandum). Consumables are included in the
factory overhead calculation and we have no further information from
Agro Dutch's public responses to break out this information further.
Accordingly, we have also revised our preliminary determination
methodology to value raw materials other than fresh mushrooms and
containers as part of factory overhead, and have not valued them
separately so as to avoid double-counting.
Because we are including the valuation of all factors other than
mushrooms and containers in factory overhead, the specific valuation
and factor consumption issues raised by the parties concerning
chlorine, salt, vitamin C, and citric acid are moot.
Comment 6: Valuation of Cans
The respondents contend that the Department should value tin cans
based on the domestic prices for Indian tin cans, as placed on the
record by respondents. The respondents argue that these values, derived
from Agro Dutch's Annual Report, are appropriate because (a) they match
the fact that the PRC producers obtain all of their tin cans from
domestic sources, (b) they are consistent with the Department's
preference for domestic surrogate values, as stated in Brake Drums and
Brake Rotors at 9163, and (c) they are more specific than the Import
Statistics value used in the preliminary determination, which was based
on a ``basket'' HTS category for tin containers of 50 liters or less.
The petitioners assert that the Department should continue to value
cans based on the Indian import statistics average unit value because
it more accurately reflects the experience of the Indian industry,
which imports the overwhelming majority of the cans used in the
production of the subject merchandise. Alternatively, if the Department
uses Agro Dutch's purchase data to value cans, petitioners contend that
the Department should calculate the value using both domestic and
imported cans, since the purchases from both sources reflect the
commercial environment of the surrogate country. The petitioners add
that this value should also be adjusted to reflect the different rates
of consumption based on can size, using data supplied by the
petitioners.
DOC Position:
We agree with the respondents with regard to the source of the
surrogate value and, therefore, have revised our preliminary
determination methodology to value tin cans based on the unit values
derived from the 1996-1997 Agro Dutch Annual Report, since this
information is more specific to the input being valued than the import
statistics. However, we agree with the petitioners that there is no
reason to base this value solely on the domestic purchase value. There
is no basis in Department practice or precedent to select only the
domestic surrogate value when the overwhelming majority of that input
consumed by a producer in the surrogate country is imported. In
selecting the appropriate surrogate value, the Department is attempting
to reflect the purchase experience of a producer in the surrogate
country, not necessarily to mimic the purchase pattern of the producer
in the NME.
In addition, we have adjusted the Agro Dutch unit price data for
can size according to the weight-based methodology outlined by the
respondents (see Valuation Memorandum). We note that the petitioners'
adjustment methodology is based on a single price quote offered to an
unidentified party. Because we have no further information to test the
representativeness or reliability of this quote, we determined that
this information is insufficient for our price adjustment purposes.
Therefore, we
[[Page 72266]]
have relied on the weight-based alternative which, as noted by the
respondents, was used by the petitioners in their calculations for the
antidumping duty petition.
Comment 7: Valuation of Water Inputs
The respondents claim that the Department erred in valuing
separately the water placed in the container with the mushrooms. Citing
such cases as Final Determination of Sales at Less Than Fair Value:
Persulfates from the PRC, 62 FR 27222, May 19, 1997, and Final
Determination of Sales at Less Than Fair Value: Saccharin from the PRC,
59 FR 58818, November 15, 1994, the respondents state that it is the
Department's practice to presume that water consumption is included in
the factory overhead ratio calculation and that, in this investigation,
there is no evidence on the record to reject this presumption. Without
such evidence, the respondents allege that the separate water valuation
results in double-counting of the water input.
The petitioners contend that water is a direct input for particular
segments of the preserved mushrooms production process and, thus, water
consumed in that process should be treated as a direct material valued
separately from factory overhead. The petitioners argue that the
respondents have misstated the Department's practice in that the
Department's presumption that water consumption is part of factory
overhead is dependent on whether the input is classified as an indirect
material in the production process. In this instance, petitioners
continue, the water in the can is a required input in the production
process and thus a direct material. As such, the petitioners contend
that the presumption should be that water is not part of factory
overhead, consistent with Final Results of Administrative Review:
Helical Spring Lock Washers from the PRC, 62 FR 61794, November 19,
1997.
DOC Position:
We agree with petitioners in principle that water packed in the can
or jar with the preserved mushrooms is a direct material. However, as
discussed above under Comment 7, we have determined that all water
consumed by the Indian producer Agro Dutch is recorded in its financial
statement as part of ``consumables,'' which are a component of factory
overhead. It is not possible to break out this water consumption from
the rest of the ``consumables'' included in the financial statement.
Accordingly, since all water consumption, for whatever purpose, is
included in factory overhead, we have not valued water separately so as
to avoid double counting.
Comment 8: Valuation of Glue
The respondents argue that the Department's selection of a
surrogate value for glue consumed in the packing process, which was
derived from Indian import statistics, was incorrect because the value
used was based on retail-level size containers. According to the
respondents, the verifications demonstrated that the PRC producers
obtain glue in larger size containers, and thus the respondents contend
that glue should be valued based on a value exclusive of glue sales in
containers of one kilogram or less. For this surrogate value, the
respondents advocate use of the Indonesian import statistics value that
they placed on the record of this investigation.
DOC Position:
Based on further analysis of the surrogate value data on the
record, we have revised our selection of the Indian surrogate value to
rely on a different set of Indian import statistics than that used for
the preliminary determination. The imports statistics we have used in
the final determination correspond to a type of glue more similar to
that employed by the respondents, which is covered by the HTS category
for glue that the respondents proposed in their May 28, 1998,
submission (see Valuation Memorandum). We have made this change to the
surrogate value selected because the revised value appears to be more
specific to the type of glue consumed by the producers, and not because
of the size of the containers associated with the glue.
Comment 9: Valuation of Diesel Fuel
The petitioners contend that diesel fuel should be valued using
prices reported in the Indian publication Economic Times of India
(``Times''). The petitioners claim that the Times value is superior to
the unit value derived from Indian import statistics used in the
preliminary determination because it is based on domestic sources, more
product-specific, and more contemporaneous than the import statistics
value.
DOC Position:
We agree with the petitioners with regard to the source of the
surrogate value at issue. This source is contemporaneous with the POI,
while the import statistics values are based on 1995-1996 values. For
the final determination, we have applied the average of the ``old''
prices listed in the Times value for diesel fuel. We used the ``old''
prices rather than the ``new'' prices published in the Times because,
according to the published report, the latter did not take effect until
the very end of the POI. Thus, it is a reasonable assumption that the
``old'' prices were in effect during the POI.
C. Production Factor Issues
Comment 10: Allocation Methodology for Input Factors
The petitioners argue that the consumption factors for three
producers, Longhai, Putian, and Zishan, should be recalculated to
allocate over the different can sizes based on drained-weight of the
mushrooms, rather than net or packed weight. The petitioners contend
that to allocate factors on a basis other than drained weight is
distortive because per-unit EP is based on drained weight.
The respondents reply that the petitioners are mistaken and, in
fact, the producers reported consumption factors on a drained-weight
basis. The respondents state that the producers in question all record
production on a net-weight basis, but they all converted production
factors to drained weight using net weight as the allocation basis.
DOC Position:
We agree with the respondents. Our verification reports for
Longhai, Putian, and Zishan confirm that the consumption factors have
been reported on a drained-weight basis (see, e.g., Longhai
verification report of October 13, 1998, at pages 4-5) and therefore no
recalculation is necessary.
Comment 11: Treatment of Cans and Jars as Direct Materials or
Packing Materials
The respondents claim that the Department erred in classifying
containers (i.e. tin cans and glass jars) as direct materials and
instead should consider these items to be packing materials. The
respondents contend that section 773(c)(1)(B) of the Act specifies that
the cost of containers shall be added to NV after accounting for the
factors of production utilized in producing the merchandise. According
to the respondents, the containers are simply a means of transporting
preserved mushrooms and are not an integral part of the product. As
such, the respondents continue, valuation of container materials should
not be included in the valuation of the cost of manufacturing. The
respondents distinguish the facts in the instant case from those in
Washington Red Raspberries Commission v. United States, 859 F.2d 898
(Fed. Cir. 1988) (``Red Raspberries''), in which the Department's
treatment of containers as an integral part of the subject merchandise
was affirmed by the Court
[[Page 72267]]
of Appeals for the Federal Circuit. In this respect, the respondents
argue that the containers case do not preserve the mushrooms but serve
merely as a vessel in which to ship them.
The petitioners state that the containers are properly treated as
part of the direct materials factors as they are an integral part of
the production process and subject merchandise. The petitioners also
cite the decision in Red Raspberries to support the position that,
where the materials are not incidental to the cost of the merchandise,
but rather the product cannot exist in its natural form but for the
container, that container cost may be included in direct materials.
DOC Position:
Consistent with our approach in the three other preserved mushrooms
investigations, including Final Determination of Sales at Less Than
Fair Value: Certain Preserved Mushrooms from Chile, 63 FR 56613,
October 22, 1998, we have treated the containers (i.e., cans or jars)
as part of the subject merchandise. We note that preserved mushrooms
include the container as an integral part of the product, as noted
above in the ``Scope of Investigation'' section of this notice, and the
product does not exist as the subject merchandise without the
container. This treatment is also consistent with our rationale in Red
Raspberries and our methodology in similar cases involving preserved
products, such as the Final Determination of Sales at Less Than Fair
Value: Canned Pineapple Fruit from Thailand, 60 FR 29553, June 5, 1995.
Comment 12: Accounting for Water Loss
The petitioners contend that the Department should adjust the
reported water input consumed by the PRC producers (i.e. the water
packed in the cans or jars) to account for water lost during
production. According to the petitioners, most of the producers
reported a theoretical factor for this water input which failed to
account for water lost. As Putian accounted for this input loss through
a theoretical water waste ratio, the petitioners contend that the
Department should apply Putian's water waste ratio to the other
producers as facts available.
The respondents state that the petitioners have misunderstood the
producers' reporting. According to the respondents, the reporting
methodology accounts for all water consumed by the producers and thus
includes any water that was allegedly lost. They add that while
Putian's methodology was different than that employed by the other
producers, it provided the same results.
DOC Position:
We agree with the respondents. The verification reports indicate
that the producers have accounted adequately for water consumption.
However, as noted above in our responses to Comment 5 and Comment 7,
all water consumed is included in factory overhead and we have not
included a separate value for water in the final determination. Thus,
since all water factors consumed have been valued as part of factory
overhead, this issue is moot.
Comment 13: Facts Available for Can Supplier Input Factors
The petitioners contend that the Department should apply facts
available for the factors of production reported by Zhaoan's affiliated
can supplier, Zhangzhou Ruida, because the Department was unable to
verify these factors. Citing Zhangzhou Ruida's verification report, the
petitioners assert that the factors could not be verified because the
manufacturer had used a cost-based allocation methodology rather than a
quantity-based allocation methodology. As facts available for these
inputs, the petitioners claim that the Department should apply the
surrogate value selected for cans.
DOC Position:
We agree with the petitioners. As discussed in the verification
report, Zhangzhou Ruida was unable to support its response and
therefore we cannot rely on its information for the final
determination. Accordingly, we have applied the surrogate value for
cans, as identified in Comment 6 above, to Zhaoan's can consumption
factors.
Comment 14: Treatment of Labels as Packing Materials
As discussed above under Comment 11, the respondents assert that
the containers used for preserved mushrooms should be treated as
packing materials rather than direct materials. Similarly, the
respondents contend that the labels affixed to the containers should
also be considered packing materials.
DOC Position:
We agree with respondents with respect to labels. While cans are an
integral part of the subject merchandise (see Comment 11), cans may or
may not have labels, which serve more as a packaging component to
identify and market the finished product. Therefore, we have valued
labels as part of packing materials in the final determination.
D. Company-Specific Issues
Comment 15: Xiamen Jiahua's Sales Prices
Xiamen Jiahua contends that certain U.S. sales prices should be
revised to reflect the price charged by Xiamen Jiahua's affiliated
trading company to unaffiliated customers, as Xiamen Jiahua reported at
the commencement of verification, rather than the previously reported
prices, which reflect the sale from Xiamen Jiahua to the affiliated
trading company.
DOC Position:
We agree and have revised the sales data pursuant to Xiamen
Jiahua's September 14, 1998, submission, which we verified. This
revision is in accordance with the statutory requirement of section
772(a) of the Act to base EP on the price to the first unaffiliated
customer.
Comment 16: Dongya Firewood Consumption
The petitioners state that the Department should include a
valuation for firewood consumed by Dongya to start the boilers used in
production of the subject merchandise in the Dongya NV calculation. The
petitioners note that consumption of this input was not reported by
Dongya in the questionnaire response.
Dongya responds that the firewood is used as kindling to ignite
coal used to generate steam in the production process. As such, Dongya
contends that this input is properly regarded as part of factory
overhead rather than a separate factor of production.
DOC Position:
We agree with Dongya and treated firewood as part of factory
overhead, rather than valuing it separately.
Comment 17: Zishan Scrap Factors
The petitioners argue that, as Zishan was unable to support the
sale and receipt of payment for scrap materials at verification, the
Department should not adjust Zishan's NV to account for the sale of
these by-products.
Zishan states that it demonstrated to the Department at
verification that it sells its by-product. While it did not provide
support for one particular month requested by the Department, Zishan
claims that nevertheless, it established the fact for another month
examined at verification and thus is entitled to an adjustment in the
calculation of its NV.
DOC Position:
We agree with the petitioners and have rejected Zishan's by-product
adjustment to its NV because Zishan was unable to document sales of its
by-
[[Page 72268]]
products during the POI. The by-product sales shown at verification
occurred several months prior to the POI. December was the only month
of the POI where there was subject merchandise production and since
Zishan could not support by-product sales for that month or any other
month of the POI, we have no basis to conclude that it in fact sold its
by-products during the POI.
Continuation of Suspension of Liquidation
In accordance with section 735(c)(1)(B) of the Act, we are
directing the Customs Service to continue to suspend liquidation of all
imports of subject merchandise that are entered, or withdrawn from
warehouse, for consumption on or after August 5, 1998, the date of
publication of the preliminary determination in the Federal Register
except for subject merchandise exported by Tak Fat or other companies
not specifically named below. For merchandise exported by Tak Fat or by
other companies not specifically named below, we are directing the
Customs Service to continue to suspend liquidation of all imports of
the subject merchandise that are entered, or withdrawn from warehouse,
for consumption on or after May 7, 1998, the date 90 days prior to the
date of publication of the preliminary determination in the Federal
Register, in accordance with our critical circumstances finding.
Furthermore, we will instruct the Customs Service to refund all bonds
and cash deposits posted on subject merchandise exported by all the
companies specifically named below, except Tak Fat, that was entered or
withdrawn from warehouses for consumption prior to August 5, 1998.
The Customs Service shall continue to require a cash deposit or the
posting of a bond equal to the weighted-average amount by which the NV
exceeds the EP, as indicated in the chart below. These suspension of
liquidation instructions will remain in effect until further notice.
------------------------------------------------------------------------
Weighted-
average Critical
Exporter/manufacturer margin circumstances
percentage
------------------------------------------------------------------------
China Processed Food I&E Co./Xiamen 154.71 No
Jiahua I&E Trading Company, Ltd..
Tak Fat Trading Co................... 178.59 Yes
Shenzhen Cofry Cereals, Oils, & 126.16 No
Foodstuffs Co., Ltd..
Gerber (Yunnan) Food Co.............. 158.79 No
Jiangsu Cereals, Oils & Foodstuffs 158.79 No
Group Import & Export Corporation.
Fujian Provincial Cereals, Oils & 158.79 No
Foodstuffs I&E Corp..
Putian Cannery Fujian Province....... 158.79 No
Xiamen Gulong I&E Co., Ltd........... 158.79 No
General Canned Foods Factory of 158.79 No
Zhangzhou.
Zhejiang Cereals, Oils & Foodstuffs 158.79 No
I&E Corp..
Shanghai Foodstuffs I&E Corp......... 158.79 No
Canned Goods Co. of Raoping.......... 158.79 No
PRC-wide Rate........................ 198.63 Yes
------------------------------------------------------------------------
The PRC-wide rate applies to all entries of subject merchandise
except for entries from exporters/factories that are identified
individually above.
ITC 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, within 45 days, determine
whether these imports 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, the proceeding
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 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 18, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-34704 Filed 12-30-98; 8:45 am]
BILLING CODE 3510-DS-P
