04-13494. Fresh Garlic From the People's Republic of China: Final Results of Antidumping Duty Administrative Review and New Shipper Reviews

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On December 10, 2003, the Department of Commerce published the preliminary results of the administrative review and new shipper reviews of the antidumping duty order on fresh garlic from the People's Republic of China. The period of review is November 1, 2001, through October 31, 2002. The reviews cover six manufacturers/exporters.

We invited interested parties to comment on our preliminary results. Based on our analysis of the comments received, we have made certain changes to our calculations. The final dumping margins for these reviews are listed in the “Final Results of the Reviews” section below.

EFFECTIVE DATE:

June 16, 2004.

FOR FURTHER INFORMATION CONTACT:

Minoo Hatten or Mark Ross, Office of Antidumping/Countervailing Duty Enforcement 3, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On December 10, 2003, the Department published the preliminary results of the administrative review and new shipper reviews of the antidumping duty order on fresh garlic from the People's Republic of China. See Fresh Garlic from the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review and New Shipper Reviews, 68 FR 68868 (December 10, 2003) (Preliminary Results). We invited parties to comment on our preliminary results. With respect to the preliminary results of the administrative review, we received comments from the petitioners and one respondent, Jinan Yipin Corporation, Ltd. (Jinan Yipin), and rebuttal comments from the petitioners, Jinan Yipin, and Shandong Heze International Trade and Developing Company (Shangdong Heze). With respect to the preliminary results of the new shipper reviews, we received comments from the petitioners and the respondent Zhengzhou Harmoni Spice Co., Ltd. (Harmoni), and rebuttal comments from the petitioners, Harmoni, and Jining Trans-High Trading Co., Ltd. (Trans-High).

On February 3, 2004, we published a notice extending the time limit for the final results to May 17, 2004. See Fresh Garlic From the People's Republic of China: Notice of Extension of Time Limit for the Final Results of Antidumping Duty Administrative and New Shipper Reviews, 69 FR 5132 (February 3, 2004). On April 23, 2004, the petitioners submitted new factual information concerning one of the respondents. While normally we would not consider accepting new factual information at such a late stage in the review, in this situation, given the nature of the allegations within the submission, we considered it appropriate to accept the information. See April 30, 2004, memorandum from Mark Ross, Program Manager, to Laurie Parkhill, Office Director. Because we required additional time to evaluate this new information and a number of other complex factual and legal questions that related directly to the assignment of antidumping duty margins in this case, on May 13, 2004, we published a notice extending the time limit for the final results to June 7, 2004. See Fresh Garlic From the People's Republic of China: Notice of Extension of Time Limit for the Final Results of Antidumping Duty Administrative and New Shipper Reviews, 69 FR 26548 (May 13, 2004).

We have conducted these reviews in accordance with section 751 of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.213 and 19 CFR 351.214 (2001).

Scope of the Order

The products covered by this antidumping duty 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 this order is dispositive. In order to be excluded from the antidumping duty 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 the U.S. Customs and Border Protection (CBP) to that effect.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties in these reviews are addressed in the Issues and Decision Memorandum, dated June 7, 2004, which is hereby adopted by this notice (Decision Memo). A list of the issues which parties raised and to which we respond in the Decision Memo is attached to this notice as an Appendix. The Decision Memo is a public document and is on file in the Central Records Unit (CRU), Main Commerce Building, Room B-099, and is accessible on the Web at www.ia.ita.doc.gov. The paper copy and electronic version of the memorandum are identical in content.

Separate Rates

In our preliminary results, we determined that Jinan Yipin, Shandong Heze, Trans-High, and Harmoni met the criteria for the application of a separate rate. We determined that Top Pearl Ltd. (Top Pearl) and Wo Hing (H.K.) Trading Co. (Wo Hing) did not qualify for a separate rate and, therefore, are deemed to be covered by the PRC-entity rate. See Preliminary Results, 68 FR at 68869. We have not received any information since the issuance of the Preliminary Results that provides a basis for reconsideration of these determinations.

The PRC-Wide Rate and Use of Adverse Facts Available

Top Pearl and Wo Hing

In the Preliminary Results, we determined that the PRC entity (including Top Pearl and Wo Hing) did not respond to the questionnaire and, therefore, failed to cooperate to the best of its ability in the administrative review. Accordingly, we determined that the use of an adverse inference is appropriate pursuant to sections 776(a)(2)(A) and (B) and 776(b) of the Act. In accordance with the Department's practice, as adverse facts available, we assigned to the PRC entity (including Top Pearl and Wo Hing) the PRC-wide rate of 376.67 percent. For detailed information on the Department's corroboration of this rate see the Preliminary Results at 68870.

Jinan Yipin

With respect to Jinan Yipin, in the Preliminary Results, we determined that the use of partial adverse facts available was warranted in accordance with sections 776(a)(2)(A) and (C) and 776(b) of the Act to calculate the dumping margin because the respondent did not provide information critical to the calculation of an antidumping duty margin and impeded the conduct of the administrative review by not providing correct and thorough responses to our questions, before, during, and following verification. See Preliminary Results, 68 FR at 68871. These inadequacies related to two issues: (1) Whether Jinan Yipin reported some sales to an affiliated party as unaffiliated-party sales and (2) whether Jinan Yipin captured all of its indirect selling expenses on U.S. sales in its response. Jinan Yipin and its U.S. affiliate, American Yipin, did not act to the best of their abilities in providing the information necessary to conduct this administrative review with respect to these issues. To address the first inadequacy, we selected a rate of 376.67 percent to apply as adverse facts available to Jinan Yipin's sales to an affiliated customer that it reported as unaffiliated-party sales transactions. With respect to Jinan Yipin's failure to provide critical information for the calculation of U.S. indirect selling expenses, as partial adverse facts available we relied on a primary source of information. For a detailed discussion of the application of partial adverse facts available, please see the memorandum from Laurie Parkhill, Office Director, AD/CVD Enforcement 3, to Jeffrey May, Deputy Assistant Secretary, Import Administration, dated December 1, 2003 (Jinan Yipin Facts-Available Memorandum).

We have considered the argument raised by Jinan Yipin and the petitioners in response to our preliminary determination and have addressed them in the Decision Memo. Based on our analysis of the parties' comments and for the reasons outlined in the Preliminary Results, we have not changed our determination with respect to the use of partial adverse facts available. In summary, the Department has applied adverse facts available to the sales to Jinan Yipin's affiliated customer and to the indirect selling expenses because Jinan Yipin failed to identify affiliated parties and, in particular, its affiliations to Houston Seafood and Bayou Dock in its questionnaire responses. Pursuant to sections 776(a)(2)(A) and (C) and 776(b) of the Act, the decision to apply partial adverse fact available is in response to all of Jinan Yipin's failures to cooperate to the best of its ability in providing accurate, responsive information on the record with respect to the issue of affiliated parties. For detailed information about the Department's corroboration of the information used as adverse facts available see the Preliminary Results at 68871-2.

Changes Since the Preliminary Results

Based on our analysis of information on the record, we have made certain changes to the margin calculations for all respondents. In addition, based on the comments received from the interested parties and changes due to verification, we have made additional revisions to the margin calculations for Harmoni, Shandong Heze, and Jinan Yipin for the final results. Company-specific changes are discussed below.

Valuation of Garlic Seed

As we discuss in response to Comment 1 of the Decision Memorandum, for the final results of these reviews we have narrowed the pricing information upon which we have relied for valuation of garlic seed to the National Horticultural Research and Development Foundation prices for the Agrifound Parvati and Yamuna Safed-3 varieties. We selected the pricing information for these varieties because, of all the varieties for which information was submitted, these two varieties match most closely the subject merchandise in terms of bulb diameter and number of cloves per bulb. This narrowing of price selection did not change the surrogate value of seed for the final results, since all of the selected prices for the Preliminary Results were identical.

Valuation of Insecticide

For insecticide, we were able to calculate a surrogate value more specific to Phoxim, the type of insecticide used by the respondents. For a detailed discussion see Decision Memorandum at Comment 4 and the memorandum from Katja Kravetsky to The File titled “Factors Valuations for the Final Results of the Administrative Review and New Shipper Reviews” dated June 7, 2004 (Final Results FOP Memorandum).

Valuation of Labor

For the final results, consistent with 19 CFR 351.408(c)(3), we used the PRC regression-based wage rate for 2001 that appears on the Import Administration Web site (http://www.ia.ita.doc.gov/​wages/​01wages/​01wages.html). The source of the wage-rate data is the International Labor Organization's Yearbook of Labour Statistics 2002 (Geneva, 2002), chapter 5B: Wages in Manufacturing. For the Preliminary Results the source of the wage-rate data was the International Labor Organization's Yearbook of Labour Statistics 2001 (Geneva, 2001), chapter 5B: Wages in Manufacturing. The revised rate is slightly higher that the rate used for the Preliminary Results.

Ocean Freight

For ocean freight, we used a ranged public rate reported by a respondent in the 11/01/02-04/30/03 new shipper review and used in Fresh Garlic from the People's Republic of China: Preliminary Results of Antidumping New Shipper Reviews, 69 FR 24123 (May 3, 2004). Because this is a rate actually incurred and paid for in a market-economy currency by a respondent in a review of fresh garlic from the PRC, we have determined that it is the most accurate rate available and we selected the public ranged figure as the surrogate value for shipments to the west coast. We adjusted this rate to arrive at a surrogate value for shipments to the east coast. For a detailed discussion, see Decision Memo at Comment 5 and Final Results.

FOP Memorandum

Application of Surrogate Financial Ratios

Based on comments received from respondents, we re-examined the annual report of Parry Agro Industries, Ltd. (Parry Agro) (the Indian tea producer we selected for surrogate financial information), and the costs that we obtained from this company's income statement and included in the numerator and denominator of the surrogate financial ratio calculations. We were not able to determine whether Parry Agro performed packing activities associated with the tea it produced as its financial information does not indicate that it incurred any packing expenses. Furthermore, in the event Parry Agro did incur packing expenses, we do not know the extent to which such expenses are included in the values we obtained from its income statement for purposes of calculating the surrogate financial ratios because packing expenses are not included as a line item or distinguished or described in the income statement in any way. Accordingly, for the final results of these reviews, in calculating the amount of overhead, selling, general and administrative expenses (SG&A), and profit included in the cost of production, we have determined not to apply the surrogate financial ratios to production costs that include packing expenses. As in the Preliminary Results, however, we have calculated separate surrogate values for materials and labor associated directly with packing fresh garlic from the PRC and added these packing expenses to the calculation of normal value. For a more detailed discussion of this issue see Decision Memo at Comment 6.

Valuation of Electricity

For the final results of these reviews, we valued electricity consumption based on the respondents' reported use of electricity unrelated to obtaining water (e.g., for cold storage located at the production/processing facility). We applied the usage figures reported by the respondents to a surrogate value for electricity that we obtained from the International Energy Agency's Energy Prices & Taxes: Quarterly Statistics (Third Quarter, 2003). We used this same methodology in the most recently completed preliminary results of the antidumping duty new shipper reviews covering the period November 1, 2002, through April 30, 2003. See memorandum from Katja Kravetsky to The File titled “Factors Valuations for the Preliminary Results of the New Shipper Reviews,” dated April 26, 2004 at pages 5, 6, and 9.

We decided that this approach to the valuation of electricity is appropriate because it helps ensure that we capture the significant electricity costs incurred by placing the subject merchandise in cold storage and other activities that consume electricity that are specific to the production of subject merchandise (e.g., fans used for drying and the strapping machine used for packing). Specifically, based on our experience in analyzing producers and exporters of fresh garlic from the PRC, we know that placing the subject merchandise in cold storage for long periods of time is not uncommon. Moreover, this activity consumes a significant amount of electricity.

Because we are valuing electricity consumption in this manner, to avoid double-counting electricity costs, we removed the line item for “Power and Fuel” costs from the numerator of the surrogate financial ratio for SG&A. Further, because we removed the electricity costs from the calculation of the surrogate financial ratios, in calculating the amount of overhead, SG&A, and profit included in the cost of production, we have determined not to apply the surrogate financial ratios to production costs that include electricity costs. Our revised calculation of the surrogate financial ratio for SG&A appears in attachment 5 of the Final Results FOP Memorandum.

Cold Storage

As discussed above, significant electricity costs can be attributed to the placement of the subject merchandise in cold storage. We examined the respondents' cold-storage activities during the verifications we conducted for these reviews. See, e.g., page 18 of the January 5, 2004, memorandum to the file titled “Verification of the Response of Shandong Heze International Trade and Developing Company in the Antidumping Duty Administrative Review of Fresh Garlic From the People's Republic of China”. For the final results of these reviews, we valued cold storage at the production facility using an electricity surrogate value and added it to the normal value. When the subject merchandise was put in cold storage before it was processed (or when it was semi-processed) at a facility away from the production/processing facility prior to shipment, we valued cold storage using a surrogate value for cold storage, which includes electricity expenses and added it to the normal value. When the garlic was fully processed and packed, and placed into a cold-storage facility not located at the production/processing facility prior to the date of shipment from PRC, we valued it using a cold-storage surrogate value and treated it as a movement expense which we deducted from the U.S. price.

Harmoni

As a result of clerical-error comments submitted by the petitioners regarding the preliminary margin calculation for Harmoni, we made certain changes to our final margin calculation. For a detailed discussion, see the final analysis memorandum for Harmoni dated June 7, 2004.

Shandong Heze

We made changes to our margin calculations for Shandong Heze to account for pre-verification corrections and verification findings. For a detailed discussion, see the final analysis memorandum for Shandong Heze dated June 7, 2004.

Jinan Yipin

We made changes to our margin calculations for Jinan Yipin to account for pre-verification corrections and verification findings. For a detailed discussion, see the final analysis memorandum for Jinan Yipin dated June 7, 2004.

Final Results of the Reviews

For the administrative review, we determine that the following dumping margins exist for the period November 1, 2001, through October 31, 2002:

Exporter	Weighted-average percentage margin
Jinan Yipin Corporation, Ltd	115.81
Shandong Heze International Trade and Developing Company	43.30
PRC-wide rate (including Top Pearl and Wo Hing)	376.67

For the new shipper reviews we determine that the following dumping margins exist for the period November 1, 2001, through October 31, 2002:

Producer and exporter combinations	Weighted-average percentage margin
Grown By Jining Yun Feng Agriculture Products Co., Ltd. and Exported By Jining Trans-High Trading Co., Ltd	0.00
Grown and Exported By Zhengzhou Harmoni Spice Co., Ltd	0.00

Duty Assessment and Cash-Deposit Requirements

The Department will determine, and CBP shall assess, antidumping duties on all appropriate entries. The Department will issue appropriate assessment instructions directly to CBP within 15 days of publication of the final results of these reviews. Further, the following cash-deposit requirements will be effective upon publication of the final results of the administrative and new shipper reviews for shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results, as provided by section 751(a)(2)(C) of the Act: (1) For subject merchandise exported by Jinan Yipin or Shangdong Heze, grown by Jining Yun Feng Agriculture Products Co., Ltd., and exported by Trans-High, or grown and exported by Zhengzhou Harmoni Spice Co., Ltd., the cash-deposit rate will be that established in these final results of reviews; (2) for all other subject merchandise exported by Trans-High or Harmoni but not grown by Jining Yun Feng Agriculture Products Co., Ltd., or Zhengzhou Harmoni Spice Co., Ltd., respectively, the cash-deposit rate will be the PRC-countrywide rate, which is 376.67 percent; (3) for all other PRC exporters of subject merchandise which have not been found to be entitled to a separate rate, the cash-deposit rate will be the PRC-wide rate of 376.67 percent; (4) for all non-PRC exporters of subject merchandise, the cash-deposit rate will be the rate applicable to the PRC supplier of that exporter. These deposit requirements shall remain in effect until publication of the final results of the next administrative review.

Notification of Interested Parties

This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during the review period. Pursuant to 19 CFR 351.402(f)(3) failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.

This notice also serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO as explained in the administrative protective order itself. Timely written notification of the return/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 final results of administrative and new shipper reviews and notice are issued and published in accordance with sections 751(a)(2)(B)(iv), 751(a)(3), and 777(i) of the Act.

Dated: June 7, 2004.

James J. Jochum,

Assistant Secretary for Import Administration.

Appendix

Decision Memorandum

1. Valuation of Garlic Seed

2. Valuation of Water

3. Valuation of Cartons

4. Valuation of Insecticide

5. Valuation of Ocean Freight

6. Application of Surrogate Financial Ratios

7. Selection of Surrogate Financial Information

8. Factor Usage Rates for Production of Subject Merchandise

9. Comments With Respect to Shandong Heze

10. Comments With Respect to Harmoni

11. Comments With Respect to Jinan Yipin