[Federal Register Volume 64, Number 130 (Thursday, July 8, 1999)]
[Notices]
[Pages 36844-36847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17394]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-614-801]
Fresh Kiwifruit From New Zealand: Preliminary Results of
Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review.
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SUMMARY: The Department of Commerce is conducting an administrative
review of the antidumping duty order on fresh kiwifruit from New
Zealand in response to a request by the respondent, the New Zealand
Kiwifruit Marketing Board, the sole exporter of the subject merchandise
to the United States. The review covers the period June 1, 1997,
through May 31, 1998.
We preliminarily determine that sales have been made below normal
value. Interested parties are invited to comment on these preliminary
results. If these preliminary results are adopted in our final results
of administrative review, we will instruct the Customs Service to
assess antidumping duties on entries subject to this review.
EFFECTIVE DATE: July 8, 1999.
FOR FURTHER INFORMATION CONTACT: Sunkyu Kim or John P. Maloney, Jr.,
Office 2, AD/CVD Enforcement Group I, Import Administration--Room B099,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-2613 or (202) 482-1503, respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute and Regulations
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 (URAA). In addition, unless
otherwise indicated, all citations to the Department of Commerce's (the
Department's) regulations are to the current regulations at 19 CFR part
351 (April 1998).
Background
On June 10, 1998, the Department published in the Federal Register
a notice of ``Opportunity to Request an Administrative Review'' of the
antidumping duty order on fresh kiwifruit from New Zealand (63 FR
31717).
In accordance with 19 CFR 351.213(b)(1), on June 29, 1998, the New
Zealand Kiwifruit Marketing Board (NZKMB) requested an administrative
review of the antidumping duty order covering the period June 1, 1997,
through May 31, 1998. NZKMB also requested revocation of the
antidumping order, in accordance with 19 CFR 351.222(b)(1). On July 28,
1998, the Department initiated an administrative review for NZKMB (63
FR 40258).
On July 21, 1998, the California Kiwifruit Commission (the
petitioner) submitted a letter objecting to NZKMB's request for
revocation. The petitioner argued that NZKMB failed to satisfy the
regulatory requirements for seeking revocation and urged the Department
to reject NZKMB's revocation request in this administrative review.
Subsequently, on September 23, 1998, NZKMB withdrew its request for
revocation of the antidumping duty order at the conclusion of this
review.
On August 20, 1998, the Department issued the antidumping
questionnaire to NZKMB. NZKMB submitted responses to sections A through
D of the antidumping questionnaire on October 19, 1998 and February 22,
1999. The Department issued its supplemental questionnaires and
received responses to the questionnaires in April 1999.
During May 1999, the Department conducted verifications of the
sales and cost responses of NZKMB and individual kiwifruit growers. On
June 24, 1999, NZKMB submitted revised sales and cost of production
databases incorporating changes resulting from the verifications.
The Department is conducting this review in accordance with section
751(a) of the Act.
Scope of Review
The product covered by this review is fresh kiwifruit. Processed
kiwifruit, including fruit jams, jellies, pastes, purees, mineral
waters, or juices made from or containing kiwifruit are not covered
under the scope of this review. This merchandise is currently
classifiable under Harmonized Tariff Schedule of the United States
(HTSUS) subheading 0810.90.20.60. Although the HTSUS subheading is
provided for convenience and customs purposes, the written description
of the scope of this proceeding is dispositive.
Verification
As provided in section 782(i) of the Act, we verified the
information provided by NZKMB. We used standard verification
procedures, including on-
[[Page 36845]]
site inspection of the respondent's facilities and examination of
relevant sales and financial records. Based on the Department's
verification findings, we made certain changes to the sales and cost
data submitted by the respondent used to calculate the preliminary
margin. Our verification results are outlined in the verification
reports placed in the case file.
Normal Value Comparisons
To determine whether sales of fresh kiwifruit to the United States
were made at less than normal value (NV), we compared the constructed
export price (CEP) to the NV for NZKMB, as specified in the
``Constructed Export Price'' and ``Normal Value'' sections of this
notice.
When making comparisons in accordance with section 771(16) of the
Act, we considered all products sold in the home market as described in
the ``Scope of the Review'' section of this notice, above, that were
sold in the ordinary course of trade for purposes of determining
appropriate product comparisons to U.S. sales.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (LOT) as the export price (EP) or CEP
transaction. The NV LOT is that of the starting-price sales in the
comparison market or, when NV is based on constructed value (CV), that
of the sales from which we derive selling, general and administrative
(SG&A) expenses and profit. For EP, the LOT 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 NV sales are at a different LOT 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 in the comparison market. If the comparison-
market sales are at a different LOT and the difference affects price
comparability, as manifested in a pattern of consistent price
differences between the sales on which NV is based and comparison-
market sales at the LOT of the export transaction, we make an LOT
adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP
sales, if the NV 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 NV and CEP affects price comparability, we adjust NV
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).
NZKMB claimed that it made home market sales at two levels of trade
based on the channel of distribution (i.e., sales to a distributor on a
consignment basis and direct sales to wholesale or retail customers).
In the U.S. market, NZKMB reported only CEP sales made through one
channel of distribution and claimed one level of trade (the CEP level
of trade). NZKMB argued that a CEP offset is warranted in this case
because neither of its two claimed home market levels of trade is
similar to the U.S. CEP level of trade, and the home market levels are
more remote from the factory than the CEP level. Accordingly, we have
performed an analysis of the information on the record to determine
whether a LOT adjustment, or in the alternative, a CEP offset, is
warranted.
In order to determine whether NV was established at a different LOT
than CEP sales, we examined stages in the marketing process and selling
functions along the chains of distribution between NZKMB and its home
market customers. We compared the selling functions performed for home
market sales with those performed with respect to the CEP transactions,
exclusive of economic activities occurring in the United States,
pursuant to section 772(d) of the Act, to determine whether the home
market levels of trade constituted more advanced stages of distribution
than the CEP level of trade.
Based on an analysis of the information on the record, we found
that NZKMB made sales in the home market at one LOT, with two types of
sales within that level: sales through a distributor and direct sales
to wholesale or retail customers. We examined the selling functions
performed for both types of sales and found that NZKMB, and its
marketing subsidiary Zespri, performed minimal selling functions for
both types of sales in the home market. Through its packhouse and
coolstore providers, NZKMB provides quality checking services
supporting all home market sales. In addition, Zespri provides some
advertising and customer support for home market sales to its
distributor. However, for sales made to its distributor, which
constitute the vast majority of home markets sales, the distributor
handles the bulk of the services and selling functions after delivery
from the coolstore, and Zespri ``does not provide technical advice,
warranty services, freight or delivery arrangements, direct advertising
support to the distributor (except for general brand-enhancement
advertising), or any other sales support services.'' See NZKMB's
October 19, 1998, submission at page A-17. Similarly, for the few
direct sales to its customers, NZKMB maintains the fruit in coolstore
until sale and provides quality control through its coolstore
providers, but Zespri provides no subsequent sales support activities
besides general advertising and customer support. Given the minimal
level of reported selling functions for both types of sales in the home
market, we preliminarily determine that the selling functions for both
sales types are sufficiently similar to justify only one LOT in the
home market.
Because all U.S. sales were CEP sales, the LOT for such sales is
the level of the constructed sale from the exporter to the importer. We
examined the selling functions performed by NZKMB and Zespri for U.S.
CEP sales and preliminarily determine that they are made at the same
LOT as home market sales. As with home market sales, NZKMB provides
quality checking services in support of U.S. sales through their
packhouse and coolstore providers. In addition, Zespri staff in New
Zealand provide some support for U.S. sales including promotional
information and strategic advice on sales and marketing tactics. See
NZKMB verification report memorandum for Louis Apple from James Maeder
and John Maloney, dated June 14, 1999. The majority of selling function
support for U.S. sales occurs in the United States, performed by
Zespri's affiliated North American selling agent, and are not
considered for comparison purposes. Thus, similar to home market sales,
Zespri performs a limited number of selling functions in New Zealand in
support of the constructed U.S. CEP sales, including the quality and
condition checking services performed for all kiwifruit sales.
Furthermore, a comparison between the reported indirect selling
expenses in New Zealand for U.S. sales and the reported indirect
selling expenses for home market sales indicated no substantial
quantitative difference in the level of selling functions. As a result,
we find that the quantity and quality of selling functions performed by
NZKMB and Zespri in support of the constructed U.S. sales are
comparable to the selling functions performed in support of home market
sales. Therefore, our analysis of the chains of distribution and
selling functions performed for all sales in the home market and CEP
sales in the U.S.
[[Page 36846]]
market indicates that both are made at the same stage in the marketing
process.
Because of the analogous levels of selling functions and stages in
the chains of distribution between home market sales and constructed
U.S. sales, we find that sales in both markets were made at the same
LOT. Therefore, no LOT adjustment or CEP offset is warranted in this
case.
Constructed Export Price
For all U.S. sales made by NZKMB, we used CEP, in accordance with
section 772(b) of the Act, because the sales were made to the first
unaffiliated party in the United States after importation. We
calculated CEP based on packed F.O.B. (ex-New Zealand coolstore) and
delivered prices. We made deductions, where appropriate, for foreign
inland freight (coolstore to port), pre-sale warehousing expenses,
transportation insurance expenses (including inland and marine
insurance), foreign brokerage and handling expenses, ocean freight,
U.S. brokerage and handling, U.S. inland freight, U.S. coolstore
expenses, and U.S. Customs fees, in accordance with section 772
(c)(2)(A) of the Act.
In accordance with sections 772(d)(1) and (2) of the Act, we made
additional deductions, where appropriate, for commissions, credit
expenses, direct advertising expenses, U.S. indirect selling expenses,
U.S. inventory carrying costs, and U.S. repacking costs. We also made
an adjustment for profit, in accordance with section 772(d)(3) of the
Act. Finally, we increased the U.S. price to account for post-sale
price adjustments not reflected in the gross price.
Normal Value
In order to determine whether there were sufficient sales of
kiwifruit in the home market to serve as a viable basis for calculating
NV, we compared the volume of NZKMB's home market sales of the foreign
like product to the volume of U.S. sales of subject merchandise, in
accordance with section 773(a)(1)(B) of the Act. Based on this
comparison, we determined that NZKMB had a viable home market during
the period of review (POR) (i.e., June 1, 1997 through May 31, 1998).
Consequently, we based NV on home market sales.
Pursuant to section 773(b)(2)(A)(ii) of the Act, there were
reasonable grounds to believe or suspect that NZKMB had made home
market sales at prices below the cost of production (COP) in this
review because the Department had disregarded sales below the COP in
the most recently completed administrative review. See Fresh Kiwifruit
from New Zealand: Final Results of Antidumping Duty Administrative
Review, 61 FR 46438 (September 3, 1996) (Kiwifruit Third Review).
Therefore, pursuant to section 773(b)(1) of the Act, we initiated an
investigation to determine whether the respondent made home market
sales during the POR at prices below the COP. We followed the
Department's determinations in the original investigation and the prior
administrative reviews that, in comparing NV to COP, the reseller's or
exporter's acquisition prices are irrelevant because section 773(b) of
the Act requires that the Department look at the actual COP of the
subject merchandise. Accordingly, we used the costs incurred by
kiwifruit growers, the actual producers of the subject merchandise, to
calculate the COP.
Due to the large number of growers from which the NZKMB purchased
kiwifruit during the POR, the Department determined that sampling was
both administratively necessary and methodologically appropriate to
calculate a representative cost of producing the subject merchandise
for purposes of this administrative review. See section 777A of the
Act. We selected the sample of kiwifruit growers by first
geographically segregating farms into two regions: the Bay of Plenty
region and the non-Bay of Plenty region. In selecting the sample of
twenty growers, we selected sixteen growers representing the Bay of
Plenty region and four from the non-Bay of Plenty region in order to
accurately reflect the relative proportion of kiwifruit production from
each of the two regions. Because the Department's purpose is to
estimate the average unit cost per tray of exported kiwifruit, as a
second step, we have assigned selection probabilities to the growers on
the basis of the volume of kiwifruit each grower submitted to the NZKMB
for export. We sent the COP/CV questionnaires through the NZKMB to the
twenty selected kiwifruit growers and received responses to the
Department's questionnaire from all twenty selected growers. We
verified the COP/CV data provided by four of the twenty selected
growers.
We calculated each grower's cultivation cost by summing all costs
for the 1997-1998 kiwifruit season. These costs included cost of
materials, farm labor, farm overhead, and packing. We allocated the
cultivation cost on a per-tray equivalent basis over the total number
of tray equivalents submitted by each grower to the NZKMB. A tray
equivalent is a standard unit of measurement for kiwifruit which
represents the amount of kiwifruit which can fit into a standard
packing tray. We adjusted these per-tray costs to reflect fruit loss
and then added the NZKMB's G&A and interest expenses to the farm's
average cost per tray.
The orchard set-up costs for all growers were amortized over twenty
years as was done in prior reviews. Where growers purchased an
established orchard, the acquisition price of the farm was treated as
the set-up cost.
Except as follows, we relied on the COP data submitted on June 24,
1999, which incorporates the revised COP data of the three verified
growers based on information obtained at verification. With respect to
the COP and packing data provided by the remaining growers that were
not verified, we adjusted their reported COP and packing data to
reflect the adjusted COP and packing amounts of the three verified
growers, based on our findings at the verifications. Specifically, for
each of the three growers we verified, we calculated the difference
between the reported COP and packing expense and the revised COP and
packing expense based on the verification findings. We then increased
the COP and packing expense amounts reported by the remaining,
unverified growers by the average percentage difference between the
revised and reported COPs and packing amounts of the three verified
growers. See Preliminary Results Calculation Memorandum dated June 30,
1999. We then calculated a simple average COP and packing expense from
the sampled growers' individual COPs and packing expenses, as revised.
The total COP was calculated on a New Zealand dollar per single-layer
tray (NZ$/SLT) equivalent basis. We compared the COP figures to home
market prices 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. On a product-specific basis, we compared
the COP to home market prices, less any applicable movement charges,
and direct and indirect selling expenses.
In determining whether to disregard home market sales made at
prices below the COP, we examined whether such sales were made: (1) In
substantial quantities within an extended period of time; and (2) at
prices which permitted the recovery of all costs within a reasonable
period of time in the normal course of trade, pursuant to section
773(b)(1) of the Act.
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of NZKMB's sales of a given product were at prices less than
the COP, we did not disregard any below-cost sales of that
[[Page 36847]]
product because we determined that the below-cost sales were not made
in ``substantial quantities.'' Where 20 percent or more of NZKMB's
sales of a given product 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) of the Act. In such cases, 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 all of NZKMB's home market sales were at prices less
than COP. We, therefore, disregarded all home market sales and based NV
on CV in accordance with section 773(a)(4) of the Act.
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of the respondent's cost of materials, fabrication,
SG&A, profit and U.S. packing costs. Section 773(e)(2)(B) of the Act
states that in the absence of above-cost sales of a foreign like
product, SG&A and profit shall be based on (i) expenses and profit of
the respondent's other products, or (ii) the expenses and profit of
other producers subject to the antidumping investigation or review, or
(iii) any other reasonable method. The first two alternatives are not
available in this case, since NZKMB sells no other products and there
are no other New Zealand exporters subject to this review. Therefore,
we must rely on ``other reasonable'' methods. In this case, NZKMB
earned no profits on home market sales and we have no other information
on the record with respect to profit earned in the home market.
Therefore, consistent with the methodology used in the most recent
prior review of this proceeding, as facts available, we used the
profits realized at the grower level. In this instance, we used the
average profit of the twenty sampled growers as the profit figure in
our margin calculations. With respect to selling expenses, we have used
the selling expenses associated with the home market sales. See Fresh
Kiwifruit from New Zealand: Amended Final Results of Antidumping Duty
Administrative Review, 62 FR 47440 (September 9, 1997).
In comparing CEP to CV, we made circumstance-of-sale adjustments,
where appropriate, for differences in credit expenses and advertising
expenses, in accordance with sections 773(a)(6)(C)(iii) and 773(a)(8)
of the Act. With respect to commissions, where applicable, we offset
any commission paid on a U.S. sale by reducing the NV by the amount of
home market indirect selling expenses, including inventory carrying
costs, up to the amount of the U.S. commission, in accordance with 19
CFR 351.410(e).
Currency Conversion
We made currency conversions into U.S. dollars in accordance with
section 773A(a) of the Act, based on the exchange rates in effect on
the dates of the U.S. sales as certified by the Federal Reserve Bank.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the
following margin exists for the period June 1, 1997, through May 31,
1998:
------------------------------------------------------------------------
Percent
Manufacturer/exporter margin
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New Zealand Kiwifruit Marketing Board........................ 4.66
------------------------------------------------------------------------
Interested parties may request a hearing within 30 days of the
publication of this notice. See 19 CFR 351.310(c). Any hearing, if
requested, will be held 37 days after the date of the publication of
this notice, or the first workday thereafter. Interested parties may
submit case briefs within 30 days of publication. Rebuttal briefs,
limited to issues raised in the case briefs, may be filed not later
than 35 days after the date of publication. Parties who submit case
briefs or rebuttal briefs in this proceeding are requested to submit
with each argument (1) a statement of the issue and (2) a brief summary
of the argument. Parties are also encouraged to provide a summary of
the arguments not to exceed five pages and a table of statutes,
regulations, and cases cited.
The Department will subsequently issue a notice of the final
results of this administrative review, which will include the results
of its analysis of issues raised in any such written briefs not later
than 120 days after the date of publication of this notice.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. We have
calculated an importer-specific assessment rate based on the ratio of
the total amount of antidumping duties calculated for the examined
sales made during the POR to the total entered value of the examined
sales. This rate will be assessed uniformly on all entries of that
particular importer made during the POR. The Department will issue
appraisement instructions directly to the Customs Service.
Further, the following deposit requirements will be effective for
all shipments of fresh kiwifruit from New Zealand entered, or withdrawn
from warehouse, for consumption on or after the publication date of the
final results of this administrative review, as provided for by section
751(a)(1) of the Act: (1) The cash deposit rate for NZKMB will be the
rate established in the final results of this review, except if the
rate is less than 0.50 percent and, therefore, de minimis within the
meaning of 19 CFR 351.106, the cash deposit will be zero; (2) for
previously reviewed or investigated companies not listed above, the
cash deposit rate will continue to be the company-specific rate
published for the most recent period; (3) if the exporter is not a firm
covered in this review, a prior review, or the less-than-fair-value
(LTFV) investigation, but the manufacturer is, the cash deposit rate
will be the rate established for the most recent period for the
manufacturer of the merchandise; and (4) the cash deposit rate for all
other manufacturers or exporters will continue to be 98.60 percent, the
all others rate established in the LTFV investigation.
These deposit requirements, when imposed, shall remain in effect
until publication of the final results of the next administrative
review.
This notice 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 29, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-17394 Filed 7-7-99; 8:45 am]
BILLING CODE 3510-DS-P
