[Federal Register Volume 64, Number 130 (Thursday, July 8, 1999)]
[Notices]
[Pages 36847-36853]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17392]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-122-833]
Notice of Preliminary Determination of Sales at Less Than Fair
Value: Live Cattle From Canada
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
[[Page 36848]]
EFFECTIVE DATE: July 8, 1999.
FOR FURTHER INFORMATION CONTACT: Gabriel Adler or Kris Campbell, Office
5, AD/CVD Enforcement, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, D.C. 20230; telephone: (202) 482-
1442 or (202) 482-3813, respectively.
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 Department of Commerce (Department)
regulations refer to the regulations codified at 19 CFR Part 351 (April
1998).
Preliminary Determination
We preliminarily determine that live cattle from Canada are being
sold, or are likely to be sold, in the United States at less than fair
value (LTFV), as provided in section 733 of the Act. The estimated
margins are shown in the Suspension of Liquidation section of this
notice.
Case History
This investigation was initiated on December 22, 1998. See
Initiation of Antidumping Duty Investigations: Live Cattle from Canada
and Mexico, 63 FR 71886 (December 30, 1998) (Initiation Notice). Since
the initiation of the investigation, the following events have
occurred:
On January 20, 1999, the United States International Trade
Commission (the ITC) preliminarily determined that there is a
reasonable indication that imports of the product under investigation
are materially injuring the United States industry.
On March 1, 1999, after considering comments from interested
parties on the issue of respondent selection, the Department selected
the following companies as respondents in this investigation: Cor Van
Raay Farms Ltd. and Butte Grain Merchants Ltd. (Cor Van Raay); Pound
Maker Agventures, Ltd. (Pound Maker); Riverside Feeders Ltd. and
Grandview Cattle Feeders Ltd. (Riverside/Grandview); Jameson, Gilroy
and B & L Livestock Ltd. (JGL); Groenenboom Farms, Ltd. (Groenenboom);
and Schaus Land and Cattle Company (Schaus) (collectively
``respondents''). See Selection of Respondents, below. On March 2,
1999, the Department issued an antidumping questionnaire to the
selected respondents.1
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\1\ Section A of the questionnaire requests general information
concerning a company's corporate structure and business practices,
the merchandise under investigation that it sells, and the manner in
which it sells that merchandise in all of its markets. Section B
requests a complete listing of all home market sales, or, if the
home market is not viable, of sales in the most appropriate third-
country market. Section C requests a complete listing of U.S. sales.
Section D requests information on the cost of production of the
foreign like product and the constructed value of the merchandise
under investigation.
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The respondents submitted their initial responses to the
questionnaire in March, April and May 1999. After analyzing these
responses, we issued supplemental questionnaires to the respondents to
clarify or correct the initial questionnaire responses. We received
timely responses to these questionnaires.
Immediately prior to the date of this determination (on June 29th
and 30th), the respondents filed revised U.S., home market, and cost
databases. Our initial examination of this information indicates that,
for at least one company, the antidumping rate calculated using such
data may differ significantly from the rates listed below. We will
examine this data further and, if we find that the errors corrected
result in a rate that differs substantially from the rates as
calculated for this preliminary determination, we may issue an amended
preliminary determination for any such company.
Period of Investigation
The period of investigation (POI) is October 1, 1997, through
September 30, 1998. This period corresponds to each respondent's four
most recent fiscal quarters prior to the filing of the petition (i.e.,
November 12, 1998).
Scope of Investigation
The scope of this investigation covers all live cattle except (1)
imports of dairy cows for the production of milk for human consumption
and (2) purebred or other cattle specially imported for breeding
purposes.
The merchandise subject to this investigation is classifiable as
statistical reporting number 0102.90.40 of the Harmonized Tariff
Schedule of the United States (HTSUS), with the exception of
0102.90.40.72 and 0102.90.40.74. Although the HTSUS subheadings are
provided for convenience and customs purposes, the written description
of the merchandise is dispositive.
Selection of Respondents
Section 777A(c)(1) of the Act directs the Department to calculate
individual dumping margins for each known exporter and producer of the
subject merchandise. However, section 777A(c)(2) of the Act gives the
Department discretion, when faced with a large number of exporters/
producers, to limit its examination to a reasonable number of such
companies if it is not practicable to examine all companies. Where it
is not practicable to examine all known producers/exporters of subject
merchandise, this provision permits the Department to investigate
either: (1) a sample of exporters, producers, or types of products that
is statistically valid based on the information available at the time
of selection, or (2) exporters and producers accounting for the largest
volume of the subject merchandise that can reasonably be examined.
After consideration of the complexities expected to arise in this
proceeding (including issues of model matching, cost of production, and
the segmented nature of the cattle industry), and the resources
available to the Department, we determined that it was not practicable
in this investigation to examine all known producers/exporters of
subject merchandise. Instead, we found that given our resources, we
would be able to investigate the six producers/exporters with the
greatest export volume, as identified above. For a more detailed
discussion of respondent selection in this investigation, see
Memorandum from Gary Taverman to Richard W. Moreland, (March 1, 1999)
(Respondent Selection Memorandum).
Collapsing Determinations
The Department's regulations provide for the treatment of
affiliated producers as a single entity where: (1) those producers have
production facilities for similar or identical products that would not
require substantial retooling of either facility in order to
restructure manufacturing priorities, and (2) the Department concludes
that there is a significant potential for the manipulation of price or
production.2 In identifying a significant potential for the
manipulation of price or production, the Department may consider such
factors as: (i) the level of common ownership; (ii) the extent to which
managerial employees or board members of one firm sit on the board of
directors of an affiliated firm; and (iii) whether operations are
intertwined, such as through the sharing of sales information,
involvement in production and pricing decisions, the sharing of
facilities or employees, or significant transactions
[[Page 36849]]
between the affiliated producers. 3 These factors are
illustrative, and not exhaustive.
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\2\ See 19 CFR 351.401(f)(1).
\3\ See 19 CFR 351.401(f)(2).
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In this investigation, we have preliminarily determined to collapse
(1) Riverside/Grandview with affiliates Vander Heyden Ranches and
VanVaerenbergh Farms, (2) Pound Maker with affiliates Dale Blair and
Blair Stock Farms, and (3) JGL with affiliates M&T Feedlot and Kirk
Sinclair. For a detailed discussion of this collapsing determination,
requiring reference to business proprietary information, see Memorandum
from the Team to Richard Moreland, dated June 30, 1999, regarding
Collapse of Affiliated Parties.
Product Comparisons
Pursuant to section 771(16) of the Act, all products produced by
the respondents that fit the definition of the scope of the
investigation and were sold in the comparison market during the POI
fall within the definition of the foreign like product. For slaughter
cattle, we have relied on three criteria to match U.S. sales of subject
merchandise to comparison market sales of the foreign like product:
type, breed, and gender. For feeder cattle we have included a fourth
matching criterion of weight band, given the impact of weight on price
for sales of this type of cattle.
We have determined that it is generally not possible to match
across type, breed, or gender, because there are significant
differences among products that cannot be accounted for by means of a
difference-in-merchandise adjustment. See, e.g., letter from the
Canadian Cattlemen's Association to the Department of Commerce, dated
January 20, 1999, at 5 (noting that for these categories, the different
products ``are characterized by significant differences in market
structure (both demand and supply) and in market pricing,'' such that
``[s]ales comparisons cutting across these proposed categories would
produce distorted results and should not be permitted.'') See also
letter from the Ranchers-Cattlemen Action Legal Foundation (R-Calf, the
petitioner) to the Department of Commerce, dated June 8, 1999 (R-Calf
letter), at 11. However, the record indicates that such a distortion
does not arise with respect to products of different weight bands. See
R-Calf letter at 10-11. Therefore, for sales of feeder cattle (for
which there are variations in weight bands), in situations where an
identical match is not possible we have sought to compare feeder cattle
of different weight bands, with a difference-in-merchandise adjustment.
Fair Value Comparisons
To determine whether sales of live cattle from Canada were made in
the United States at less than fair value, we compared the export price
(EP) or constructed export price (CEP) to the normal value, as
described in the Export Price and Constructed Export Price and Normal
Value sections of this notice. In accordance with section
777A(d)(1)(A)(i) of the Act, we calculated POI weighted-average EPs and
CEPs for comparison to POI weighted-average normal values.
Export Price and Constructed Export Price
In accordance with section 772 of the Act, we calculated either an
EP or a CEP, depending on the nature of each sale. Section 772(a) of
the Act defines EP as the price at which the subject merchandise is
first sold before the date of importation by the exporter or producer
outside the United States to an unaffiliated purchaser in the United
States, or to an unaffiliated purchaser for exportation to the United
States. Section 772(b) of the Act defines CEP as the price at which the
subject merchandise is first sold in the United States before or after
the date of importation, by or for the account of the producer or
exporter of the merchandise, or by a seller affiliated with the
producer or exporter, to an unaffiliated purchaser, as adjusted under
sections 772(c) and (d) of the Act.
Consistent with these definitions, we found that all the
respondents made EP sales during the POI. These sales are properly
classified as EP sales because they were made by the exporter or
producer to unaffiliated customers in the United States prior to the
date of importation.
We also found that Schaus made CEP sales during the POI. These
sales involved cattle exported as feeder cattle, which were custom fed
at unaffiliated U.S. feedlots and then sold to unaffiliated U.S.
customers. Because the sales were made by the respondent after the date
of importation, the sales are properly classified as CEP sales.
For all respondents, we calculated EP and CEP, as appropriate,
based on prices charged to the first unaffiliated customer in the
United States.
All six respondents made at least some sales on a spot-price basis.
For such sales, where invoices were issued to the U.S. customer before
the date of shipment, we have relied on the date of invoice as the date
of sale, since that is the date on which the material terms of sale
were established. Where invoices were issued after the date of
shipment, or not issued at all, we have relied on the date of shipment
as the date of sale, since it is the Department's practice not to rely
on a date later than the date of shipment as the date of sale.
Three of the respondents also made sales to the United States
pursuant to futures contracts. For such sales, we based the date of
sale on the ``lock-in'' date (i.e., the date on which the respondent,
pursuant to the terms of the contract, accepted the future delivery
price indicated by the Chicago Mercantile Exchange Board on that day in
question), since that was the date on which the essential terms of sale
were established.
As the starting U.S. price, we relied on either the gross unit
price shown on sales invoices (for live-weight sales) or the net price
shown on settlement reports (for dressed-weight sales).4 In
accordance with section 772(c)(2) of the Act, we reduced the EP and CEP
by movement expenses and export taxes and duties, where appropriate.
These included foreign inland freight, international freight,
brokerage, and customs duties.
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\4\ For sales made on a live-weight basis, the price charged for
each animal is based on the weight of the animal prior to slaughter.
For sales made on a dressed-weight basis, the price charged for each
animal is based on the weight of the animal after slaughter, and
takes into account adjustments for grade and yield.
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Section 772(d)(1) of the Act provides for additional adjustments to
the CEP. We reduced the CEP by the amount of credit expenses and
further manufacturing expenses. Section 772(d)(3) of the Act requires
that the CEP be adjusted for the profit allocated to CEP selling
expenses. As described below, we made such an adjustment in the case of
Schaus, the only respondent to have made CEP sales.
We made company-specific adjustments as follows:
Cor Van Raay
We based EP on delivered and FOB prices to unaffiliated
customers in the United States. We made deductions from the starting
price, where appropriate, for movement expenses including
international freight, U.S. customs duty, and miscellaneous movement
charges.
Groenenboom
We based EP on delivered and FOB prices to unaffiliated
customers in the United States. We made deductions from the starting
price, where appropriate, for movement expenses including
international freight and transit insurance.
JGL
We based EP on delivered and FOB prices to unaffiliated
customers in the United
[[Page 36850]]
States. We made deductions from the starting price, where
appropriate, for movement expenses, including international freight,
U.S. inland freight, insurance, feed expenses, yard insurance, straw
expenses, and loading expenses.
Pound Maker
We based EP on delivered and FOB prices to unaffiliated
customers in the United States. We made deductions from the starting
price, where appropriate, for movement expenses, including
international freight, U.S. customs duty, transit insurance and
brokerage expenses.
Riverside/Grandview
We based EP on delivered and FOB prices to unaffiliated
customers in the United States. We made deductions from the starting
price, where appropriate, for movement expenses including freight
from the respondent's facility to the customer, U.S. customs duty,
and brokerage and handling expenses.
Schaus
We based EP and CEP on delivered and FOB prices to unaffiliated
customers in the United States. We made deductions from the starting
price, where appropriate, for movement expenses including freight
from the respondent's facility to the customer, U.S. customs duty,
and export processing fees. In addition to these adjustments, for
CEP sales, in accordance with section 772(d)(1) of the Act, we
adjusted the CEP by the amount of direct selling expenses and
revenues (i.e., credit expenses and interest revenue). In accordance
with section 772(d)(2) of the Act, we reduced the CEP by the amount
of further manufacturing expenses. Finally, in accordance with
section 772(d)(3) of the Act, we deducted an amount of profit
allocated to the expenses deducted under sections 772(d)(1) and (2)
of the Act.
Normal Value
A. Selection of Comparison Markets
Section 773(a)(1) of the Act directs that normal value be based on
the price at which the foreign like product is sold in the home market,
provided that the merchandise is sold in sufficient quantities (or
value, if quantity is inappropriate) and that there is no particular
market situation that prevents a proper comparison with the EP or CEP.
The statute contemplates that quantities (or value) will normally be
considered insufficient if they are less than five percent of the
aggregate quantity (or value) of sales of the subject merchandise to
the United States.
All respondents had viable home markets for live cattle, and they
reported home market sales data for purposes of the calculation of
normal value.
Adjustments made in deriving the normal values for each company are
described in detail in Calculation of Normal Value Based on Home Market
Prices and Calculation of Normal Value Based on Constructed Value,
below.
B. Cost of Production Analysis
Based on allegations contained in the petition, and in accordance
with section 773(b)(2)(A)(i) of the Act, we found reasonable grounds to
believe or suspect that live cattle sales made in Canada were made at
prices below the cost of production (COP). See Initiation Notice, 63 FR
at 71889. As a result, the Department has conducted investigations to
determine whether the respondents made sales in their respective home
markets at prices below their respective COPs during the POI within the
meaning of section 773(b) of the Act. We conducted the COP analysis
described below.
1. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated a
weighted-average COP for live cattle, based on the sum of the cost of
materials and fabrication for the foreign like product, plus amounts
for general and administrative (G&A) expenses. We relied on the COP
data submitted by each respondent in its cost questionnaire response,
except in specific instances where the submitted costs were not
appropriately quantified or valued, or otherwise required adjustment,
as discussed below:
Cor Van Raay
We adjusted the reported COP to account for differences in cost
associated with the gender of the cattle. Since Cor Van Raay did not
differentiate its reported costs by gender, but other respondents
did, as facts available we based the gender adjustment on the
average gender-related cost difference reported by other
respondents.
Groenenboom
We adjusted the reported COP to account for differences in cost
associated with the gender of the cattle. Since Groenenboom did not
differentiate its reported costs by gender, but other respondents
did, as facts available we based the gender adjustment on the
average gender-related cost difference reported by other
respondents.
Pound Maker
We adjusted the denominator used in the G&A expense rate
calculation by removing cost of sales amounts which did not appear
on Pound Maker's financial statements.
Riverside/Grandview
We adjusted the reported COP to account for differences in cost
associated with the gender of the cattle. Since Riverside/Grandview
did not differentiate its reported costs by gender, but other
respondents did, as facts available we based the gender adjustment
on the average gender-related cost difference reported by other
respondents. We also adjusted financial expenses to exclude offsets
for a disaster claim and custom work, and to include a payout
penalty assessed by a lender and imputed interest expenses on non-
interest bearing loans from shareholders.
Schaus
We adjusted the reported COP to exclude offsets for various
income items not associated with the production of the subject
merchandise.
2. Valuation of Resale Merchandise
Respondents JGL and Schaus had sales not only of their own-produced
cattle, but also of cattle that they purchased and resold without
additional value added.
Consistent with our practice regarding the cost of resales of
subject merchandise, we requested cost of production data from certain
of JGL's suppliers. See Memorandum to Richard W. Moreland from Gary
Taverman and Neal Halper, April 8, 1999 (Reporting Methodology
Memorandum) at 5-7.5 At the same time, given the nature of
the industry and the manner in which costs are maintained, we
determined to rely on JGL's own costs as a surrogate for supplier costs
where appropriate, and also to request a complete listing of JGL's
acquisition costs as an alternative source of cost data. Id. at 6
(``[U]pon receipt and analysis of the section D response, we may
determine that JGL's own production costs are an appropriate surrogate
for resale costs, to the extent that JGL produces cattle that are
comparable to those involved in straight resales.'') and 7 (``Given
that this approach might not yield cost data for all combinations of
type, breed, gender, and weight of cattle sold by respondents, we would
propose also to obtain a complete listing of acquisition costs, as a
possible alternative basis for calculation of cost of production.'')
(at footnote 13).
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\5\ See also, Fresh and Chilled Atlantic Salmon From Norway,
Final Results of Antidumping Duty Administrative Review, 61 FR
65522, 65525 (December 13, 1996); Elemental Sulphur From Canada,
Final Results of Antidumping Finding Administrative Review, 61 FR
8239, 8250 (March 4, 1996).
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While we have received the cost data requested from JGL's
suppliers, we are continuing to analyze this information and have
determined not to use such costs for this preliminary determination. We
note that the reported supplier costs, which pertain to feeder cattle,
have in most instances not been provided on a weight-band specific
basis (see Product Comparisons section, above, regarding comparisons of
feeder cattle on a weight-band specific basis and matching across
weight bands). Other aspects of the cost data contained in these
responses also require further analysis, including issues raised by the
petitioners regarding alleged
[[Page 36851]]
inadequacies in these supplier submissions.6 While we do not
agree with the petitioners that alleged deficiencies in the supplier
responses (e.g., hay costs associated with grazing cattle, and family
labor costs) require the determination of respondent JGL's resale costs
based on application of adverse facts available,7
particularly given the information provided by JGL with respect to its
own feeder costs and acquisition prices, we intend to closely
scrutinize the reporting of such supplier costs in supplemental
questionnaires and at verification of JGL and the supplier firms. If,
based on the results of verification and of our analysis of the
information provided by the suppliers, we determine that such firms
have not cooperated to the best of their ability, we may determine such
supplier costs based on the facts available for the final
determination.
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\6\ See letter from R-Calf to the Department, June 28, 1999.
\7\ The petitioners maintain that JGL's resale costs should be
valued based on information in the petition published by the
Government of Manitoba. Id. at 2-5.
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Accordingly, we are determining the costs of cattle resold by JGL
using JGL's own costs as a surrogate, where available, and are
otherwise relying on the acquisition price paid by JGL.8
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\8\ We have examined the acquisition prices reported by JGL in
comparison with the costs of feeder cattle on the record for this
company and do not find reason to believe that the prices paid by
JGL are distortive as a surrogate for supplier costs for the
preliminary determination.
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For Schaus, consistent with the methodology described above with
respect to JGL, we have valued resold cattle using Schaus' cost of
production for own-produced cattle as a surrogate for the costs
incurred by Schaus' suppliers, or where such data were not available,
we have relied on the acquisition price paid by Schaus for cattle to be
resold. For the final determination, we will consider whether it would
be more appropriate to rely on other cost data, such as the cost data
reported by the JGL suppliers, as a surrogate for the costs incurred by
Schaus' suppliers.
3. Test of Home Market Sales Prices
We compared the adjusted weighted-average COP for each respondent
to the home market sales of the foreign like product, as required under
section 773(b) of the Act, in order to determine whether these sales
had been made at prices below the COP within an extended period of time
(i.e., a period of one year) in substantial quantities 9 and
whether such prices were sufficient to permit the recovery of all costs
within a reasonable period of time.
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\9\ In accordance with section 773(b)(2)(C)(i) of the Act, we
determined that sales made below the COP were made in substantial
quantities if the volume of such sales represented 20 percent or
more of the volume of sales under consideration for the
determination of normal value.
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On a model-specific basis, we compared the revised COP to the home
market prices, less any applicable movement charges, taxes, rebates,
commissions and other direct and indirect selling expenses.
4. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of a respondent's sales of a given product were at prices less
than the COP, we did not disregard any below-cost sales of that product
because we determined that the below-cost sales were not made in
``substantial quantities.'' Where 20 percent or more of a respondent's
sales of a given product during the POI were at prices less than the
COP, we determined such sales to have been made in ``substantial
quantities'' within an extended period of time in accordance with
section 773(b)(2)(B) or the Act. Because we compared prices to the POI
average COP, we also determined that such sales were not made at prices
which would permit recovery of all costs within a reasonable period of
time, in accordance with section 773(b)(2)(D) of the Act. Therefore, we
disregarded the below-cost sales.
We found that, for certain models of live cattle, more than 20
percent of the home market sales of all six respondents were made
within an extended period of time at prices less than the COP. Further,
the prices did not provide for the recovery of costs within a
reasonable period of time. We therefore disregarded the below-cost
sales and used the remaining above-cost sales as the basis for
determining normal value, in accordance with section 773(b)(1) of the
Act. For those U.S. sales of live cattle for which there were no
comparable home market sales in the ordinary course of trade, we
compared EPs or CEPs to the constructed value in accordance with
section 773(a)(4) of the Act. See Calculation of Normal Value Based on
Constructed Value section, below.
C. Calculation of Normal Value Based on Home Market Prices
We performed price-to-price comparisons where there were sales of
comparable merchandise in the home market that did not fail the cost
test.
Cor Van Raay
We calculated normal value based on delivered or FOB prices and
made deductions from the starting price, where appropriate, for
movement expenses (inland freight from the respondent's facility to the
customer). In addition, we made COS adjustments for direct expenses
(i.e., credit expenses), in accordance with section 773(a)(6)(C)(iii)
of the Act.
Groenenboom
We calculated normal value based on delivered or FOB prices and
made deductions from the starting price, where appropriate, for
movement expenses (inland freight from the respondent's facility to the
customer, plus insurance). In addition, we made COS adjustments for
direct expenses, including credit expenses, Alberta Cattle Commission
Fees, branding fees, banking fees, and grading fees, in accordance with
section 773(a)(6)(C)(iii) of the Act.
JGL
We calculated normal value based on delivered or FOB prices and
made deductions from the starting price, where appropriate, for billing
adjustments and movement expenses (including inland freight from the
respondent's facility to the customer, freight insurance, feed
expenses, yard insurance, straw expenses, and loading expenses). In
addition, we made COS adjustments for direct expenses and revenues,
including credit expenses, branding inspection fees, veterinary fees,
and miscellaneous expenses, as well as interest revenue, where
appropriate, in accordance with section 773(a)(6)(C)(iii) of the Act.
Pound Maker
We calculated normal value based on delivered or FOB prices and
made deductions from the starting price, where appropriate, for
movement expenses (inland freight from the respondent's facility to the
customer). In addition, we made COS adjustments for direct expenses
(i.e., credit expenses, checkoff fees, brand inspection fees and
commission expenses), in accordance with section 773(a)(6)(C)(iii) of
the Act.
Riverside/Grandview
We calculated normal value based on delivered or FOB prices and
made deductions from the starting price, where appropriate, for
movement expenses (inland freight from the respondent's facility to the
customer). In addition, we made circumstance-of-sale (COS) adjustments
for direct expenses (i.e., credit expenses, brand inspection fees and
transit fees), in accordance with section 773(a)(6)(C)(iii) of the Act.
[[Page 36852]]
Schaus
We calculated normal value based on delivered or FOB prices and
made deductions from the starting price, where appropriate, for billing
adjustments and movement expenses (including inland freight from the
respondent's facility to the customer). In addition, we made COS
adjustments for direct expenses and revenues, including credit expenses
and interest revenue, where appropriate, in accordance with section
773(a)(6)(C)(iii) of the Act,
D. Calculation of Normal Value Based on Constructed Value
Section 773(a)(4) of the Act provides that where normal value
cannot be based on comparison market sales, normal value may be based
on the constructed value. Accordingly, for those models of live cattle
for which we could not determine the normal value based on comparison
market sales, either because (1) there were no sales of a comparable
product or (2) all sales of comparison products failed the COP test, we
based normal value on the constructed value.
Section 773(e)(1) of the Act provides that the constructed value
shall be based on the sum of the cost of materials and fabrication for
the foreign like product, plus amounts for selling, general, and
administrative expenses (SG&A), profit, and U.S. packing costs. For
each respondent, we calculated the cost of materials and fabrication
based on the methodology described in the Calculation of COP section,
above. We based SG&A and profit for each respondent on the actual
amounts incurred and realized by the respondent in connection with the
production and sale of the foreign like product in the ordinary course
of trade for consumption in the comparison market, in accordance with
section 773(e)(2)(A) of the Act.
We made adjustments to constructed value for differences in COS in
accordance with section 773(a)(8) of the Act and 19 CFR 351.410. For
comparisons to EP, we made COS adjustments by deducting direct selling
expenses incurred on home market sales from, and adding U.S. direct
selling expenses to, constructed value. For comparisons to CEP, we made
COS adjustments by deducting direct selling expenses incurred on home
market sales from constructed value.
Level of Trade/CEP Offset
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine normal value based on sales in the comparison
market at the same level of trade as the EP or CEP transaction. The
normal value level of trade is that of the starting-price sales in the
comparison market or, when normal value is based on constructed value,
that of the sales from which we derive SG&A expenses and profit. For
EP, the U.S. level of trade is also the level of the starting-price
sale, which is usually from exporter to importer. For CEP, it is the
level of the constructed sale from the exporter to the importer.
To determine whether normal value sales are at a different level of
trade than EP or CEP, we examine stages in the marketing process and
selling functions along the chain of distribution between the producer
and the unaffiliated customer. If the comparison market sales are at a
different level of trade and the difference affects price
comparability, as manifested in a pattern of consistent price
differences between the sales on which normal value is based and
comparison market sales at the level of trade of the export
transaction, we make a level-of-trade adjustment under section
773(a)(7)(A) of the Act. For CEP sales, if the normal value level is
more remote from the factory than the CEP level and there is no basis
for determining whether the difference in the levels between normal
value and CEP affects price comparability, we adjust normal value under
section 773(a)(7)(B) of the Act (the CEP-offset provision). See Notice
of Final Determination of Sales at Less Than Fair Value: Certain Cut-
to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November
19, 1997).
In implementing these principles in this investigation, we obtained
information from each respondent about the marketing stages involved in
the reported U.S. and home market sales, including a description of the
selling activities performed by the respondents for each channel of
distribution. In identifying levels of trade for EP and home market
sales we considered the selling functions reflected in the starting
price before any adjustments. For CEP sales, we considered only the
selling activities reflected in the price after the deduction of
expenses and under section 772(d) of the Act.
In this investigation, we found that the respondents perform
minimal selling functions in the United States and home markets. With
respect to each respondent's EP sales, we found a single level of trade
in the United States, and a single, identical level of trade in the
home market. It was thus unnecessary to make any level-of-trade
adjustment for comparison of EP and home market prices. One respondent,
Schaus, also made CEP sales. For this respondent, we found that the
adjusted CEP level of trade was essentially the same as that of the
single home market level of trade, such that no level-of-trade
adjustment or CEP offset was necessary.
Currency Conversions
We made currency conversions in accordance with section 773A of the
Act. The Department's preferred source for daily exchange rates is the
Federal Reserve Bank. Section 773A(a) of the Act directs the Department
to use a daily exchange rate in order to convert foreign currencies
into U.S. dollars unless the daily rate involves a fluctuation. It is
the Department's practice to find that a fluctuation exists when the
daily exchange rate differs from the benchmark rate by 2.25 percent.
The benchmark is defined as the moving average of rates for the past 40
business days. When we determine a fluctuation to have existed, we
substitute the benchmark rate for the daily rate, in accordance with
established practice.
Verification
In accordance with section 782(i) of the Act, we intend to verify
information to be used in making our final determination.
Suspension of Liquidation
In accordance with section 733(d) of the Act, we are directing the
Customs Service to suspend liquidation of all entries of live cattle
from Canada, except for Pound Maker (which has a de minimis weighted-
average margin), that are entered, or withdrawn from warehouse, for
consumption on or after the date of publication of this notice in the
Federal Register. We are also instructing the Customs Service to
require a cash deposit or the posting of a bond equal to the weighted-
average amount by which the normal value exceeds the EP or CEP, as
indicated in the chart below. These instructions suspending liquidation
will remain in effect until further notice.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter/producer margin
percentage
------------------------------------------------------------------------
Cor Van Raay............................................... 4.49
Groenenboom................................................ 3.90
JGL........................................................ 3.94
Pound Maker................................................ \1\ 0.18
Riverside/Grandview........................................ 6.81
Schaus..................................................... 5.43
All Others................................................. 4.73
------------------------------------------------------------------------
\1\ deminimis.
[[Page 36853]]
Section 735(c)(5)(A) of the Act directs the Department to exclude
all zero and de minimis weighted-average dumping margins, as well as
dumping margins determined entirely under facts available under section
776 of the Act, from the calculation of the ``all others'' rate.
Accordingly, we have excluded the de minimis dumping margin for Pound
Maker from the calculation of the ``all others'' rate.
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our preliminary determination. If our final antidumping
determination is affirmative, the ITC will determine whether these
imports are materially injuring, or threaten material injury to, the
U.S. industry. The deadline for that ITC determination would be the
later of 120 days after the date of this preliminary determination or
45 days after the date of our final determination.
Public Comment
For this investigation, case briefs must be submitted no later than
August 6, 1999. Rebuttal briefs must be filed no later than August 13,
1999. A list of authorities used, a table of contents, and an executive
summary of issues should accompany any briefs submitted to the
Department. Executive summaries should be limited to five pages total,
including footnotes.
Section 774 of the Act provides that the Department will hold a
hearing to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs, provided that such a
hearing is requested by any interested party. If a hearing is
requested, it will be held on August 18, 1999, at the U.S. Department
of Commerce, 14th Street and Constitution Avenue, NW., Washington, D.C.
20230. Parties should confirm by telephone the time, date, and place of
the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request within 30 days of
the publication of this notice. Requests should specify the number of
participants and provide a list of the issues to be discussed. Oral
presentations will be limited to issues raised in the briefs.
If this investigation proceeds normally, we will make our final
determination no later than September 13, 1999 (i.e., 75 days after the
date of issuance of this notice).
This determination is published pursuant to sections 733(d) and
777(i)(1) of the Act.
Dated: June 30, 1999.
Richard W. Moreland
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-17392 Filed 7-7-99; 8:45 am]
BILLING CODE 3510-DS-P
