2011-8323. Garlic From the People's Republic of China: Rescission of Antidumping Duty New Shipper Reviews

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On November 12, 2010, the Department of Commerce (Department) published preliminary results for the new shipper reviews (NSRs) of fresh garlic from the People's Republic of China (PRC) covering the period of review (POR) November 1, 2008, through October 31, 2009. See Fresh Garlic From the People's Republic of China: Preliminary Results of New Shipper Reviews and Preliminary Rescission, in Part, 75 FR 69415 (November 12, 2010) (Preliminary Results). The reviews covered three respondents: Jinxiang Chengda Imp & Exp Co., Ltd. (Chengda), Zhengzhou Huachao Industrial Co., Ltd. (Huachao), and Jinxiang Yuanxin Imp & Exp Co., Ltd. (Yuanxin).

As discussed below, we preliminarily found that Yuanxin's and Huachao's sales were bona fide and that these sales were made in the United States at prices below normal value (NV). In addition, we found Chengda's sales to be not bona fide, and announced our preliminary intent to rescind Chengda's new shipper review. For the final results of this review, we are finding the sales of all three respondents, Chengda, Huachao, and Yuanxin, to be not bona fide. Therefore, because there were no other shipments or entries by these three companies during the POR, we are rescinding these new shipper reviews.

DATES:

Effective Date: April 7, 2011.

FOR FURTHER INFORMATION CONTACT:

Scott Lindsay, AD/CVD Operations, Office 6, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone].

SUPPLEMENTARY INFORMATION:

Background

Since the Preliminary Results, the following events have occurred. On December 2, 2010, surrogate value information was placed on the record by Huachao. On December 30, 2010, the Department extended the time limit for the final results of this new shipper review. On January 26, 2011, the Department issued a supplemental questionnaire to Yuanxin. On January 27, 2011, the Department issued a supplemental questionnaire to Huachao. On February 4, 2011, the Department issued a letter to Yuanxin concerning the business proprietary designation of the company's Web site address.

On February 4, 2011, the Department issued the briefing schedule for briefs addressing all issues except the bona fides of Huachao's and Yuanxin's respective sales. On February 8, 2011, Yuanxin requested an extension to the deadlines as established in the February 4, 2011 briefing schedule. On February 9, 2011, the Department issued an extension of this briefing schedule, with briefs due February 17, 2011, and rebuttal briefs due February 22, 2011. On February 14, 2011, the Department placed information related to Jinxiang Hejia Co., Ltd.'s NSR sale to the United States, from the 2007/2008 NSR, on the record of this review. Huachao and Yuanxin submitted supplemental questionnaire responses on February 14, 2011. Yuanxin also submitted its case brief on February 14, 2011. On February 15, 2011, the Department placed memoranda on the record of this review that included information related to Yuanxin's domain name registration and the corporate records of the importers and customers of each of the exporters involved in this review. On February 17, 2011, Huachao and Chengda submitted case briefs.

On February 18, 2011, the Department issued the briefing schedule for briefs addressing only the bona fides of Huachao's and Yuanxin's respective sales. Additionally, on February 18, 2011, the Fresh Garlic Producers Association and its individual members (Christopher Ranch L.L.C., the Garlic Company, Valley Garlic, and Vessey and Company, Inc.) (collectively, Petitioners) requested an extension of the February 22, 2011 deadline for rebuttal briefs not related to the bona fides of Huachao's and Yuanxin's respective sales. On February 22, 2011, the Department granted Petitioners' February 18, 2011 request for an extension to the rebuttal briefs deadline, the new deadline becoming February 25, 2011. On February 24, 2011, Petitioners submitted a rebuttal to Huachao's February 14, 2011 supplemental questionnaire response. On February 25, 2011, Petitioners submitted rebuttal briefs for all three respondents. Also, on February 25, 2011, Petitioners submitted a brief regarding whether Huachao's POR sale was bona fide.

On March 1, 2011, Huachao requested an extension to the deadline of the bona fides rebuttal briefs as established in the Department's February 18, 2011 briefing schedule. On March 2, 2011, the Department granted Huachao's March 1, 2011 request for an extension, the new deadline for bona fides rebuttal briefs becoming March 7, 2011. On March 3, 2011, Huachao submitted a letter requesting that the Department reject Petitioners' February 24, 2011 submission on the grounds that it contained untimely new factual information. Further, Huachao argued that Petitioners' February 25, 2011 case brief also be rejected, as it relies upon information contained in the February 24, 2011 submission. The information in question involves the nature of the United States garlic market and the appropriate benchmark to be used in determining the bona fide nature of Huachao's sale. The Department found this information to be relevant to the information provided by Huachao in its supplemental response, which addressed Department questions regarding whether Huachao's sale was bona fide. Thus, the Department concluded that Petitioners' submission was timely rebuttal information allowed for under 19 CFR 351.301(c). Finally, on March 7, 2011, Huachao submitted a rebuttal brief to the February 25, 2011 case brief submitted by Petitioners regarding the bona fides of its sale.

On March 16, 2011, Department officials met with Chengda's counsel to discuss issues related to the case briefs. See Memorandum for the File from Lingjun Wang, Case Analyst, AD/CVD Operations, Office 6, “Meeting with Counsel for the Jinxiang Chengda Import & Export Co., Ltd.: New Shipper Review of the Antidumping Duty Order on Fresh Garlic from China” (March 16, 2011). On March 17, 2011, Department officials met with Petitioners' counsel to discuss issues related to the case briefs. See Memorandum for the File from David Lindgren, Case Analyst, AD/CVD Operations, Office 6, “Meeting with Counsel for the Petitioners: New Shipper Review of the Antidumping Duty Order on Fresh Garlic from China” (March 17, 2011).

Scope of the Order

The products covered by the order are all grades of garlic, whole or separated into constituent cloves, whether or not peeled, fresh, chilled, frozen, provisionally preserved, or packed in water or other neutral substance, but not prepared or preserved by the addition of other ingredients or heat processing. The differences between grades are based on color, size, sheathing, and level of decay. The scope of this order does not include the following: (a) garlic that has been mechanically harvested and that is primarily, but not exclusively, destined for non-fresh use; or (b) garlic that has been specially prepared and cultivated prior to planting and then harvested and otherwise prepared for use as seed. The subject merchandise is used principally as a food product and for seasoning. The subject garlic is currently classifiable under subheadings 0703.20.0010, 0703.20.0020, 0703.20.0090, 0710.80.7060, 0710.80.9750, 0711.90.6000, and 2005.90.9700 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of the order is dispositive. In order to be excluded from the order, garlic entered under the HTSUS subheadings listed above that is (1) mechanically harvested and primarily, but not exclusively, destined for non-fresh use or (2) specially prepared and cultivated prior to planting and then harvested and otherwise prepared for use as seed must be accompanied by declarations to CBP to that effect.

Analyses of Comments Received

In addition to commenting on the bona fides of Chengda's and Huachao's U.S. sales (see Bona Fides Analysis section below), the parties addressed, in their case and rebuttal briefs, three surrogate valuation issues: (1) What to use as the surrogate value for raw garlic bulbs; (2) which financial statements to use as the surrogate financial ratios; and (3) how to properly calculate the wage rate. Since, as discussed below, we are rescinding these reviews, the Department need not address the parties' comments on these issues pertaining to the calculation of the dumping margin.

Bona Fides Analysis

In conducting an NSR, the Department examines price, quantity, and other circumstances associated with the sale to determine if the sale was based on normal commercial considerations and presents an accurate representation of the company's normal business practices, and provides a future indicator of its future selling practice. See Shandong Chenhe Int'l Trading Co. v. United States, No. 08-00373, slip op. at 19 (Ct. Int'l Trade Nov. 22, 2010); see also Tianjin Tiancheng Pharmaceutical Co., Ltd. v. United States, 366 F. Supp. 2d 1246, 1250 (Ct. Int'l Trade 2005); and Hebei New Donghua Amino Acid Co., Ltd. v. United States, 374 F. Supp. 2d 1333, 1342 (Ct. Int'l Trade 2005). If the Department determines that the price was not based on normal commercial considerations or is atypical of the respondent's normal business practices, including other sales of comparable merchandise, the sale may be considered not bona fide, and, as such, cannot serve as a reasonable or reliable basis for calculating a dumping margin.

In the Preliminary Results, the Department found Chengda's POR sales to be not bona fide. The Department found that Huachao's POR sale, however, was made on a bona fide basis, noting that it would continue to examine all factors relating to the bona fides of that sale given the Department's concerns regarding the price, quantity, and payment terms of the sale. Likewise, the Department found that Yuanxin's POR sale was also made on a bona fide basis, noting that it would continue to examine the bona fides of the sale given the Department's concerns regarding the price, quantity, and atypicality of the product and transaction. Based on our continuing analyses of all aspects of the parties' sales, summarized below, and our analyses of supplemental questionnaire responses, of information and documentation from a prior NSR placed on the record of this review, and of comments made by interested parties, the Department continues to find that Chengda's sales are not bona fide, and now finds that the sales of Yuanxin and Huachao are not bona fide as well. As such, the sales made by all three parties do not provide reasonable or reliable bases for calculating dumping margins.

Chengda

For the Preliminary Results, the Department analyzed the bona fides of Chengda's sales and preliminarily found Chengda's sales to the United States to be not bona fide. See “Bona Fide Nature of the Sale in the Antidumping Duty New Shipper Review of Fresh Garlic from the People's Republic of China (PRC): Jinxiang Chengda Imp & Exp Co., Ltd.” (November 1, 2010). Since the Preliminary Results, both Chengda and Petitioners have submitted arguments regarding whether Chengda's POR shipment was bona fide. Significant portions of these arguments involve discussion of business proprietary information (BPI). Therefore, the Department's summaries of, and positions on, these arguments, in addition to our full analysis of the bona fides of Chengda's sales, are included in the memorandum, “Final Results of Antidumping Duty New Shipper Review of Fresh Garlic from the People's Republic of China: Bona Fides Analysis of Chengda Imp & Exp Co., Ltd.,” issued concurrently with this Federal Register notice. Based on the Department's complete analysis of all the information on the record of this review regarding the bona fides of Chengda's NSR sales, the Department continues to find Chengda's sales not bona fide because (1) Chengda's sale prices are so high that they are atypical, aberrational, commercially unreasonable, and not indicative of future sales, and (2) Chengda's sales quantities are too small to reflect normal commercial practices of the garlic industry.

Huachao

For the Preliminary Results, the Department analyzed the bona fides of Huachao's sale and preliminarily found Huachao's sale to the United States to be bona fide, noting that we would continue to examine all factors relating to the bona fides of that sale given the Department's concerns regarding the price, quantity, and payment terms of the sale. See “Bona Fide Nature of the Sale in the Antidumping Duty New Shipper Review of Fresh Garlic from the People's Republic of China (PRC): Zhengzhou Huachao Industrial Co., Ltd.” (November 1, 2010). After the Preliminary Results, the Department issued a supplemental questionnaire to Huachao. In addition, Petitioners filed a case brief and Huachao filed a rebuttal brief on whether Huachao's sale should be considered bona fide. Significant portions of these arguments involve discussion of BPI. Therefore, the Department's summaries of, and positions on, these arguments, in addition to our full analysis of the bona fides of Huachao's sale, are included in the memorandum “Final Results of Antidumping Duty New Shipper Review of Fresh Garlic from the People's Republic of China: Bona Fides Analysis of Zhengzhou Huachao Industrial Co., Ltd.,” issued concurrently with this Federal Register notice. Based on the Department's complete analysis of all the information on the record of this review regarding the bona fides of Huachao's NSR sale, the Department finds Huachao's sale to be not bona fide because (1) Huachao's sale price is so high as to be commercially unreasonable and not indicative of the garlic industry, (2) Huachao's sales quantity is not commercially reasonable, (3) Huachao's function as the processor of its U.S. sale is atypical of its normal business practice, and (4) there are inconsistencies in the information provided by Huachao's customer in the United States, raising doubts about Huachao's description of the sale's structure.

Yuanxin

In the Preliminary Results, the Department found that Yuanxin's POR sale was made on a bona fide basis, noting that it would continue to examine the bona fides of the sale given the Department's concerns regarding the price, quantity, and atypical nature of the product and transaction. See “Bona Fide Nature of the Sale in the Antidumping Duty New Shipper Review of Fresh Garlic from the People's Republic of China (PRC): Jinxiang Yuanxin Imp & Exp Co., Ltd.” (November 1, 2010). As noted in the background section, after the Preliminary Results, the Department issued a supplemental questionnaire to Yuanxin. In addition, new information with respect to the bona fides of Yuanxin's sale was placed on the record of this review. See the Department's February 14, 2011 memorandum to the file regarding Jinxiang Hejia Co., Ltd.'s NSR and Yuanxin's February 14, 2011 supplemental questionnaire response; see also the Department's February 15, 2011 memorandum to the file regarding Yuanxin's domain name registration and the Department's February 15, 2011 memorandum to the file regarding the corporate records of the importers and customers of each of the exporters involved in this review.

Significant portions of the issues involved in Yuanxin's bona fides include BPI. Therefore, we have addressed all of the arguments in a separate memorandum as part of our full bona fides analysis. See “Final Results of Antidumping Duty New Shipper Review of Fresh Garlic from the People's Republic of China: Bona Fides Analysis of Jinxiang Yuanxin Imp & Exp Co., Ltd.,” issued concurrently with this Federal Register notice. Based on the Department's complete analysis of all the information on the record of this review regarding the bona fides of Yuanxin's NSR sale, the Department finds Yuanxin's sale to be not bona fide because (1) Yuanxin's sale price is so high as to be commercially unreasonable and not indicative of future sales, (2) Yuanxin's sales quantity is not representative of the garlic industry, and (3) the structure of Yuanxin's U.S. sale is of an unusual nature.

Rescission of New Shipper Reviews

For the foregoing reasons, the Department finds that the sales of all three new shippers are not bona fide and that these sales do not provide a reasonable or reliable basis for calculating a dumping margin. Because these non-bona fide sales were the only sales of subject merchandise during the POR, the Department is rescinding all three new shipper reviews in their entirety.

Notification to Importers

The Department will notify U.S. Customs and Border Protection that bonding is no longer permitted to fulfill security requirements for shipments by Chengda, Huachao, and Yuanxin of fresh garlic from the PRC entered, or withdrawn from warehouse, for consumption in the United States on or after the publication of this rescission notice in the Federal Register, and that a cash deposit of $4.71 per kilogram should be collected for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of this notice, as provided for by section 751(a)(2)(C) of the Act, by Chengda, Huachao, and Yuanxin.

This notice is the only reminder to parties subject to the administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under the APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

These new shipper reviews and notice are issued and published in accordance with sections 751(a)(2)(B) and 777(i) of the Act and 19 CFR 351.214.

Dated: March 31, 2011.

Ronald K. Lorentzen,

Deputy Assistant Secretary for Import Administration.