[Federal Register Volume 63, Number 150 (Wednesday, August 5, 1998)]
[Notices]
[Pages 41794-41801]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20912]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-851]
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
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: August 5, 1998.
FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Kate 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 the People's Republic of China 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 Duty Investigations: Certain Preserved Mushrooms from
Chile, India, Indonesia, and the People's Republic of China, (63 FR
5360, February 2, 1998) (``Notice of Initiation'')), the following
events have occurred:
During January and February 1998, the Department requested
information from the U.S. Embassy in the People's Republic of China
(``PRC'') to identify producers/exporters of the subject merchandise.
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
questionnaire to the China Chamber of Commerce for Import & Export of
Foodstuffs, Native Produce, and Animal By-Products (the ``Chamber'')
and the Ministry of Foreign Trade and Economic Cooperation (``MOFTEC'')
with instructions to forward the questionnaire to all producers/
exporters of the subject merchandise and that these companies must
respond by the due dates. During February and March 1998, we sent
courtesy copies of the antidumping duty questionnaire to the following
companies identified as possible exporters/producers of the subject
merchandise during the POI:
Shanghai Maling Canned Food
Fuzhou Cannery
Chin Huay Food Co. (HK) Ltd.
China Ningbo Canned Food
Zhang Zhou General Canned Food
Xia Men Cannery
Raoping Tinned Food Factory
Ruian Canned Factory
Yue Qin Canned Food Factory
Wenzhou Wanli Food Co. Ltd.
Glory Land Food Industrial Co.
Ning De Cannery
Shansha Cannery
Xin an Jiang Canned Food
Cangxi Cannery
Ba Zhong Cannery
Chongqing Cannery
Tung Chun Company
Nang Jin Cannery
Mei Wei Foods Industry Co. Ltd.
Dongguan Canning Factory
Cangban Canned Food Factory
Cofco (Longhai) Food Inc.
Longhai Senox Food Industry Ltd.
Pinghe Canned Factory
Fujian Tiand Food Drink Co.
Shanghai Foreign Trade Xian You
Fuan Canned Food Factory
Xibin Overseas Chinese Canned
Dongya Food Company
Fujian Zhaoan Canned Food
Zhanghou Xiancheng Canned
Zhang Huaqing Canned Food
Zishan Food Canning Plant
Gerber Food (Yunnan) Food Co.
Jiufa Edible Fungus Co. Ltd.
Xiamen Jiahua Export and Import Trading Co. Ltd.
Xiamen Gulong Import Export Co., Ltd.
Bazhong Canned Food Factory
Beiliu Canned Food Factory
Dangdong Canned Food Import & Export Co.
Dayi Brewery
Dongqing Canned Food Processing Factory
Fu'an Kangcuo Cereals & Oils Management Station
Fujian Changshan Huaqiao Canned Food Processing Factory
Fujian Zhangzhou Canned Food Factory
Hebei Edible Fungus Research Institute
Hunan Changsha Canned Food Factory
Jiangsu Rugao Canned Food Factory
Chifeng Fuyuan Cereals & Oils Co.
Fuzhou Native Produce & Animal By-Products Import and Export Co.
Guangdong Heshan Foodstuffs Import & Export Corp.
Beijing Foreign Trade Food Corp.
China National Processed Food Import & Export Corp.
Chengdu Native Produce Import & Export Corp.
Shantou Foodstuffs Import & Export Corp.
Shanghai Cereals & Oil Trade Co.
Guangdong Maoming Native Produce Import & Export Corp.
Henan Native Produce Import and Export Corp.
[[Page 41795]]
Qingdao Cereals, Oils & Foodstuffs Import and Export Corp.
On March 30, 1998, the Department issued a notice setting aside 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). No parties to this
investigation commented on product coverage.
During the period March through June 1998, the Department received
questionnaire responses from (1) China Processed Food Import & Export
Company (``China Processed'');
(2) Jiangsu Cereals, Oils & Foodstuffs Group Import & Export
Corporation (``Jiangsu'');
(3) Shenzhen Cofry Cereals, Oils, & Foodstuffs Company, Ltd.
(``Shenzhen Cofry''); (4) Gerber (Yunnan) Food Co.; (5) Fujian
Provincial Cereals, Oils & Foodstuffs Import & Export Corp.;
(6) Putian Cannery Fujian Province, Xiamen Gulong Import & Export
Co., Ltd.; (7) General Canned Foods Factory of Zhangzhou; (8) Zhejiang
Cereals, Oils & Foodstuffs Import & Export Corp.; (9) Shanghai
Foodstuffs Import & Export Corp.; (10) Canned Goods Co. of Raoping; and
(11) Xiamen Jiahua Import & Export Trading Company, Ltd. (``Xiamen
Jiahua''). In addition, the Department received letters from Beilu
Canned Food Factory and Longhai Senox, Ltd., each stating that it did
not sell the subject merchandise to the United States during the second
half of 1997.
On April 13, 1998, the Department invited interested parties to
provide publicly available information (``PAI'') for valuing the
factors of production and for surrogate country selection. We received
responses from the interested parties on May 27, 1998, and additional
comments on June 4, 1998.
On April 14, 1998, pursuant to section 777A(c) of the Act, the
Department determined that, due to the large number of exporters/
producers of the subject merchandise, it would limit the number of
mandatory respondents in this investigation. See ``Respondent
Selection'' section below.
On April 20, 1998, Gerber requested that it be considered a
voluntary respondent in this investigation. On April 28, 1998, we
informed Gerber that, due to administrative resource constraints, we
would not accept voluntary respondents unless one of the designated
mandatory respondents elected not to respond to the Department's
questionnaire.
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).
On June 5, 1998, the respondents requested that the PRC be treated
as a market economy in this investigation, and that the PRC mushroom
industry be considered a market-oriented industry (``MOI''). The
Department issued a MOI questionnaire to the PRC respondents on June
19, 1998, and the respondents submitted their responses on July 17,
1998. Treatment of both of these claims for the preliminary
determination is discussed below under ``Nonmarket Economy Country and
Market-Oriented Industry Status.''
On June 17, 1998, the petitioners alleged that critical
circumstances exist with respect to imports of mushrooms from the PRC.
Accordingly, pursuant to section 732(e) of the Act, on June 19, 1998,
the Department requested information regarding shipments of mushrooms
for the period January 1996 to July 1998 from all mandatory respondents
participating in this investigation. We received the requested
information on July 6, 1998. The critical circumstances analysis for
the preliminary determination is discussed below under ``Critical
Circumstances.''
Postponement of Final Determination and Extension of Provisional
Measures
Pursuant to section 735(a)(2) of the Act, on July 16, 1998, the
mandatory PRC respondents requested that, in the event of an
affirmative preliminary determination in this investigation, the
Department postpone its final determination until not later than 135
days after the date of the publication of an affirmative preliminary
determination in the Federal Register. On July 27, 1998, these parties
amended their request to agree to extend the provisional measures to
not more than six months. In accordance with 19 CFR 351.210(b), because
(1) our preliminary determination is affirmative, (2) the requesting
exporters account for a significant proportion of exports of the
subject merchandise, and (3) no compelling reasons for denial exist, we
are granting the respondents' request and are postponing the final
determination until no later than 135 days after the publication of
this notice in the Federal Register. Suspension of liquidation will be
extended accordingly.
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 this investigation (``POI'') comprises each
exporter's two most recent fiscal quarters prior to the filing of the
petition.
Respondent Selection
The Department determined that the resources available to it for
this investigation and the three companion mushroom investigations
limited our ability to analyze any more than the responses of the three
largest exporters/producers of the subject merchandise in this
investigation. Based on Section A questionnaire responses, the
Department selected the three largest exporters to be the mandatory
respondents in this proceeding: China Processed (including its
affiliated
[[Page 41796]]
exporter, Xiamen Jiahua), Jiangsu, and Shenzhen Cofry. (See
``Memorandum from the Team to Louis Apple dated April 14, 1998).
Subsequently, Jiangsu reported in its questionnaire responses that
it purchases the subject merchandise from Mei Wei Foods Industrial Co.
Ltd. (``Mei Wei'') and resells the merchandise to Tak Fat Trading
Company (``Tak Fat''), a Hong Kong trading company, which owns Mei Wei.
In submissions separate from Jiangsu, Tak Fat and Mei Wei provided the
same information. According to the questionnaire responses and Tak
Fat's letters, Tak Fat negotiates the sales prices with the ultimate
U.S. customer, and controls the production of Mei Wei, its wholly-owned
PRC affiliate. Jiangsu acts only as an intermediary in order to
facilitate the export of the merchandise from the PRC and arrange the
shipment of the subject merchandise from the PRC. Under these
circumstances, we find that Tak Fat is the actual exporter and
appropriate respondent. Thus, our analysis for purposes of the
preliminary determination was based on Tak Fat's sales during the POI,
which included the sales initially reported by Jiangsu sourced from Mei
Wei, and the other mandatory exporters and their respective suppliers.
As the supplemental questionnaire responses include consolidated data
from Tak Fat and Jiangsu, the Department was able to analyze Tak Fat's
sales based on submitted data.
Nonmarket Economy Country and Market Oriented Industry Status
The Department has treated the PRC as a nonmarket economy country
(``NME'') in all past antidumping investigations (see, e.g., 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'') and Final Determination of Sales at Less Than Fair Value:
Furfuryl Alcohol from the People's Republic of China, 60 FR 22545 (May
8, 1995) (``Furfuryl Alcohol'')). A designation as an NME remains in
effect until it is revoked by the Department (see section 771(18)(C) of
the Act).
On June 5, 1998, the respondents made a claim that economic changes
in the PRC warrant revocation of PRC's NME status. Because the
respondents' submission does not provide sufficient support for their
claim for market economy status and does not address a number of
important factors for determining market economy status (see,
Memorandum from the Team to Lou Apple, dated July 27, 1998), we have
preliminarily determined to continue to treat the PRC as an NME.
In addition, the respondents have claimed that their material
inputs are acquired at market prices and that, accordingly, the
Department should determine that the PRC mushroom industry is a MOI and
should rely on the actual PRC prices for valuing these inputs. Because
the supporting information for this claim was submitted by respondents
on July 17, 1998, less than two weeks prior to the preliminary
determination, we did not have adequate time to analyze the information
for purposes of the preliminary determination. However, we will examine
the respondents' MOI claim for purposes of the final determination.
Separate Rates
Each respondent has requested a separate company-specific rate.
China Processed is wholly owned by China National Cereals, Oils, &
Foodstuffs Import & Export Corp., which in turn is owned by ``the whole
people.'' Its affiliated exporter Xiamen Jiahua is a domestic joint
venture between China National Cereals, Oils & Foodstuffs Corp., and
Xiamen Special Economic Trade Group Cereals, Oils, & Foodstuffs Import
& Export Company. Both of these companies are also owned by ``the whole
people.'' Shenzhen Cofry is a limited liability company owned by the
China Ocean Helicopter Company and the Anhui Cereals, Oils, &
Foodstuffs Import & Export Group, which, in turn, are both owned by
``the whole people.'' Tak Fat is a Hong Kong trading company which is
wholly-owned by Hong Kong entities. Therefore, we determine that no
separate rates analysis is required for this exporter.
As stated in Silicon Carbide and Furfuryl Alcohol, ownership of the
company by ``all the people'' does not require the application of a
single rate. Accordingly, the above-mentioned companies named as
mandatory respondents as well as the companies who submitted a Section
A response are eligible for consideration of a separate rate.
The Department's separate rate test is not concerned, in general,
with macroeconomic/border-type controls, e.g., export licenses and
quotas and minimum export prices, particularly if these controls are
imposed to prevent dumping. The test focuses, rather, on controls over
the investment, pricing, and output decision-making process at the
individual firm level. See Certain Cut-to-Length Carbon Steel Plate
from Ukraine: Final Determination of Sales at Less than Fair Value, 62
FR 61754, 61757, (November 19, 1997); Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, from the People's Republic of China:
Final Results of Antidumping Duty Administrative Review, 62 FR 61276,
61279, November 17, 1997; and Honey from the People's Republic of
China: Preliminary Determination of Sales at Less than Fair Value, 60
FR 14725, 14726, (March 20, 1995).
To establish whether a firm is sufficiently independent from
government control to be entitled to a separate rate, the Department
analyzes each exporting entity under a test arising out of the Final
Determination of Sales at Less Than Fair Value: Sparklers from the
People's Republic of China, 56 FR 20588 (May 6, 1991) and amplified in
Silicon Carbide. Under the separate rates criteria, the Department
assigns separate rates in NME cases only if respondents can demonstrate
the absence of both de jure and de facto governmental control over
export activities.
1. Absence of De Jure Control
The respondents have placed on the record a number of documents to
demonstrate absence of de jure control, including the ``Foreign Trade
Law of the People's Republic of China'' and the ``Law of the People's
Republic of China on Industrial Enterprises Owned By the Whole
People.''
In prior cases, the Department has analyzed these laws and found
that they establish an absence of de jure control. (See, e.g., Notice
of Final Determination of Sales at Less Than Fair Value: Certain
Partial-Extension Steel Drawer Slides with Rollers from the People's
Republic of China, 60 FR 54472 (October 24, 1995); see also Furfuryl
Alcohol.) We have no new information in this proceeding which would
cause us to reconsider this determination.
According to the respondents, exports of mushrooms are also
affected by quota allocations under a December 17, 1997, Notice
Regarding Printing and Distributing ``List of Commodities Subject
Export License Administration and Issuance of Licenses at Different
Levels'' and Relevant Issues issued by MOFTEC (``Notice''). The
respondents claim that, although the export license and quota
allocation regulations and procedures which applied to sales of the
subject merchandise during the POI were promulgated in 1996, they are,
for all intents and purposes, the same as those set forth in the 1997
version. Under the Notice, 143 items are subject to export licensing
controls with three categories of control--(1) ``controlled''; (2)
``less controlled,'' and (3) the ``least
[[Page 41797]]
controlled'' merchandise. Mushrooms fall under the ``least controlled''
category.
The respondents describe the quota process as follows. MOFTEC
distributes quota amounts to the provinces and municipalities and
exporters (except those located in Beijing, which are supposed to apply
to MOFTEC directly). The quota process is administered through export
licenses required for the export of the subject merchandise. Neither
the quota allocation process nor the export licensing process involve
any PRC government participation in the setting of export prices.
Global quota amounts are determined by MOFTEC based on (1)
international market demand/supply; (2) the previous year's exports;
(3) Chamber proposals; and (4) the suggestions of PRC Provincial Trade
Commissions which take into account the requests of mushroom exporters
and their previous year's exports as well as requests of other PRC
exporters who wish to export, but have not previously received a quota.
The Commissions are comprised of local government authorities involved
with foreign trade of their provinces. They are separate from MOFTEC,
receiving neither funding nor administration from MOFTEC. Once a quota
is received, a company may obtain an export license from the applicable
Commissions' Trade Administration Import and Export Divisions after it
has a commitment from a foreign buyer. Copies of the quotas are sent to
MOFTEC and the Chamber.
The Commissions grant the export licenses based on the quotas
allocated to each company. Records are kept of each individual
company's quota and the quantities it has exported so that the
Commissions can determine when an individual company has reached its
allocated quota.
Furthermore, according to the respondents, the concept of the
``minimum price'' floor referenced in the Memorandum on Minimum Price
for Export of Canned Mushroom Products is an agreed minimum price only.
The exporters claim to have the autonomy to set the price at whatever
level they wish without government interference. The memorandum
referenced above did not set forth minimum prices established by the
Chamber or the PRC government but, rather, established minimum prices
that were discussed among, and agreed to, by the member companies of
the Chamber that were involved in the canned mushroom business.
The respondents describe the process for establishing the minimum
prices as follows: (1) member companies request the Chamber convene a
meeting of all the exporters; (2) the Chamber provides information on
domestic productivity and international markets during this meeting;
and (3) the member companies then agree to minimum prices and
memorialize the agreement in the minutes to the meeting. Therefore,
according to the respondents, the minimum price is an agreement among
the exporters and a means by which exporters can insure that no
exporter is selling subject merchandise lower than what they, as an
industry, consider to be the fair market price. In addition, the
minimum price is considered a means of ``self-regulation'' among the
industry to prevent unfair competition.
The quota system in the instant investigation operates on the basis
of transparent and well-defined rules. Companies are free to
independently negotiate export prices with their customers above the
floor price, which the exporting companies themselves set. MOFTEC has
claimed that it does not involve itself in the price-setting of
companies that export mushrooms. Thus, the allocation of the export
quota is arrived at in a competitive forum, and separate prices are set
by each enterprise with industry input regarding the floor price and in
open competition with respect to the final price.
In past cases, the Department has determined that there is an
absence of government control over export pricing and marketing
decisions of firms even though there may be some government involvement
with respect to the export of products subject to investigation. See
Preliminary Determination of Sales at Less Than Fair Value: Honey from
the People's Republic of China, 60 FR 14725, March 20, 1995.
Accordingly, we preliminarily determine that, within the preserved
mushroom industry, there is an absence of de jure government control
over exporting pricing and marketing decisions of firms.
2. Absence of De Facto Control
As stated in previous cases, there is some evidence that certain
enactments of the PRC central government have not been implemented
uniformly among different sectors and/or jurisdictions in the PRC. (See
Silicon Carbide and Furfuryl Alcohol.) Therefore, the Department has
determined that an analysis of de facto control is critical in
determining whether respondents are, in fact, subject to a degree of
governmental control which would preclude the Department from assigning
separate rates.
The Department typically considers four factors in evaluating
whether each respondent is subject to de facto governmental control of
its export functions: (1) whether the export prices are set by, or
subject to, the approval of a governmental authority; (2) whether the
respondent has authority to negotiate and sign contracts, and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of its management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses (see Silicon Carbide and Furfuryl Alcohol).
China Processed/Xiamen Jiahua and Shenzhen Cofry each asserted the
following: (1) it establishes its own export prices; (2) it negotiates
contracts without guidance from any governmental entities or
organizations; (3) it makes its own personnel decisions; and (4) it
retains the proceeds of their export sales, uses profits according to
its business needs, and has the authority to sell its assets and to
obtain loans. Additionally, the three respondents' questionnaire
responses indicate that company-specific pricing during the POI does
not suggest coordination among exporters. This information supports a
preliminary finding that there is an absence of de facto governmental
control of the export functions of these companies. Consequently, we
preliminarily determine that these exporters have met the criteria for
the application of separate rates.
Margins for Exporters Whose Responses Were Not Analyzed
For the responding companies that provided all the questionnaire
responses requested of them and otherwise fully cooperated with the
Department's investigation, but nonetheless, were not fully analyzed by
the Department due to limited resources (see ``Respondent Selection''
section above), including Jiangsu, we are assigning the weighted-
average of the rates of the three fully analyzed companies, or a non-
adverse facts available rate. Companies receiving this rate are
identified by name in the ``Suspension of Liquidation'' section of this
notice.
The parties who responded but were not analyzed have applied for
separate rates, and provided information for the Department to consider
in this request. Although the Department is unable, due to
administrative constraints, to consider the requests for separate rates
status, and to calculate a separate rate for each of these named
parties, there has been no failure on the part of these
[[Page 41798]]
firms to provide requested information. Because it would not be
appropriate for the Department to refuse to consider a request for an
examination of separate rates status, and assign to the cooperative
firms the rate for the noncooperative firms (which in this case is an
adverse margin based on facts available), the Department has assigned a
single calculated rate for these firms, which is a weighted-average of
the rates of the three analyzed companies.
China-Wide Rate
U.S. import statistics indicate that the total quantity and value
of U.S. imports of mushrooms from the PRC is greater than the total
quantity and value of mushrooms reported by all PRC exporters that
submitted responses in this investigation. Given this discrepancy, it
appears that not all exporters of PRC mushrooms responded to our
questionnaire. Accordingly, we are applying a single antidumping
deposit rate--the PRC-wide rate--to all exporters in the PRC, other
than those specifically identified below under ``Suspension of
Liquidation,'' based on our presumption that the export activities of
the companies that failed to respond to the Department's questionnaire
are controlled by the PRC government (see, e.g., Notice of Final
Determination of Sales at Less Than Fair Value: Bicycles from the
People's Republic of China, 61 FR 19026, April 30, 1996) (``Bicycles
from the PRC'').
As explained below, this PRC-wide antidumping rate is based on
adverse facts available. 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.''
Section 776(b) of the Act provides that adverse inferences may be
used when a party has failed to cooperate by not acting to the best of
its ability to comply with a request for information. The exporters
that decided not to respond in any form to the Department's
questionnaire failed to act to the best of their ability in this
investigation. Further, absent a response, we must presume government
control of these and all other PRC companies for which we cannot make a
separate rates determination. Thus, the Department has determined that,
in selecting from among the facts otherwise available, an adverse
inference is warranted.
As adverse facts available, we are assigning the highest margin in
the petition, 198.63%, because the margins in the petition (as
recalculated by the Department at initiation) were higher than any of
the calculated margins.
Section 776(c) of the Act provides that where the Department
selects from among the facts otherwise available and relies on
``secondary information,'' such as the petition, the Department shall,
to the extent practicable, corroborate that information from
independent sources reasonably at the Department's disposal. The
Statement of Administrative Action accompanying the URAA, H.R. Doc. No.
316, 103d Cong., 2d Sess. (1994) (hereinafter, the ``SAA''), states
that ``corroborate'' means to determine that the information used has
probative value. See SAA at 870.
The petitioners methodology for calculating (``EP'') and normal
value (``NV'') is discussed in the Notice of Initiation. To corroborate
the petition's EP calculations, we compared the prices in the petition
for three of the products to the prices submitted by respondents for
the same mushroom style and container size. To corroborate the
petitioners' NV calculations, we compared the petitioners' factor
consumption and surrogate value data for those same three products to
the data reported by the respondents for the most significant factors--
fresh mushrooms, cans, factory overhead, and selling, general, and
administrative expenses, and the surrogate values for these factors in
the petition to the values selected for the preliminary determination,
as discussed below. Our analysis showed that the petitioners' data was
either reasonably close to the data submitted by the respondents and
the surrogate values chosen by the Department, or conservative (see
Memorandum to the File dated July 27, 1998 (``Corroboration Memo'').
Therefore, we find that the calculations set forth in the petition have
probative value.
Fair Value Comparisons
To determine whether sales of the subject merchandise by China
Processed/Xiamen Jiahua, Tak Fat, and Shenzhen Cofry to the United
States were made at LTFV, we compared the EP to the NV, as described in
the ``Export Price'' and ``Normal Value'' sections of this notice,
below. In accordance with section 777A(d)(1)(A)(i) of the Act, we
compared POI-wide weighted-average EPs to weighted-average NVs. To
value foreign brokerage and handling incurred in the PRC, we relied on
the value used in the Bicycles from the PRC investigation.
Export Price
China Processed/Xiamen Jiahua
We used EP methodology in accordance with section 772(a) of the
Act, because the subject merchandise was sold directly to unaffiliated
customers in the United States prior to importation and CEP methodology
was not otherwise indicated. We calculated EP based on packed FOB or
C&F prices to the first unaffiliated purchaser in the United States.
Where appropriate, we made deductions from the starting price (gross
unit price) for billing adjustments, inland freight from the plant/
warehouse to port of exit, brokerage and handling in the PRC, and ocean
freight. Because domestic brokerage and handling and inland freight
were provided by NME companies, we based those charges on surrogate
rates from India. (See ``Normal Value'' section for further
discussion). As China Processed and Xiamen Jiahua reported using market
economy carriers for ocean freight, we valued this expense using the
actual reported costs.
Tak Fat
We used EP methodology in accordance with section 772(a) of the Act
because the subject merchandise was sold directly to unaffiliated
customers in the United States prior to importation and CEP methodology
was not otherwise indicated. We calculated EP based on packed FOB or
C&F prices, to the first unaffiliated purchaser in the United States.
Where appropriate, we made deductions from the starting price (gross
unit price) for inland freight from the plant/warehouse to port of
exit, brokerage and handling in the PRC, and international freight, in
accordance with section 772(c) of the Act. Because domestic brokerage
and handling and inland freight were provided by NME companies, we
based those charges on surrogate rates from India. As Tak Fat reported
using market economy carriers for ocean freight, we valued this expense
using the actual reported costs.
Shenzhen Cofry
We used EP methodology in accordance with section 772(a) of the
Act, because the subject merchandise was sold directly to unaffiliated
customers in the United States prior to
[[Page 41799]]
importation and CEP methodology was not otherwise indicated. We
calculated EP based on packed FOB or C&F prices to the first
unaffiliated purchaser in the United States. Where appropriate, we made
deductions from the starting price (gross unit price) for billing
adjustments, inland freight from the plant/warehouse to port of exit,
brokerage and handling in the PRC, and ocean freight. Because domestic
brokerage and handling and inland freight were provided by NME
companies, we based those charges on surrogate rates from India. As
Shenzhen Cofry reported using market economy carriers for ocean
freight, we valued this expense using the actual reported costs.
Normal Value
A. Surrogate Country
Section 773(c)(4) of the Act requires the Department to value the
NME producer's factors of production, to the extent possible, in one or
more market economy countries that: (1) are at a level of economic
development comparable to that of the NME, and (2) are significant
producers of comparable merchandise. The Department has determined that
India, Pakistan, Sri Lanka, Egypt, and Indonesia are countries
comparable to the PRC in terms of overall economic development (see
Memorandum dated February 23, 1998). According to the available
information on the record, we have determined that both India and
Indonesia meet the statutory requirements for an appropriate surrogate
country for the PRC. For purposes of the preliminary determination, we
have selected India as the surrogate country, based on the quality and
contemporaneity of the currently available data. Accordingly, we have
calculated NV using Indian values for the PRC producers, factors of
production, except, as noted below, in certain instances where an input
was sourced from a market economy and paid for in a market economy
currency. We have obtained and relied upon PAI wherever possible.
B. Factors of Production
In accordance with section 773(c) of the Act, we calculated NV
based on factors of production reported by the companies in the PRC
which produced mushrooms for the exporters which sold mushrooms to the
United States during the POI. To calculate NV, the reported unit factor
quantities were multiplied by publicly available Indian values, where
possible.
For Longhai Food, Inc. (``Longhai''), which supplied some of the
merchandise sold by China Processed, Mei Wei, and Zhaoan Canned Food
Factory (``Zhaoan''), which supplied some of the merchandise sold by
Shenzhen Cofry, we recalculated the reported mushroom consumption
factor for preserved mushroom produced from brined mushrooms, to an
amount equivalent to consumption of fresh mushrooms, based on the
difference between each producer's reported consumption of both types
of mushrooms. We made this adjustment because we were unable to
identify a surrogate value for brined mushrooms (see below).
For those inputs (e.g., glass jars used by Longhai) that were
sourced (either partially or totally) from a market economy and paid
for in market economy currency, we used the actual price paid for the
input to calculate the factors-based NV, in accordance with 19 CFR
351.408(a)(1). As appropriate, for these imported materials, we
calculated PRC brokerage and inland freight from the port to the
factory using surrogate rates from India. We valued the remaining
factors using PAI from India, except where noted below. Where a
producer did not report the distance between the material supplier and
the factory, as facts available, we used either the distance to the
nearest seaport (if an import value was used as the surrogate value for
the factor) or the farthest distance reported for a supplier, as facts
available.
Mei Wei claimed it obtained labels from a market economy source and
paid market economy prices for this factor, but did not provide the
necessary price data. Therefore, we have valued Mei Wei's label
consumption based on the Indian surrogate value for labels. Dongya Food
Co., Ltd., a supplier to Xiamen Jiahua, claimed that it consumed
chlorine purchased from a market economy source. According to the
single invoice submitted to support this claim, the material, sodium
hypochloride, was purchased in November 1995--over one and a half years
prior to the beginning of the POI. Given this long period between
purchase and the POI, we have no basis to assume that the material in
question was actually used during the POI, nor is it clear from the
record that the sodium hypochloride purchased is the same as the
chlorine reported as consumed. Therefore, we have not valued this input
based on the submitted market economy price and, instead, relied on the
surrogate value.
The selection of the surrogate values applied in this determination
was based on the quality, specificity, and contemporaneity of the data.
As appropriate, we adjusted input prices to make them delivered prices.
For those values not contemporaneous with the POI and quoted in a
foreign currency, we adjusted for inflation using wholesale price
indices published in the International Monetary Fund's International
Financial Statistics. For a complete analysis of surrogate values, see
the Preliminary Determination Valuation Memorandum from the team to the
File (``Preliminary Determination Valuation Memorandum''), dated July
27, 1998.
We valued fresh mushrooms using the average unit value derived from
the 1996-1997 annual reports from three Indian preserved mushroom
producers for their purchases of fresh mushrooms. We were unable to
identify an appropriate surrogate value for brined (provisionally
preserved) mushrooms; thus, as facts available for the preliminary
determination, we used the fresh mushroom value to value brined
mushroom consumption but adjusted the reported brined mushroom
consumption factor to an amount equivalent to a fresh mushroom
consumption factor using an industry standard ratio. For salt and
citric acid, we used a domestic price published in the commodity
section of The Financial Express. For monosodium glutamate (``MSG''),
vitamin C (ascorbic acid), tin cans and lids, glass jars, and labels,
we used Indian import values from Monthly Statistics of the Foreign
Trade of India (``Monthly Statistics''). To value chlorine, we used a
value from the Final Determination of Sales at Less Than Fair Value:
Coumarin from the PRC, (59 FR 66895, December 28, 1994), as found in
the Department's Index of Factor Values for Use in Antidumping Duty
Investigations Involving Products from the People's Republic of China.
To value water consumed in the production process (i.e., water packed
in cans or jars with the mushrooms), we relied on the publicly
available tariff rates reported in the Second Water Utilities Data
Book.
Longhai, Zishan Cannery Canned Food Factory (``Zishan''), which
also produced merchandise sold by China Processed, and Zhaoan Canned
Food Factory (``Zhaoan''), which produced some of the merchandise sold
by Shenzhen Cofry, reported that they resold scrap can material. For
Longhai and Zishan, we made an offset deduction to the surrogate cost
of production using an average unit value derived from 1997 U.S. import
statistics. We used this U.S. value as facts available because we were
unable to identify an appropriate surrogate value from a surrogate
country. We were not able to make the same offset deduction
[[Page 41800]]
for Zhaoan because it did not report the necessary factor data.
Longhai, Zishan, and Zhaoan, reported that they resold scrap mushrooms
not consumed in the canning/jarring process. We were unable to identify
an appropriate surrogate value for this material. As this factor does
not appear to have a significant impact on the calculation of NV, we
have not made an offset for scrap mushrooms in the preliminary
determination.
We valued labor based on a regression-based wage rate, in
accordance with 19 CFR 351.408(c)(3).
To value electricity, we used the 1996 electricity rates reported
in an article ``All Charged Up Over the Cost of Power in India''
published in Business World in August 1996. We based the value of coal
and diesel fuel on the import values from the Monthly Statistics.
We based our calculation of factory overhead (which includes water
consumed for rinsing and blanching mushrooms), SG&A expenses, and
profit on data contained in the financial reports of three Indian
producers of the subject merchandise (i.e., Agro Dutch Foods (India),
Saptarishi Agro Industries, Ltd., and Transchem, Ltd.).
To value truck freight rates, we used a 1994 rate from The Times of
India. As we were unable to identify a surrogate value for inland water
transportation, we valued boat and barge transportation using the
surrogate value for truck freight. With regard to rail freight, we
based our calculation on information from the Indian Railway Conference
Association.
The CAFC's decision in Sigma Corp. v. United States, 117 F. 3d 1401
(CAFC 1997) requires that we revise our calculation of source-to-
factory surrogate freight for those material inputs that are based on
CIF import values in the surrogate country. Therefore, we have added to
CIF surrogate values from India a surrogate freight cost using the
shorter of the reported distances from either the closest PRC port to
the factory, or from the domestic supplier to the factory on an import-
specific basis.
For the following reported packing materials: glue, tape,
corrugated paper, wooden pallets, and shrink wrap, we used import
values from the Monthly Statistics.
Critical Circumstances
On June 17, 1998, the petitioners alleged that there is a
reasonable basis to believe or suspect that critical circumstances
exist with respect to imports of mushrooms from the PRC. In accordance
with 19 CFR 351.206(c)(2)(i), since this allegation was filed earlier
than the deadline for the Department's preliminary determination, we
must issue our preliminary critical circumstances determination not
later than the preliminary determination.
Section 733(e)(1) of the Act provides that if a petitioner alleges
critical circumstances, the Department will determine whether there is
a reasonable basis to believe or suspect that:
(A)(i) there is a history of dumping and material injury by reason
of dumped imports in the United States or elsewhere of the subject
merchandise, or
(ii) the person by whom, or for whose account, the merchandise was
imported knew or should have known that the exporter was selling the
subject merchandise at less than its fair value and that there was
likely to be material injury by reason of such sales, and
(B) there have been massive imports of the subject merchandise over
a relatively short period.
In this investigation, the first criterion is satisfied. Brazil has
levied antidumping duties against preserved mushrooms from the PRC.
Brazil's antidumping duty order will be in force until January 2003.
Therefore, we preliminarily determine that there is a history of
dumping elsewhere of mushrooms by PRC producers/exporters. Because
there is a history of dumping, it is not necessary to address whether
the importer had knowledge that dumping was occurring and material
injury was likely.
Because we have preliminarily found that the first statutory
criterion is met, we must consider the second statutory criterion:
whether imports of the merchandise have been massive over a relatively
short period. According to 19 CFR 351.206(h), we consider the following
to determine whether imports have been massive over a relatively short
period of time: (1) volume and value of the imports; (2) seasonal
trends (if applicable); and (3) the share of domestic consumption
accounted for by the imports.
When examining volume and value data, the Department typically
compares the export volume for equal periods immediately preceding and
following the filing of the petition. Under 19 CFR 351.206(h), unless
the imports in the comparison period have increased by at least 15
percent over the imports during the base period, we will not consider
the imports to have been ``massive.'' The Department examines shipment
information submitted by the respondent or import statistics when
respondent-specific shipment information is not available.
To determine whether or not imports of subject merchandise have
been massive over a relatively short period, we compared each of the
mandatory respondent's export volume for the five months subsequent to
the filing of the petition (January-May 1998) to that during the five
months prior to the filing of the petition (August-December 1997).
These periods were selected based on the Department's practice of using
the longest period for which information is available from the month
that the petition was submitted through the effective date of the
preliminary determination. For the non-mandatory PRC exporters, we
performed this analysis using import statistics and then subtracted the
figures of the mandatory respondents. For all other producers/
exporters, we performed the analysis using import statistics.
Based on our analysis, we preliminarily find that the increase in
imports was greater than 15 percent with respect to the named
respondents, the non-mandatory PRC exporters, and all other producers/
exporters.
With regard to the seasonality issue, we were unable to discern a
seasonal pattern for any of the mandatory respondents, or any other
company, based on the information on the record. Furthermore, we were
unable to consider the share of domestic consumption accounted for by
the imports, pursuant to 351.206(h)(iii), because the available data
did not permit such analysis.
However, because there is a history of dumping of such or similar
merchandise, and imports of mushrooms from the mandatory respondents,
the respondents who were not analyzed, and the respondents who failed
to submit a response have been massive over a relatively short period
of time, we preliminarily determine that there is a reasonable basis to
believe or suspect that critical circumstances exist with respect to
mushrooms from the all mandatory respondents in this investigation as
well as the non-mandatory respondents and all other producers/
exporters.
We will make a final determination concerning critical
circumstances when we make our final determination of sales at LTFV in
this investigation.
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
[[Page 41801]]
imports of subject merchandise that are entered, or withdrawn from
warehouse, for consumption on or after 90 days prior to 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 EP, as
indicated in the chart below. These suspension of liquidation
instructions will remain in effect until further notice.
------------------------------------------------------------------------
Weighted-
Exporter/manufacturer average margin Critical
percentage circumstances
------------------------------------------------------------------------
China Processed Food I&E Co./ 168.72 Yes.
Xiamen Jiahua I&E Trading
Company, Ltd.
Tak Fat Trading Co............... 180.63 Yes.
Shenzhen Cofry Cereals, Oils, & 189.61 Yes.
Foodstuffs Co., Ltd.
Gerber (Yunnan) Food Co.......... 176.78 Yes.
Jiangsu Cereals, Oils & 176.78 Yes.
Foodstuffs Group Import & Export
Corporation.
Fujian Provincial Cereals, Oils & 176.78 Yes.
Foodstuffs I&E Corp.
Putian Cannery Fujian Province... 176.78 Yes.
Xiamen Gulong I&E Co., Ltd... 176.78 Yes.
General Canned Foods Factory of 176.78 Yes.
Zhangzhou.
Zhejiang Cereals, Oils & 176.78 Yes.
Foodstuffs I&E Corp.
Shanghai Foodstuffs I&E Corp..... 176.78 Yes.
Canned Goods Co. of Raoping...... 176.78 Yes.
PRC-wide Rate.................... 198.63 Yes.
------------------------------------------------------------------------
The PRC-wide rate applies to all entries of subject merchandise
except for entries from exporters/factories that are identified
individually above.
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 October 16, 1998, and rebuttal briefs, no later than October
23, 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 October 28, 1998, 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 135 days after the publication of this notice in the
Federal Register.
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. 98-20912 Filed 8-4-98; 8:45 am]
BILLING CODE 3510-DS-P
