01-16298. Initiation of Antidumping Duty Investigation: IQF Red Raspberries from Chile

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Initiation of Antidumping Duty Investigation.

EFFECTIVE DATE:

June 28, 2001.

FOR FURTHER INFORMATION CONTACT:

Craig W. Matney or Jennifer D. Jones at [phone] and [phone], respectively; 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 of Commerce's (the Department's) regulations are references to the provisions codified at 19 CFR part 351 (April 2000).

The Petition

On May 31, 2001, the Department received a petition filed in proper form by the IQF Red Raspberry Fair Trade Committee (hereinafter “the petitioner”). The Department received information supplementing the petition throughout the initiation period.

In accordance with section 732(b) of the Act, the petitioner alleges that imports of IQF red raspberries from Chile 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 and its members filed this petition on behalf of the domestic industry because it is an interested party as defined in section 771(9)(C), (E) and (G) of the Act and it has demonstrated sufficient industry support with respect to the antidumping investigation that it is requesting the Department to initiate (see the Industry Support section, below).

Scope of Investigation

The products covered by this petition are imports of individually quick frozen (IQF) whole or broken red raspberries from Chile, with or without the addition of sugar or syrup, regardless of variety, grade, size or horticulture method (e.g., organic or not), the size of the container in which packed, or the method of packing. The scope of the petition excludes fresh red raspberries and block frozen red raspberries (i.e., puree, straight pack, juice stock, and juice concentrate).

The merchandise subject to this investigation is classifiable under 0811.20.2020 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheading is provided for convenience and customs purposes, the written description of the merchandise under investigation is dispositive.

During our review of the petition, we discussed the scope with the petitioner to ensure that it accurately reflects the product for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the Department's regulations (see Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27295, 27323 (May 19, 1997)), 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 calendar days of 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 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.

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 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 authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the domestic 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.

The domestic like product referred to in the petition is the single domestic like product defined in the “Scope of Investigations” section above. No party has commented on the petition's definition of the domestic like product, and there is nothing on the record to indicate that this definition is inaccurate. The Department, therefore, has adopted the domestic like product definition set forth in the petition.

Moreover, the Department has determined that the petition contains adequate evidence of industry support; therefore, polling is unnecessary (see Initiation Checklist, dated June 20, 2001 (Initiation Checklist), at Industry Support). The petitioner indicated that there may be several additional small U.S. producers accounting for less than 10 percent of U.S. production who are not members of the IQF Red Raspberry Fair Trade Committee. We have no knowledge of any other domestic producers of IQF red raspberries. Accordingly, the Department determines that this petition is filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.

Initiation Standard for Cost Investigations

Pursuant to section 773(b) of the Act, the petitioner submitted information providing reasonable grounds to believe or suspect that sales made by Chilean producers/exporters in the comparison markets were at prices below the cost of production (COP) and, accordingly, requested that the Department initiate country-wide sales-below-COP investigations in connection with this investigation. The Statement of Administrative Action (SAA), submitted to the Congress in connection with the interpretation and application of the URAA, states that an allegation of sales below COP need not be specific to individual exporters or producers. SAA, H.R. Doc. No. 103-316 at 833 (1994). The SAA, at 833, states that “Commerce will consider allegations of below-cost sales in the aggregate for a foreign country, just as Commerce currently considers allegations of sales at less than fair value on a country-wide basis for purposes of initiating an antidumping investigation.”

Further, the SAA provides that new section 773(b)(2)(A) of the Act retains the requirement that the Department have “reasonable grounds to believe or suspect” that below-cost sales have occurred before initiating such an investigation. Reasonable grounds exist when an interested party provides specific factual information on costs and prices, observed or constructed, indicating that sales in the foreign market in question are at below-cost prices. Id. We have analyzed the country-specific allegations as described below.

Export Price and Normal Value

The data used by the petitioner to calculate U.S. price, COP and constructed value (CV) are discussed in the June 20, 2000 Initiation Checklist (Initiation Checklist) available in room B-099 of the main Commerce building. Should the need arise to use any of this information as facts available under section 776 of the Act in our preliminary or final determination, we may re-examine the information and revise the margin calculations, if appropriate.

Export Price

The petitioner based export price (EP) on the unit values for the sales made during the POI, according to Chilean export data. The per-unit prices from the Chilean export statistics are stated on an FOB, Chilean-port basis. Therefore, the petitioner did not subtract any U.S. or international movement expenses from the gross unit price. Moreover, the petitioner did not adjust EP for foreign inland freight expenses. The petitioner explained that it is not aware of any differences in such expenses between U.S. sales and the third country sales used for normal value (NV). No other deductions to the starting price were made to calculate EP.

Normal Value

Price-to-Price Comparisons

The petitioner claims that there was not a viable home market for IQF red raspberries in Chile. Therefore, the petitioner identified the largest third-country market for each of the Chilean producers used in the margin calculations.

The per-unit prices from the Chilean export statistics for each third-country market are stated on an FOB, Chilean-port basis. Therefore, the petitioner did not subtract any third-country or international movement expenses from the gross unit price. The petitioner did not adjust NV for foreign inland freight expenses or make any circumstance of sale adjustments, other than commission expenses for one exporter. The petitioner explained that it is not aware of any differences in such expenses between the third country sales used for NV and U.S. sales. For Arvalan S.A., the petitioner made a circumstance of sale adjustment to NV for commissions paid in both the U.S. and comparison markets. Also, the petitioner did not adjust for differences in packing, stating that exports to the United States and third countries are packed in the same way for the six exporters used in the petition's margin calculations.

Based on information submitted in a supplement to the petition, we also have calculated a company-specific margin for a seventh exporter. For further discussion, see the Initiation Checklist.

Based on price-to-price comparisons, calculated in accordance with section 773(a) of the Act, the estimated dumping margins for IQF red raspberries from Chile range from 0 to 10.32 percent.

Price-to-CV Comparisons

The petitioner also provided information demonstrating reasonable grounds to believe or suspect that sales of IQF red raspberries from Chile in the United Kingdom, Netherlands, France and Belgium were made at prices below the fully absorbed COP, within the meaning of section 773(b) of the Act, and requested that the Department conduct country-wide sales-below-cost investigations of such sales.

Pursuant to section 773(b)(3) of the Act, COP consists of COM; selling, general and administrative expenses; and packing. The petitioner calculated COP by adding the cost of the acquisition of the red raspberries to the cost of processing these berries into IQF red raspberries. The petitioner derived the cost of the berries from a 1999 Chilean government estimate of the cost of red raspberries during the 1999-2000 growing season and the ratio of processing costs to berry acquisition cost from a 1991 estimate from an agricultural periodical. To support the petitioner's contention that the 1991 estimate is representative of POI processing costs, a supplement to the petition provides COP information, including processing costs, from the seventh Chilean producer of the subject merchandise for a period substantially closer in time to the POI. Because processing costs in this supplement are substantially similar to the 1991 estimate, they support the 1991 information as a basis for calculating COP for the other six exporters, while also providing company-specific processing costs for the seventh exporter (see June 20, 2001 Memorandum from Susan Kuhbach to Richard Moreland). Accordingly, we have used this information, along with the raspberry acquisition costs for the 1999-2000 growing season, as the basis for initiating COP investigations.

Based upon a comparison of the prices of the foreign like product in the comparison markets to the calculated COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product in the United Kingdom, Netherlands, France and Belgium were made below the COP, within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating country-wide cost investigations for the United Kingdom, Netherlands, France and Belgium. However, if information collected during the investigation indicates that any exporter's home market is viable or the appropriate comparison market is not the United Kingdom, Netherlands, France or Belgium, a new cost allegation for that exporter or country will be required.

Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the petitioner also based NV for sales in the comparison markets on CV. The petitioner calculated CV starting with the same COP figure used to compute comparison market costs. Consistent with section 773(e)(2) of the Act, the petitioner also included in CV an amount for profit. For profit, the petitioner relied upon a publicly-available amount reported for the Chilean frozen red raspberry industry. For further discussion, see the Initiation Checklist.

Based upon the comparison of CV to EP, after adjustments by the Department, the petitioner calculated estimated dumping margins ranging from 2.73 to 61.27 percent.

Fair Value Comparisons

Based on the data provided by the petitioner, there is reason to believe that imports of IQF red raspberries 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 imports of the subject merchandise. The petitioner contends that the industry's injured condition is evident in the declining trends in net operating income, net sales volume and value, profit to sales ratios, and capacity utilization. The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, lost sales data, and pricing information. 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).

Initiation of Antidumping Investigation

Based upon our examination of the petition on IQF red raspberries, we have found that it meets the requirements of section 732 of the Act. Therefore, we are initiating an antidumping duty investigation to determine whether imports of IQF red raspberries from Chile 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 Petition

In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of the petition has been provided to the representatives of the Government of Chile. We will attempt to provide a copy of the public version of the petition 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 Determination by the ITC

The ITC will determine, no later than July 16, 2001, whether there is a reasonable indication that imports of IQF red raspberries from Chile 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, these investigations will proceed according to statutory and regulatory time limits.

This notice is issued and published pursuant to section 777(i) of the Act.

Dated: June 20, 2001.

Faryar Shirzad,

Assistant Secretary for 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).