01-8524. Notice of Initiation of Antidumping Investigation: Live Processed Blue Mussels From Canada

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Initiation of Antidumping Investigation.

EFFECTIVE DATE:

April 6, 2001.

FOR FURTHER INFORMATION CONTACT:

Ron Trentham, Zev Primor and Paige Rivas at [phone], [phone] and [phone], respectively; AD/CVD Enforcement Office 4, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

Initiation of Investigation

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are references to the provisions codified at 19 CFR Part 351 (2000).

The Petition

On March 12, 2001, the Department of Commerce (the Department) received a petition filed in proper form by Great Eastern Mussel Farms Inc. (hereinafter, the petitioner). On March 20, 2001, the Department received a letter from the petitioner amending the petition. The petitioner is a mussel processor in the United States market.

In accordance with section 732(b) of the Act, the petitioner alleges that imports of live processed blue mussels from Canada are being, or are likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Act, and that such imports are materially injuring an industry in the United States.

The Department finds that the petitioner filed this petition on behalf of the domestic industry because it is an interested party as defined in section 771(9)(C) of the Act and has demonstrated sufficient industry support with respect to the antidumping investigation that it is requesting the Department to initiate (see below).

Period of Investigation

The anticipated period of investigation (POI) is April 1, 2000 through March 31, 2001.

Scope of Investigation

Imports covered by the investigation are shipments of live processed blue mussels from Canada. Included in the scope are fresh, live processed blue mussels (mytilus edulis). Processing includes, but is not limited to, purging, grading, debearding, picking, inspecting and packing. The live processed blue mussels subject to this investigation are currently classifiable under subheadings 0307.31.00 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and Customs purposes, the Department's written description of the scope of this investigation remains dispositive. See Initiation Checklist, Re: product description.

During our review of the petition, we discussed the scope with the petitioner to ensure that it accurately reflected the product for which the domestic industry is seeking relief. The petitioner agreed that the scope of the petition should be expanded to include both farmed and non-farmed mussels. See Memorandum to File: Live Blue Processed Mussels from Canada—Scope Definition (March 20, 2001). Moreover, as discussed in the preamble to the Department's regulations (62 FR 27323), we are setting aside a period for parties to raise issues regarding product coverage. The Department encourages all parties to submit such comments within 20 days from publication of this notice. Comments should be addressed to Import Administration's Central Records Unit at Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. The period of scope consultations is intended to provide the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of the preliminary determination.

Determination of Industry Support for the Petition

Section 771(4)(A) of the Act defines the “industry” as the producers of a domestic like product. Thus, to determine whether the petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The U.S. International Trade Commission (ITC), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to separate and distinct authorities. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to the law.^[1]

Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this subtitle.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation,” i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition.

In this case, we have adopted the definition of the domestic like product defined in the “Scope of Investigation” section, above. That definition was developed in consultation with the petitioner.

Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (1) At least 25 percent of the total production of the domestic like product; and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Finally, section 732(c)(4)(D) of the Act provides that, if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the administering agency shall: (i) Poll the industry or rely on other information in order to determine if there is support for the petition as required by subparagraph (A), or (ii) determine industry support using a statistically valid sampling method.

On March 28, 2001, Confederation Cove Mussel Co. Ltd. (CCMC), a Canadian mussel producer, filed a submission stating that the petitioner does not constitute 100 percent of the U.S. domestic industry. See Letter from CCMC to the Secretary of Commerce, Re: Mussels from Canada, Comments on Standing, March 28, 2001. On March 29, 2001, the petitioner submitted rebuttal comments to CCMC's comments. See Letter from the Petitioner to the Secretary in Response to CCMC, March 29, 2001. On March 30, 2001, the Government of Canada submitted comments reiterating some of the same arguments made by CCMC. See Diplomatic Note No. 0101 (March 30, 2001).

In order to estimate production for the domestic industry as defined for purposes of this case, the Department has relied upon not only the petition and amendments thereto, but also upon “other information” it obtained through research. See Determination of Industry Support for the Petition for the Initiation of the Antidumping Duty Investigation of Live Processed Blue Mussels from Canada (Industry Support Memorandum), April 2, 2001, and Initiation Checklist Re: Industry Support.

Based on a review of these sources of information and all submitted comments, we have determined that the petitioner accounts for at least 50 percent of production by the domestic industry. Furthermore, no domestic interested party has expressed opposition to the petition. Thus, pursuant to section 734(c)(4)(A), there is adequate support for the petition.

Accordingly, we determine that the petition is filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.

Export Price and Normal Value

The following are descriptions of the allegations of sales at less than fair value upon which the Department based its decision to initiate these investigations. The sources of data for the deductions and adjustments relating to home market price, and U.S. price are detailed in the Initiation Checklist. Should the need arise to use any of this information as facts available under section 776 of the Act in our preliminary or final determinations, we may re-examine the information and revise the margin calculations, if appropriate.

Export Price

The petitioner identified the following Canadian companies as processors of blue mussels in its petition: Atlantic Mussels Growers, Atlantic Shellfish, PEI Mussel King, Prince Edward Aqua Farms, and CCMC. The petitioner based export prices (EPs) on actual prices between the Canadian processors and U.S. wholesalers. The prices were obtained from U.S. wholesalers by the petitioner. Where appropriate, the petitioner made adjustments for movement and packing expenses. The movement expenses figures were based on an invoice from a Canadian mussels producer to an unaffiliated U.S. customer and a price quote from an independent freight company delivering subject merchandise to both U.S. and Canadian markets. Further, the petitioner stated that it based packing expenses on its own cost experience because the packing materials are virtually identical in both markets. To support the accuracy of this information the petitioner provided an affidavit from the company official that was responsible for collecting the information.

Additionally, the Department conducted its own research in order to determine the average entered value of live blue mussels from Canada. Based on U.S. Customs data, we determined that the average entered value of blue mussels from Canada during the POI was 0.73 dollar per pound of mussels (unadjusted for freight and packing). This figure was within the range of petitioner's alleged U.S. prices. We also confirmed that figure through a publication, SeafoodReport, which tracks U.S. imports for a variety of shellfish. See Memorandum to File: Live Processed Mussels from Canad—Average Price of Imported Mussels from Canada (March 29, 2001).

Normal Value

The petitioner based normal value (NV) on actual prices from the five major processors named above to unaffiliated Canadian wholesalers. The NVs were obtained by the petitioner from Canadian wholesalers and adjusted for domestic freight and packing charges. The freight expenses were based on a price quote provided by an independent freight company which provides freight services to both U.S. and Canadian markets. Packing expenses were based on the petitioner's own cost experience. To support the accuracy of this information, the petitioner provided an affidavit from the company official that was responsible for collecting the information.

Fair Value Comparisons

Based upon the comparison of NV to EP, the petitioner calculated estimated dumping margins ranging from 15 to 67 percent. Thus, based on the data provided by the petitioner, there is reason to believe that imports of live processed blue mussels from Canada are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

The petition alleges that the U.S. industry producing the domestic like product is being materially injured, or is threatened with material injury, by reason of the individual and cumulated imports of the subject merchandise sold at less than NV. The petitioner contends that the industry's injured condition is evident in the declining trends in net operating profits, net sales volumes, profit to sales ratios, and capacity utilization. The allegations of injury and causation are supported by relevant evidence including the U.S. Customs' import statistics and the SeafoodReport which indicate that imports of blue mussels from Canada in 2000 grew by at least 30 percent compared to the prior year. See Seafood Report, at vol. 5, numbers 9 and 12 (attached to the petition). According to the petitioner, the trend of Canadian imports registered similar growth rates in the past four years, while during the same period petitioner's sales have been declining. We have assessed the allegations and supporting evidence regarding material injury and causation, and have determined that these allegations are properly supported by accurate and adequate evidence and meet the statutory requirements for initiation (see Initiation Checklist at Attachment Re: Material Injury).

Initiation of Antidumping Investigation

Based upon our examination of the petition on live processed blue mussels, and the petitioner's response to our supplemental questionnaire clarifying the petition, as well as our conversations with industry experts who provided information concerning various aspects of the petition, we have found that they meet the requirements of section 732 of the Act. See Industry Support Memorandum. Therefore, we are initiating an antidumping duty investigation to determine whether imports of live processed blue mussels from Canada are being, or are likely to be, sold in the United States at less than fair value. Unless this deadline is extended, we will make our preliminary determination no later than 140 days after the date of this initiation.

Distribution of Copies of the Petitions

In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of this petition has been provided to the representatives of the Government of Canada. We will attempt to provide a copy of the public version to each exporter named in the petition, as appropriate.

International Trade Commission Notification

We have notified the ITC of our initiation, as required by section 732(d) of the Act.

Preliminary Determinations by the ITC

The ITC will determine, no later than April 26, 2001, whether there is a reasonable indication that imports of live processed blue mussels from Canada are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination will result in the investigation being terminated; otherwise, this investigation will proceed according to statutory and regulatory time limits.

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

Dated: April 2, 2001.

Bernard T. Carreau,

Deputy Assistant Secretary, Import Administration.

Footnotes

1.  See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 639, 642-44 (CIT 1988); High Information Content Flat Panel Displays and Display Glass from Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991).