00-16510. Preliminary Results of Antidumping Duty Administrative Review for Two Manufacturers/Exporters: Certain Preserved Mushrooms From the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Results of Antidumping Duty Administrative Review.

SUMMARY:

In response to a timely request from two manufacturer/exporters and the petitioners, ^[1] on March 30, 2000, the Department of Commerce published a notice of initiation of an administrative review of the antidumping duty order on certain preserved mushrooms from the People's Republic of China with respect to China Processed Food Import & Export Co., Gerber Food (Yunnan) Co., Ltd., Mei Wei Food Industry Co., Ltd., and Tak Fat Trading Co. The periods of review are August 5, 1998, through January 31, 2000, for China Processed Food Import & Export Co. and Gerber Food (Yunnan) Co., Ltd., and May 7, 1998 through January 31, 2000, for Mei Wei Food Industry Co., Ltd. and Tak Fat Trading Co.^[2] . See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 65 FR 16875, March 30, 2000. As a result of the review, the Department of Commerce has preliminarily determined that dumping margins exist for the exports of the subject merchandise by Mei Wei Food Industry Co., Ltd. and Tak Fat Trading Co. for the covered period. The Department will issue separate preliminary results no later than October 31, 2000, for the other two respondents.

We invite interested parties to comment on these preliminary results. Parties who submit argument in this proceeding are requested to submit with the argument (1) a statement of the issue and (2) a brief summary of the argument.

EFFECTIVE DATE:

June 30, 2000.

FOR FURTHER INFORMATION CONTACT:

David J. Goldberger or Rebecca Trainor, 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:

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. In addition, unless otherwise indicated, all citations to the Department of Commerce's regulations are to 19 CFR part 351 (1999).

Background

On February 19, 1999, the Department of Commerce (the Department) published in the Federal Register (64 FR 8308) an antidumping duty order on certain preserved mushrooms from the People's Republic of China (PRC). On February 14, 2000, the Department published in the Federal Register (65 FR 7348) a notice of opportunity to request an administrative review of the antidumping duty order on certain preserved mushrooms from the PRC covering the period August 5, 1998, through January 31, 2000. On February 29, 2000, the petitioners requested, in accordance with 19 CFR 351.213, that we conduct an administrative review of exports to the United States by China Processed Food Import & Export Co. (CPF), Gerber Food (Yunnan) Co. (Gerber), Mei Wei Food Industry Co., Ltd. (Mei Wei), and Tak Fat Trading Co. (Tak Fat) of certain preserved mushrooms from the PRC. CPF and Gerber also requested on February 28, 2000, that we conduct administrative reviews of their respective exports. On March 29, 2000, the Department issued the antidumping questionnaire to CPF, Gerber, Mei Wei and Tak Fat. On March 30, 2000, the Department published a notice of initiation of an administrative review of the antidumping duty order on certain preserved mushrooms from the PRC with respect to CPF, Gerber, Mei Wei and Tak Fat (65 FR 16875). The Department is now conducting that review in accordance with section 751 of the Act.

The Department received timely questionnaire responses from CPF and Gerber and is currently analyzing their information. We will issue preliminary results based on these responses by the statutory due date. However, on May 5, 2000, Mei Wei and Tak Fat submitted a letter to the Department advising that they would not respond to the antidumping duty questionnaire because they claimed that the merchandise they exported to the United States during the period of review (POR) was “marinated” mushrooms which are outside the scope of the antidumping duty order.

In a separate scope proceeding, the Department determined that certain preserved mushrooms produced, exported, or imported by Mei Wei, Tak Fat, Leung Mi International, Tak Yeun Corp., and the U.S. Importer Genex International Corp. and identified as “marinated” or “acidified” are within the scope of the antidumping duty order. This determination was based on the acetic acid content level of the merchandise in question. See Recommendation Memorandum—Final Ruling of Request by Tak Fat, et al. for Exclusion of Certain Marinated, Acidified Mushrooms from the Scope of the Antidumping Duty Order on Certain Preserved Mushrooms from the People's Republic of China, dated June 19, 2000. As a result of the scope proceeding, the Department learned that a large number of entries of the merchandise at issue in the scope inquiry produced/exported by Mei Wei and Tak Fat during the POR have not been liquidated. See “U.S. Customs Data on Imports of Acidified Mushrooms,” Memorandum to the File dated June 19, 2000. This merchandise incorrectly entered the U.S. Customs territory without the payment of cash deposits or the posting of a special dumping bond by the U.S. Importer. In order to insure the proper final collection of antidumping duties on these preserved mushroom entries, and given Tak Fat's and Mei Wei's refusal to cooperate in this review, we are issuing the preliminary results of this administrative review with respect to Mei Wei and Tak Fat on an expedited basis. See “Separate Rates Determination” and “PRC-Wide Rate and Use of Facts Otherwise Available” sections below.

Scope of the Review

The products covered by this review are certain preserved mushrooms whether imported whole, sliced, diced, or as stems and pieces. The preserved mushrooms covered under this review 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 this review 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 review 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.^[3]

The merchandise subject to this review is classifiable under subheadings 2003.1000.27, 2003.1000.31, 2003.1000.37, 2003.1000.43, 2003.1000.47, 2003.1000.53, 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, our written description of the scope of this review is dispositive.

Separate Rates Determination

In previous antidumping duty proceedings, the Department has treated the PRC as a non-market economy (NME) country. We have no evidence suggesting that this determination should be changed. Accordingly, the Department has determined that NME treatment is appropriate in this review. See section 771(18)(c)(i) of the Act.

To establish whether a company operating in a NME is sufficiently independent to be entitled to a separate rate, the Department analyzes each exporting entity under the test established in the Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588, May 6, 1991 (Sparklers), as amplified by the 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). Under this test, companies operating in a NME are entitled to separate, company-specific margins when they can demonstrate an absence of government control, both in law and in fact, with respect to export activities (Sparklers, 56 FR 20589). Evidence supporting, though not requiring, a finding of de jure absence of government control over export activities includes: (1) An absence of restrictive stipulations associated with the individual exporter's business and export licenses; (2) any legislative enactments decentralizing control of companies; and (3) any other formal measures by the government decentralizing control of companies (id.). De facto absence of government control over exports is based on four factors: (1) Whether each exporter sets its own export prices independent of the government and without the approval of a government authority; (2) whether each exporter retains the proceeds from its sales and makes independent decisions regarding the disposition of profits or financing of losses; (3) whether each exporter has the authority to negotiate and sign contracts and other agreements; and (4) whether each exporter has autonomy from the government regarding the selection of management (see Silicon Carbide, 59 FR 22587).

In the instant review, neither Mei Wei nor Tak Fat submitted responses to the Department's antidumping duty questionnaire, including the separate rates section. We therefore preliminarily determine that these companies did not establish their entitlement to a separate rate in this review and, therefore, are presumed to be part of the PRC NME entity and, as such, are subject to the PRC country-wide rate.^[4] . Accordingly, exports by these companies are preliminarily assigned the PRC-wide rate, which is the highest margin in the LTFV petition.

PRC-Wide Rate and Use of Facts Otherwise Available

As noted above, Mei Wei and Tak Fat submitted a letter to the record stating that they would not participate in this review. Because of their refusal to cooperate in this review and their failure to establish their entitlement to a separate rate, we determine that the application of the PRC-wide rate, which is based on facts available, is appropriate, pursuant to section 776(a)(2) of the Act.

Section 776(a)(2) of the Act provides that “if an interested party or any other person (A) withholds information that has been requested by the administering authority; (B) fails to provide such information by the deadlines for the submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782; (C) significantly impedes a proceeding under this title; or (D) provides such information but the information cannot be verified as provided in section 782(i), the administering authority shall, subject to section 782(d), use the facts otherwise available in reaching the applicable determination under this title.”

Because Mei Wei and Tak Fat have refused to participate in this administrative review, we find that, in accordance with sections 776(a)(2)(A) and (C) of the Act, the use of total facts available is appropriate (see, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Persulfates from The People's Republic of China, 62 FR 27222, 27224, May 19, 1997; and Certain Grain-Oriented Electrical Steel From Italy: Final Results of Antidumping Duty Administrative Review, 62 FR 2655, Jan. 17, 1997 (for a more detailed discussion, see Preliminary Results of Antidumping Duty Administrative Review: Certain Grain-Oriented Electrical Steel From Italy, 61 FR 36551, 36552, July 4, 1996)). Because these respondents have provided no information, sections 782(d) and (e) are not relevant to our analysis.

Section 776(b) of the Act provides that, if the Department finds that an interested party “has failed to cooperate by not acting to the best of its ability to comply with a request for information,” the Department may use information that is adverse to the interests of the party as facts otherwise available. Adverse inferences are appropriate “to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See Statement of Administrative Action (SAA) accompanying the URAA, H.R. Doc. No. 103-316, at 870 (1994). Furthermore, “an affirmative finding of bad faith on the part of the respondent is not required before the Department may make an adverse inference.” See Antidumping Duties; Countervailing Duties: Final Rule, 62 FR 27296, 27340, May 19, 1997.

Section 776(b) of the Act authorizes the Department to use as adverse facts available information derived from the petition, the final determination from the LTFV investigation, a previous administrative review, or any other information placed on the record. Under section 782(c) of the Act, a respondent has a responsibility not only to notify the Department if it is unable to provide requested information, but also to provide a “full explanation and suggested alternative forms.” Mei Wei's and Tak Fat's March 5, 2000, letter documented for the record their refusal to provide this information and they have otherwise failed to respond to our requests for information, thereby failing to comply with this provision of the statute. Therefore, we determine that respondents failed to cooperate to the best of their ability, making the use of an adverse inference appropriate.

In this proceeding, in accordance with Department practice (see, e.g., Rescission of Second New Shipper Review and Final Results and Partial Rescission of First Antidumping Duty Administrative Review Brake Rotors From the People's Republic of China, 64 FR 61581, 61584, November 12, 1999; and Preliminary Results of Antidumping Duty Administrative Review: Fresh Garlic From the People's Republic of China, 64 FR 39115, July 21, 1999), as adverse facts available, we have preliminarily assigned to exports of subject merchandise by Mei Wei and Tak Fat the PRC-wide rate which is 198.63 percent, the rate established in the LTFV investigation, and the highest dumping margin determined in any segment of this proceeding. The Department's practice when selecting an adverse rate from among the possible sources of information is to ensure that the margin is sufficiently adverse “as to effectuate the purpose of the facts available rule to induce respondents to provide the Department with complete and accurate information in a timely manner.” See Final Determination of Sales at Less than Fair Value: Static Random Access Memory Semiconductors from Taiwan, 63 FR 8909, 8932, February 23, 1998.

Section 776(c) of the Act provides that where the Department selects from among the facts otherwise available and relies on “secondary information,” the Department shall, to the extent practicable, corroborate that information from independent sources reasonably at the Department's disposal. Secondary information is described in the SAA as “{i}nformation derived from the petition that gave rise to the investigation or review, the final determination concerning the subject merchandise, or any previous review under section 751 concerning the subject merchandise.” See SAA at 870. The SAA states that “corroborate” means to determine that the information used has probative value (id.). To corroborate secondary information, the Department will, to the extent practicable, examine the reliability and relevance of the information to be used. To examine the reliability of margins in the petition, we examine whether, based on available evidence, those margins reasonably reflect a level of dumping that may have occurred during the period of investigation by any firm, including those that did not provide us with usable information. This procedure generally consists of examining, to the extent practicable, whether the significant elements used to derive the petition margins, or the resulting margins, are supported by independent sources. With respect to the relevance aspect of corroboration, the Department will consider information reasonably at its disposal as to whether there are circumstances that would render a margin not relevant. Where circumstances indicate that the selected margin may not be relevant, the Department will attempt to find a more appropriate basis for facts available. See, e.g., Final Results of Antidumping Duty Administrative Review: Fresh Cut Flowers from Mexico, 61 FR 6812, 6814, February 22, 1996 (where the Department disregarded the highest margin as best information available because the margin was based on another company's uncharacteristic business expense resulting in an unusually high margin).

In the underlying LTFV investigation, we established the reliability of the petition margin (see, Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Preserved Mushrooms From the People's Republic of China, 63 FR 41794, 41798, August 5, 1998; and Notice of Final Determination of Sales at Less Than Fair Value: Certain Preserved Mushrooms from the People's Republic of China, 63 FR 72255, December 31, 1998). As there is no information on the record of this review that demonstrates that this rate is not an appropriate adverse facts available rate for the PRC-wide rate, we determine that this rate has probative value and, therefore, is an appropriate basis for the PRC-wide rate to be applied in this review to exports of subject merchandise by Mei Wei and Tak Fat as facts otherwise available.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the following margin applies for the period May 7, 1998, through January 31, 2000, for those imports where the exporter is Mei Wei or Tak Fat:

Exporter/manufacturer	Margin percentage
PRC-wide Rate	198.63

The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. The Department will issue appraisement instructions directly to the Customs Service. Upon publication of the final results of this administrative review, the cash deposit rate for all shipments by Mei Wei or Tak Fat of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date, will be the PRC-wide rate stated in the final results of this administrative review, as provided for by section 751(a)(1) of the Act. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Pursuant to 19 CFR 351.309, interested parties may submit written comments in response to these preliminary results. Case briefs must be submitted within 10 days after the date of publication of this notice, and rebuttal briefs, limited to arguments raised in case briefs, must be submitted no later than five days after the time limit for filing case briefs. Parties who submit argument in this proceeding are requested to submit with the argument: (1) A statement of the issue, and (2) a brief summary of the argument. Case and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). In addition, pursuant to 19 CFR 351.310, within 10 days of the date of publication of this notice, interested parties may request a public hearing on arguments raised in the case and rebuttal briefs. Any hearing, if requested, will be held two days after the date for submission of rebuttal briefs, that is, 17 days after the date of publication of these preliminary results. The Department will publish the final results of this administrative review with respect to subject merchandise exports by Mei Wei and Tak Fat, including the results of its analysis of issues raised in any case or rebuttal brief or at a hearing, not later than 120 days after the date of publication of these preliminary results, unless this time period is extended.

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

This administrative review and notice are in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: June 23, 2000.

Troy H. Cribb,

Acting Assistant Secretary for Import Administration.

Footnotes

1.  The petitioners are the Coalition for Fair Preserved Mushroom Trade which includes the American Mushroom Institute and the following domestic companies: L.K. Bowman, Inc., Nottingham, PA; Modern Mushrooms Farms, Inc., Toughkernamon, PA; Monterrey Mushrooms, Inc., Watsonville, CA; Mount Laurel Canning Corp., Temple, PA; Mushrooms Canning Company, Kennett Square, PA; Southwood Farms, Hockessin, DE; Sunny Dell Foods, Inc., Oxford, PA; United Canning Corp., North Lima, OH.

2.  Because of an affirmative critical circumstance finding, liquidation was suspended 90 days prior to publication of the preliminary less-than-fair-value (LTFV)investigation for these companies.

3.  On June 19, 2000, the Department affirmed that “marinated,” “acidified,” or “pickled” mushrooms containing less than 0.5 percent acetic acid are within the scope of the antidumping duty order.

4.  In the LTFV investigation, Tak Fat was identified as a Hong Kong company. There is no information about Tak Fat's location, ownership, or corporate structure on the record of this review that would establish Tak Fat's eligibility for a separate rate.