[Federal Register Volume 63, Number 150 (Wednesday, August 5, 1998)]
[Notices]
[Pages 41786-41789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20910]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-337-804]
Notice of Preliminary Determination of Sales at Less Than Fair
Value: Certain Preserved Mushrooms From Chile
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: August 5, 1998.
FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Katherine
Johnson, Import Administration, International Trade Administration,
U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230; telephone: (202) 482-4136 or (202) 482-4929,
respectively.
The 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 (``URAA''). In addition,
unless otherwise indicated, all citations to the Department of Commerce
(``Department'') regulations are to the regulations at 19 CFR part 351,
62 FR 27296 (May 19, 1997).
Preliminary Determination
We preliminarily determine that certain preserved mushrooms
(``mushrooms'') from Chile are being, 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 of sales at LTFV are
shown in the ``Suspension of Liquidation'' section of this notice.
Case History
Since the initiation of this investigation (Notice of Initiation of
Antidumping Investigations: Certain Preserved Mushrooms From Chile,
India, Indonesia, and the People's Republic of China (63 FR 5360,
February 2, 1998)), the following events have occurred:
During January and February 1998, the Department requested
information from the U.S. Embassy in Chile to identify producers/
exporters of the subject merchandise. During February 1998, the
Department also requested and received comments from the petitioners
and potential respondents regarding the model matching criteria.
On February 27, 1998, the United States International Trade
Commission (``ITC'') notified the Department of its affirmative
preliminary injury determination in this case.
Also on February 27, 1998, the Department issued an antidumping
duty questionnaire to Nature's Farm Products (Chile), S.A. (``NFP''),
the sole exporter of the subject merchandise from Chile.
In March 1998, the Department received a response to Section A of
the questionnaire from NFP. NFP reported that its home market was not
viable during the period of investigation (POI), but that its sales to
Brazil during the POI constituted a viable third country market.
On March 30, 1998, the Department issued a notice identifying a
period for interested parties to raise issues regarding product
coverage. (See Certain Preserved Mushrooms from Chile, India,
Indonesia, and the People's Republic of China: Comments Regarding
Product Coverage, 63 FR 16971 (April 7, 1998). NFP submitted comments
on April 30, 1998, stating that product coverage should include fresh
mushrooms as well as preserved mushrooms.
On April 1, 1998, the petitioners in this investigation, L.K.
Bowman, Inc., Modern Mushroom Farms, Inc., Monterey Mushrooms, Inc.,
Mount Laurel Canning Corp., Mushroom Canning Company, Sunny Dell Foods,
Inc., and United Canning Corp., submitted a timely allegation pursuant
to section 773(b) of the Act that NFP had made sales in the third
country market at less than the cost of production (``COP''). Our
analysis of the allegation indicated that there were reasonable grounds
to believe or suspect that NFP sold mushrooms in the third country
market at prices less than the COP. Accordingly, we initiated a COP
investigation with respect to NFP pursuant to section 773(b) of the Act
(See Memorandum from Team to Louis Apple, Office Director, dated April
8, 1998).
On April 30, 1998, the Department requested comments as to whether
it should consider ``whole mushroom size'' as a physical characteristic
for its model matching methodology. On May 14, 1998, NFP responded to
the Department's request for information.
[[Page 41787]]
On May 1, 1998, pursuant to section 733(c)(1)(A) of the Act, the
petitioners made a timely request to postpone the preliminary
determination for forty days. We granted this request and, on May 8,
1998, we postponed the preliminary determination until no later than
July 27, 1998. (See 63 FR 27264, May 18, 1998).
We received NFP's responses to Sections B and C of the
questionnaire in April 1998. We issued a supplemental questionnaire for
Sections A, B, and C to NFP in April 1998 and received responses to
these questionnaires, along with the Section D response, in May 1998.
In May 1998, we issued a supplemental questionnaire for Section D to
NFP and received the response to this questionnaire in June 1998. NFP
submitted additional information concerning its response data in June
and July 1998.
In the supplemental Section B response, NFP stated that, after a
review of its date of sale methodology for U.S. sales, revisions to its
POI sales totals indicated that the home market may, in fact, be
viable. In response, the petitioners filed a sales below COP allegation
on NFP's home market sales on July 6, 1998. As discussed below under
``Home Market Viability, `` the Department has determined that the home
market is not viable.
Scope of Investigation
For purposes of this investigation, the products covered are
certain preserved mushrooms whether imported whole, sliced, diced, or
as stems and pieces. The preserved mushrooms covered under this
investigation 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 the investigation 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 investigation 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.
The merchandise subject to this investigation is classifiable under
subheadings 2003.10.27, 2003.10.31, 2003.10.37, 2003.10.43,
2003.10.47.2003.10.53, 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, the written
description of the merchandise under investigation is dispositive.
Period of Investigation
The period of investigation (``POI'') is January 1, 1997, through
December 31, 1997.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by NFP covered by the description in the ``Scope of
Investigation'' section, above, and sold to Brazil during the POI to be
foreign like products for purposes of determining appropriate product
comparisons to U.S. sales. As discussed below, we determined that there
were no comparable third country sales in the ordinary course of trade
(i.e., above cost) during the POI. Therefore, we compared U.S. sales to
constructed value ( ``CV''), as described below.
Fair Value Comparisons
To determine whether sales of mushrooms from Chile to the United
States were made at less than fair value, we compared constructed
export price (``CEP'') to the Normal Value (``NV''), as described in
the ``Constructed Export Price'' and ``Normal Value'' sections of this
notice, below. In accordance with section 777A(d)(1)(A)(i) of the Act,
we calculated weighted-average CEPs for comparison to weighted-average
NVs or CVs.
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 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 CEP, it is the level of the constructed sale from the
exporter to the importer.
To determine whether NV sales are at a different level of trade
than CEP, we examined 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 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).
In this case, we compared all U.S. sales to CV, as noted above. As
we could not determine the LOT of the sales from which we derived the
profit for CV, we could not determine whether there is a difference in
LOT between any U.S. sales and CV. Therefore, we made no LOT adjustment
nor a CEP offset to NV.
Constructed Export Price
We calculated CEP, in accordance with subsections 772(b) of the
Act, because sales to the first unaffiliated purchaser took place after
importation into the United States.
We based CEP on the packed ex-warehouse or delivered prices to
unaffiliated purchasers in the United States. We made deductions for
discounts and rebates, where applicable. We also made deductions for
the following movement expenses, where appropriate, in accordance with
section 772(c)(2)(A) of the Act: foreign inland freight, foreign
brokerage, international freight (including marine insurance), U.S.
customs duties, post-sale warehousing expenses, and U.S. inland
freight. In accordance with section 772(d)(1) of the Act, we deducted
those selling expenses associated with economic activities occurring in
the United States, including direct selling expenses (credit costs,
commissions and other direct selling expenses), inventory carrying
costs, and other indirect selling expenses. We also deducted the profit
allocated to these expenses, in accordance with sections 772(d)(3) and
772(f) of the Act.
NFP reported receipt of an export incentive credit from the Chilean
government on both U.S. and Brazilian sales. As there is no statutory
provision
[[Page 41788]]
for an adjustment for this credit, we disregarded it when calculating
CEP and NV.
We excluded from our analysis NFP's sales of imperfect merchandise
because the quantity involved is insignificant and NFP made no
comparable third country sales of this type of merchandise. See, e.g.,
Preliminary Determination of Sales at Less than Fair Value and
Postponement of Final Determination: Canned Pineapple Fruit from
Thailand, 60 FR 2734, 2737 (January 11, 1995).
Normal Value
After testing (1) home market and third country viability as
discussed below, and (2) whether third country sales were at below-cost
prices, we calculated NV as noted in the ``Price-to-CV Comparisons''
section of this notice.
1. Home and Third Country Market Viability
In order to determine whether there is a sufficient volume of sales
in the home market to serve as a viable basis for calculating NV (i.e.,
the aggregate volume of home market sales of the foreign like product
is equal to or greater than five percent of the aggregate volume of
U.S. sales), we compared the respondent's volume of home market sales
of the foreign like product to the volume of U.S. sales of the subject
merchandise, in accordance with section 773(a)(1)(C) of the Act.
Because NFP's aggregate volume of POI home market sales of the foreign
like product was less than five percent of its aggregate volume of POI
U.S. sales for the subject merchandise (as determined by the date of
sale methodology applied by the Department discussed in a Memorandum
from the Team to Louis Apple dated July 27, 1998), we determined that
the home market was not viable for NFP. However, we determined that
Brazil, NFP's largest third country market, was viable in accordance
with section 773(a)(1)(B)(ii) of the Act. Therefore, in accordance with
section 773(a)(1)(C) of the Act, we determined that Brazil is the
appropriate foreign market for calculating NV.
2. Cost of Production Analysis
As stated in the ``Case History'' section of the notice, based on a
timely allegation filed by the petitioners, the Department initiated a
COP investigation of NFP to determine whether sales were made at prices
less than the COP.
We conducted the COP analysis described below.
A. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated COP
based on the sum of NFP's cost of materials and fabrication for the
foreign like product, plus an amount for third country SG&A, interest
expenses, and packing costs. We used the information from NFP's Section
D supplemental questionnaire response to calculate COP, with the
following adjustments:
(1) We revised NFP's submitted general and administrative (``G&A'')
expense rate because NFP calculated G&A as a percentage of sales
revenue, rather than cost of goods sold . In addition, NFP calculated a
separate rate for each product. We calculated a company-wide G&A rate
by dividing total G&A expense by total manufacturing cost.
(2) The Department normally calculates financial expenses on a
consolidated basis; however, NFP did not provide either a consolidated
financial statement or a consolidated financial expense rate.
Therefore, we recalculated NFP's financial expense rate based on its
non-consolidated financial statement. In its calculation, NFP claimed
the full amount of the monetary correction as an offset to its
financial expense. We allowed only the portion of the monetary
correction associated with the current portion of its bank loans since
the remaining portion relates to other fiscal periods. In addition, NFP
failed to respond to the Department's request for a detailed analysis
of its foreign exchange gains and losses. Therefore, we included the
entire amount of the net foreign exchange loss in our calculation of
financial expense. We calculated a revised net financial expense and
divided it by the total manufacturing costs.
Startup Adjustment Claim. NFP claimed a startup adjustment to its
COP under section 773(f)(1)(C) of the Act, alleging that it has yet to
achieve commercial production levels and, thus, continues to operate in
a start-up mode. Although NFP completed construction of its plant in
1994, it contends that, due to technical difficulties associated with
harvesting necessary raw materials, commercial production levels have
not yet been reached. NFP estimates that these levels will be reached
in mid-1999.
Section 773(f)(1)(C)(ii) of the Act authorizes adjustments for
start-up operations ``only where (I) a producer is using new production
facilities or producing a new product that requires substantial
additional investment, and (II) production levels are limited by
technical factors associated with the initial phase of production.''
NFP's production facilities were three years old by the start of the
POI; therefore, we do not consider these facilities to be ``new''
within the meaning of section 773(f)(1)(C)(ii)(I) of the Act.
Moreover, NFP has not identified any additional costs associated
with ``substantially retooling'' its production facilities, which,
according to the Statement of Administrative Action accompanying the
URAA, H.R. Doc. No. 316, 103d Cong., 2d Sess. (1994) (``SAA''), might
satisfy the first criterion. Because section 773(f)(1)(C)(ii) of the
Act establishes that both prongs of the test must be met before a
startup adjustment is warranted, this finding is sufficient to deny
NFP's claim. Therefore, we need not address NFP's arguments concerning
technical factors that limit commercial production levels (see Notice
of Final Determination of Sales at Not Less Than Fair Value: Collated
Roofing Nails from Korea, 62 FR 51420, 51426, October 1, 1997).
B. Test of Third Country Sales Prices
We compared the weighted-average COP for NFP, adjusted where
appropriate, to third country sales of the foreign like product as
required under section 773(b) of the Act. In determining whether to
disregard third country market sales made at prices less than the COP,
we examined whether (1) within an extended period of time, such sales
were made in substantial quantities, and (2) such sales were made at
prices which permitted the recovery of all costs within a reasonable
period of time. On a product-specific basis, we compared the COP to the
third country market prices, less any applicable movement charges, and
direct and indirect selling expenses.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of 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) 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
[[Page 41789]]
section 773(b)(2)(D) of the Act. Therefore, we disregarded the below-
cost sales. Where all sales of a specific product were at prices below
the COP, we disregarded all sales of that product.
We found that all of NFP's Brazilian sales were at prices below the
COP. Thus, in the absence of any above-cost Brazilian sales, we
compared constructed export prices to CV in accordance with section
773(a)(4) of the Act.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of NFP's cost of materials, fabrication, SG&A,
interest, and U.S. packing costs. We made the same adjustments to NFP's
reported costs for the CV calculation as we made for the COP
calculation.
Because there were no above-cost Brazilian sales and hence no
actual company-specific profit data available for NFP's sales of the
foreign like product to Brazil, we calculated profit expenses in
accordance with section 773(e)(2)(B)(iii) of the Act and the SAA.
Section 773(e)(2)(B)(iii) states that profit may be determined under
any reasonable method with the appropriate ``profit cap.'' The SAA,
however, provides that where, due to the absence of data, the
Department cannot determine amounts for profit under alternatives (i)
or (ii) of section 773(e)(2)(B) of the Act or a ``profit cap'' under
alternative (iii) of section 773(e)(2)(B) of the Act, the Department
may apply alternative (iii) on the basis of the facts available (SAA at
841). In this case, we are unable to determine an amount for profit
under alternatives (i) or (ii), or a ``profit cap'' under alternative
(iii) because we do not have actual amounts incurred by NFP on sales of
merchandise in the same general category as the subject merchandise and
because NFP is the only producer subject to this investigation.
Therefore, as facts availabe under section 773(e)(2)(B)(iii) of the
Act, for NFP's profit we are using the 1996 profit margin for
Ianasafrut S.A., a leading Chilean fruit and vegetable producer. We
believe this data is a reasonable surrogate for NFP's profit because it
is based upon a Chilean producer's experience on sales of the same
general category as the subject merchandise for a period in which there
was no alleged dumping. For SG&A, we have used NFP's actual expenses
incurred in Chile on Brazilian sales because this data reflects NFP's
actual experience in selling the foreign like product.
Price-to-CV Comparisons
For price-to-CV comparisons, we made adjustments to CV in
accordance with section 773(a)(8) of the Act. We deducted from CV the
amount of indirect selling expenses capped by the amount of the U.S.
commissions.
Currency Conversion
We made currency conversions into U.S. dollars based on the
exchange rates in effect on the dates of the U.S. sales as certified by
the Federal Reserve Bank, in accordance with section 773A of the Act.
Verification
As provided in section 782(i) of the Act, we will verify all
information relied upon 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 imports of subject
merchandise that are entered, or withdrawn from warehouse, for
consumption on or after the date of publication of this notice in the
Federal Register. We will instruct the Customs Service to require a
cash deposit or the posting of a bond equal to the weighted-average
amount by which the NV exceeds the export price, as indicated in the
chart below. These suspension-of-liquidation instructions will remain
in effect until further notice. The weighted-average dumping margins
are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer margin
percentage
------------------------------------------------------------------------
Nature's Farm Products (Chile) S.A.......................... 142.43
All Others.................................................. 142.43
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
Public Comment
Case briefs or other written comments in at least ten copies must
be submitted to the Assistant Secretary for Import Administration no
later than September 8, 1998, and rebuttal briefs no later than
September 11, 1998. A list of authorities used and an executive summary
of issues should accompany any briefs submitted to the Department. Such
summary should be limited to five pages total, including footnotes. In
accordance with section 774 of the Act, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs. Tentatively, the hearing
will be held on September 15, 1998, time and room to be determined, at
the U.S. Department of Commerce, 14th Street and Constitution Avenue,
N.W., 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 to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, within 30 days of the publication of this notice. Requests should
contain: (1) the party's name, address, and telephone number; (2) the
number of participants; and (3) 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 by October 13, 1998.
This determination is issued and published in accordance with
sections 733(d) and 777(i)(1) of the Act.
Dated: July 27, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-20910 Filed 8-4-98; 8:45 am]
BILLING CODE 3510-DS-P
