[Federal Register Volume 64, Number 152 (Monday, August 9, 1999)]
[Notices]
[Pages 43157-43160]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20448]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-489-805]
Notice of Preliminary Results of Antidumping Duty Administrative
Review: Certain Pasta From Turkey
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce is conducting an administrative
review of the antidumping duty order on certain pasta (pasta) from
Turkey. This review covers shipments to the United States by two
respondents during the period of review (POR) July 1, 1997, through
June 30, 1998.
We preliminarily find that, for one respondent, sales of the
subject merchandise have been made below normal value. If these
preliminary results are adopted in the final results, we will instruct
the Customs Service to assess antidumping duties on the subject
merchandise exported by this company.
For the other respondent, we preliminarily find that sales of the
subject merchandise have not been made below normal value. If these
preliminary results are adopted in the final results, we will instruct
the Customs Service not to assess antidumping duties on the subject
merchandise exported by this company.
EFFECTIVE DATE: August 9, 1999.
FOR FURTHER INFORMATION CONTACT: John Brinkmann, Office of AD/CVD
Enforcement, Group II, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
5288.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act. In addition, unless otherwise indicated,
all citations to the Department of Commerce's (the Department's)
regulations refer to the regulations codified at 19 CFR part 351
(1998).
Case History
On July 24, 1996, the Department published in the Federal Register
the antidumping duty order on pasta from Turkey (61 FR 38545). On July
1, 1998, we published in the Federal Register the notice of
``Opportunity to Request an Administrative Review'' of this order for
the period July 1, 1997 through June 30, 1998 (63 FR 35909).
In accordance with 19 CFR 351.213(b), on July 31, 1998, Borden,
Inc., Hershey Pasta and Grocery Group, Inc.,1 and Gooch
Foods, Inc. (the petitioners) requested a review of Pastavilla Kartal
Makarnacilik Sanayi ve Ticaret A.S. (Pastavilla). On July 31, 1998,
Maktas Makarnacilik ve Tic. A.S. (Maktas) and Pastavilla, requested an
administrative review, in accordance with 19 CFR 351.213(b)(2). On
August 27, 1998, we published the notice of initiation of this
antidumping duty administrative review covering the period of July 1,
1997 through June 30, 1998 (Notice of Initiation, 63 FR 45796).
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\1\ Effective January 1, 1999, Hershey Pasta and Grocery Group,
Inc., became New World Pasta, Inc.
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Because the Department had disregarded sales that failed the cost
test during the preceding review of Pastavilla and during the
investigation of Maktas, pursuant to section 773(b)(2)(A)(ii) of the
Act, we had reasonable grounds to believe or suspect that sales by
these companies of the foreign like product under consideration for the
determination of normal value in this review may have been made at
prices below the cost of production. Therefore, we initiated cost
investigations on these two companies at the time we initiated the
antidumping review.
On September 1, 1998, we issued an antidumping questionnaire to
Maktas and Pastavilla.2 Pastavilla submitted its section A
questionnaire response on October 6, 1998, and sections B, C, and D on
November 5, 1998. We received Maktas's response to section A on
September 23, 1998, and sections B, C, and D on October 26, 1998.
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\2\ Section A of the questionnaire requests general information
concerning a company's corporate structure and business practices,
the merchandise under review that it sells, and the sales of the
merchandise in all of its markets. Sections B and C of the
questionnaire request comparison market sales listings and U.S.
sales listings, respectively. Section D requests additional
information about the cost of production of the foreign like product
and constructed value of the merchandise under review.
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The Department issued supplemental questionnaires to Pastavilla for
sections B and C on January 27, 1999, and section D on February 8,
1999. On February 17, 1999, we issued to Maktas a supplemental
questionnaire for sections A, B, C, and D. Pastavilla submitted its
response to our supplemental questionnaires for sections B, C, and D on
February 24, 1999. Maktas submitted its response to our supplemental
questionnaire on March 23, 1999.
We issued a second supplemental questionnaire to Pastavilla for
sections B and D on March 11, 1999. Pastavilla submitted its response
to our second supplemental questionnaire on March 18, 1999.
On March 12, 1999, the Department published a notice postponing the
preliminary results of this review until June 30, 1999 (64 FR 12287).
On June 16, 1999, the Department published a notice further postponing
the preliminary results of this review until August 2, 1999 (64 FR
32213).
Scope of Review
Imports covered by this review are shipments of certain non-egg dry
pasta in packages of five pounds (2.27 kilograms) or less, whether or
not enriched or fortified or containing milk or other optional
ingredients such as chopped vegetables, vegetable purees, milk, gluten,
diastases, vitamins, coloring and flavorings, and up to two percent egg
white. The pasta covered by this scope is typically sold in the retail
market, in fiberboard or cardboard cartons, or polyethylene or
polypropylene bags, of varying dimensions.
Excluded from the scope of this review are refrigerated, frozen, or
[[Page 43158]]
canned pastas, as well as all forms of egg pasta, with the exception of
non-egg dry pasta containing up to two percent egg white.
The merchandise subject to review is currently classifiable under
item 1902.19.20 of the Harmonized Tariff Schedule of the United States
(HTSUS). Although the HTSUS subheading is provided for convenience and
customs purposes, the written description of the merchandise under
order is dispositive.
Scope Rulings
The Department has issued the following scope rulings to date:
(1) On October 26, 1998, the Department self-initiated a scope
inquiry to determine whether a package weighing over five pounds as a
result of allowable industry tolerances may be within the scope of the
antidumping and countervailing duty orders. On May 24, 1999, we issued
a final scope ruling finding that, effective October 26, 1998, pasta in
packages weighing or labeled up to (and including) five pound four
ounces is within the scope of the antidumping and countervailing duty
orders. See Memorandum from John Brinkmann to Richard Moreland, dated
May 24, 1999.
Comparisons to Normal Value
To determine whether sales of pasta from Turkey were made in the
United States at less than fair value, for Pastavilla, we compared the
constructed export price (CEP) to the normal value (NV); for Maktas, we
compared the export price (EP) to the NV. Because Turkey's economy
experienced high inflation during the POR (over 60 percent), as is
Department practice, we limited our comparisons to comparison market
sales made during the same month in which the U.S. sale occurred and
did not apply our ``90/60 contemporaneity rule'' (see, e.g., Notice of
Final Results and Partial Rescission of Antidumping Duty Administrative
Review: Certain Pasta From Turkey, 63 FR 68429, 68430 (December 11,
1998) and Certain Porcelain on Steel Cookware from Mexico: Final
Results of Antidumping Duty Administrative Review, 62 FR 42496, 42503
(August 7, 1997)). This methodology minimizes the extent to which
calculated dumping margins are overstated or understated due solely to
price inflation that occurred in the intervening time period between
the U.S. and comparison market sales. We attempted to compare sales of
products sold in the U.S. and comparison market within the same month
that were identical with respect to the following characteristics:
pasta shape; type of wheat; additives; and enrichment. When we did not
find any comparison market sales of merchandise that were identical in
these respects to the merchandise sold in the United States, we
compared U.S. products with the most similar merchandise sold in the
comparison market based on the characteristics listed above, in that
order of priority.
Export Price and Constructed Export Price
For the price to the United States, we used, as appropriate, EP or
CEP, in accordance with sections 772(a) and (b) of the Act. We
calculated EP where the merchandise was sold directly to the first
unaffiliated purchaser in the United States or to an unaffiliated
trading company in Turkey prior to importation and CEP was not
otherwise warranted based on the facts on our record. We calculated CEP
where sales to the first unaffiliated purchaser took place after
importation into the United States. We based EP and CEP on packed CIF,
ex-factory, FOB or delivered prices to the first unaffiliated customer
in, or for exportation to, the United States. Where appropriate, we
reduced these prices to reflect discounts.
In accordance with section 772(c)(2)(A) of the Act, we made
deductions, where appropriate, for movement expenses including inland
freight from plant or warehouse to port of exportation, foreign
brokerage and handling, international freight, marine insurance, U.S.
duties, and U.S. inland freight expenses (freight from port to the
customer). In accordance with section 772(c)(1)(B) of the Act, for
Maktas, we added to the EP the amount of duty drawback on imported
durum wheat. In addition, we increased the EP and CEP by the amount of
the countervailing duties paid that were attributable to an export
subsidy, in accordance with section 772(c)(1)(C) of the Act.
For CEP, in accordance with section 772(d)(1) of the Act, we
deducted from the starting price those selling expenses that were
incurred in selling the subject merchandise in the United States,
including imputed credit costs and indirect selling expenses that
related to economic activity in the United States. We also deducted
from CEP an amount for profit in accordance with section 772(d)(3) and
(f) of the Act.
Normal Value
A. Selection of Comparison Markets
In order to determine whether there was a sufficient volume of
sales in the comparison market to serve as a viable basis for
calculating NV, we compared Pastavilla's and Maktas' volume of
comparison market sales of the foreign like product to the volume of
their U.S. sales of the subject merchandise. Pursuant to sections
773(a)(1) (B) and (C) of the Act, because each respondent's aggregate
volume of comparison market sales of the foreign like product was
greater than five percent of its aggregate volume of U.S. sales of the
subject merchandise, we determined that the comparison market was
viable for both Pastavilla and Maktas.
B. Cost of Production Analysis
Before making any comparisons to normal value, we conducted a COP
analysis, pursuant to section 773(b) of the Act, to determine whether
Pastavilla's and Maktas' comparison market sales were made below the
cost of production. We calculated the COP based on the sum of the cost
of materials and fabrication for the foreign like product, plus amounts
for selling, general, and administrative expenses (SG&A) and packing,
in accordance with section 773(b)(3) of the Act. We relied on
Pastavilla's and Maktas' information as submitted, except in the
specific instances discussed below.
As noted above, we determined that the Turkish economy experienced
high inflation during the POR. Therefore, to avoid the distortive
effect of inflation on our comparison of costs and prices, we requested
that Pastavilla and Maktas submit the product-specific cost of
manufacturing (COM) incurred during each month of the POR. We
calculated a POR-average COM for each product after indexing the
reported monthly costs during the POR to an equivalent currency level
using the Turkish wholesale price index from the International
Financial Statistics published by the International Monetary Fund
(IMF). We then restated the POR-average COM to the cost respective of
each month.
Pastavilla
We recalculated the G&A and interest factors, using the wholesale
price index from the International Financial Statistics published by
the IMF, to be consistent with our indexation of other costs used in
calculating cost of production and constructed value. (See Analysis
Memorandum to John Brinkmann from Dennis McClure dated August 2, 1999,
for further details.)
Maktas
Maktas was not able to provide the requested production quantities
for its revised control numbers. Therefore, we have calculated a
weighted-average cost based on the production quantities
[[Page 43159]]
originally reported for each control number. (See Analysis Memorandum
to John Brinkmann from Cindy Robinson dated August 2, 1999, for further
details.)
Test of Comparison Market Prices
As required under section 773(b) of the Act, we compared the
product-specific monthly COPs (less selling expenses) to comparison
market sales of the foreign like product in order to determine whether
sales had been made at prices below the COP. We determined the net
comparison market prices for the below-cost test by subtracting from
the gross unit price any applicable movement charges, discounts,
rebates, direct and indirect selling expenses, and packing expenses.
Results of COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of 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 12 month period 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) and (C) of the Act. In such cases, because we
compared prices to POR-average costs (indexed for inflation), 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, for purposes of this
administrative review, we disregarded the below-cost sales and used the
remaining sales as the basis for determining NV, in accordance with
section 773(b)(1) of the Act.
Calculation of Normal Value Based on Comparison Market Prices
We calculated NV based on ex-factory or delivered prices to
comparison market customers. We made deductions from the starting price
for loading, inland freight, inland insurance, discounts, and rebates.
In accordance with section 773(a)(6)(A) and (B) of the Act, we deducted
comparison market packing costs and added U.S. packing costs. In
addition, we made circumstance of sale adjustments for direct expenses,
including imputed credit expenses, advertising, Export/Import Bank
insurance against non-payment, and warranty expenses, in accordance
with section 773(a)(6)(C)(iii) of the Act.
When comparing U.S. sales with comparison market sales of similar,
but not identical merchandise, we also made adjustments for physical
differences in the merchandise in accordance with section
773(a)(6)(C)(ii) of the Act. We based this adjustment on the difference
in the variable cost of manufacturing for the foreign like product and
subject merchandise, using POR-average costs indexed for inflation.
Consistent with our methodology in prior reviews (Notice of Final
Results and Partial Rescission of Antidumping Duty Administrative
Review: Certain Pasta From Italy, 64 FR 6615, 6617 (February 10,
1999)), where possible we excluded sales of pasta purchased by the
respondents from unaffiliated producers and resold in the comparison
market from our analysis. However, where the purchased pasta was
commingled with the respondent's production and we could not identify
the resales, we examined both sales of the produced pasta and resales
of the purchased pasta in the comparison market. Since we found the
percentage of pasta purchased by any single respondent to be an
insignificant part of its comparison market sales data base, we
included the sales of commingled purchased pasta in our margin
calculations.
Sales to Affiliated Parties
Pastavilla and its affiliated comparison market distributor made
home-market sales to certain affiliated grocery stores during the POR.
The individual sales of pasta by these affiliated grocery stores to
their unaffiliated customers were not available. Therefore, in
accordance with Sec. 351.403(c) of the Department's regulations, we
performed an analysis to determine whether the prices to the affiliated
grocery stores were comparable to the prices to unaffiliated parties.
Examining identical products only, we compared Pastavilla's and its
comparison market distributor's prices to each affiliated party to
prices charged to all unaffiliated customers, net of all movement
charges, discounts, rebates, direct expenses, and packing. Where prices
to an affiliated party were on average 99.5 percent or more of the
price to the unaffiliated parties, we determined that sales made to
that affiliated party were at arm's length (see 19 CFR 351.403(c) and
Notice of Final Results and Partial Rescission of Antidumping Duty
Administrative Review: Certain Pasta From Turkey, 63 FR 68429, 68430
(December 11, 1998)). We only included in our margin analysis sales to
affiliated parties that were made at arm's length.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, we determined
NV based on sales in the comparison market at the same level of trade
as the U.S. EP and CEP sales, to the extent practicable. When there
were no sales at the same level of trade, we compared U.S. sales to
comparison market sales at a different level of trade.
To determine whether comparison market sales were at different
levels of trade we examined stages in the marketing process and selling
functions along the chain of distribution between the producer and the
unaffiliated (or arm's length) customers. If the comparison-market
sales were at a different level of trade and the differences affected
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 level of trade of the export transaction, we made a
level-of-trade adjustment under section 773(a)(7)(A) of the Act.
Finally, if the NV level was more remote from the factory than the
CEP level and there was no basis for determining whether the difference
in levels between NV and CEP affected price comparability, we granted a
CEP offset, as provided in section 773(a)(7)(B) of the Act. (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).)
For a detailed description of our level-of-trade methodology and
company-specific level of trade findings for these preliminary results,
see the August 2, 1999, 97/98 Administrative Review of Pasta from Italy
and Turkey: Level of Trade Findings Memoranda on file in the Import
Administration's Central Records Unit (Room B-099) of the main Commerce
building. The company-specific level of trade analysis is included in
the analysis memorandum for each company.
The U.S. Court of International Trade (CIT) has held that the
Department's practice of determining LOTs for CEP transactions after
CEP deductions is an impermissible interpretation of section 772(d) of
the Act. See Borden, Inc., v. United States, 4 F. Supp.2d 1221, 1241-42
(CIT 1998) (Borden); see also, Micron Technology, Inc. v. United
States, Court No. 96-06-01529, Slip Op. 99-02 at 8-15 (CIT, January 28,
1999). The Department believes, however, that its practice is in full
compliance with the statute and that these CIT decisions do
[[Page 43160]]
not contain persuasive statutory analysis. On June 4, 1999, the CIT
entered final judgment in Borden on the LOT issue. See Borden, Inc., v.
United States, Court No. 96-08-01970, Slip Op. 99-50 (CIT, June 4,
1999). The government is considering an appeal of Borden. The Micron
case is on remand to the Department for application of the Borden LOT
decision in the underlying administrative proceeding. Consequently, the
Department has continued to follow its normal practice of adjusting CEP
under section 772(d) prior to starting a LOT analysis, as articulated
in the Department's regulations at Sec. 351.412.
Company-Specific Issues
Maktas
We recalculated comparison market credit expenses to account for
both reported billing adjustments, where appropriate. We also
recalculated inventory carrying costs for the comparison market. See
Analysis Memorandum to John Brinkmann from Cindy Robinson dated August
2, 1999, for further details.
Pastavilla
We reclassified Pastavilla's comparison market channel of trade and
customer category for one observation. We recalculated comparison
market imputed credit expenses, indirect selling expenses, and
inventory carrying costs. In addition, we have recalculated inventory
carrying costs for U.S. sales. See Analysis Memorandum to John
Brinkmann from Dennis McClure dated August 2, 1999, for further
details.
Currency Conversion
Because this proceeding involves a high-inflation economy, we
limited our comparison of U.S. and comparison market sales to those
occurring in the same month (as described above) and used daily
exchange rates. (See Notice of Final Results and Partial Rescission of
Antidumping Duty Administrative Review: Certain Pasta From Turkey, 63
FR 68429, 68430 (December 11, 1998).)
The Department's preferred source for daily exchange rates is the
Federal Reserve Bank. However, the Federal Reserve Bank does not track
or publish exchange rates for the Turkish Lira. Therefore, we made
currency conversions based on the daily exchange rates from the Dow
Jones Service, as published in the Wall Street Journal.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the
following percentage weighted-average margins exist for the period July
1, 1997 through June 30, 1998:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
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Maktas..................................................... 1.57
Pastavilla................................................. 0.00
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We will disclose the calculations used in our analysis to parties
to this proceeding within five days of the publication date of this
notice (see 19 CFR 351.224(b)). Any interested party may request a
hearing within 30 days of the date of publication of this notice. (see
19 CFR 351.310(c)). Any hearing, if requested, will be held 44 days
after the date of publication, or the first workday thereafter.
Interested parties may submit case briefs within 30 days of the date of
publication of this notice. Parties who submit case briefs in this
proceeding should provide a summary of the arguments not to exceed five
pages and a table of statutes, regulations, and cases cited. Rebuttal
briefs, limited to issues raised in the case briefs, may be filed not
later than seven days after the date of filing of case briefs. The
Department will publish 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 comments, within 120 days from the
publication of these preliminary results.
Assessment Rate
Pursuant to 19 CFR 351.212(b), the Department calculated an
assessment rate for each importer of the subject merchandise. Upon
completion of this review, the Department will instruct the U.S.
Customs Service to assess antidumping duties on all appropriate entries
by applying the assessment rate to its entered value of the
merchandise. If these preliminary results are adopted in our final
results, we will instruct the U.S. Customs Service to assess
antidumping duties on Maktas' entries of the merchandise subject to the
review. We will instruct Customs Service not to assess antidumping
duties on Pastavilla's entries of the merchandise subject to the
review.
Cash Deposit Requirements
To calculate the cash deposit rate for each producer and/or
exporter included in this administrative review, we divided the total
dumping margins for each company by the total net value for that
company's sales during the review period.
Furthermore, the following deposit rates will be effective upon
publication of the final results of this administrative review for all
shipments of pasta from Turkey entered, or withdrawn from warehouse,
for consumption on or after the publication date, as provided by
section 751(a)(2)(C) of the Act: (1) The cash deposit rates for
Pastavilla and Maktas will be the rate established in the final results
of this review, except if the rate is less than 0.5 percent and,
therefore, de minimis, 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 final results in which that manufacturer
or exporter participated; (3) if the exporter is not a firm covered in
this review, a prior review, or the original less-than-fair-value
(LTFV) investigation, but the manufacturer is, the cash deposit rate
will be the rate established for the most recent final results for the
manufacturer of the merchandise; and (4) if neither the exporter nor
the manufacturer is a firm covered in this or any previous review
conducted by the Department, the cash deposit rate will be 51.49
percent, the ``All Others'' rate established in the LTFV investigation
(See Notice of Antidumping Duty Order and Amended Final Determination
of Sales at Less Than Fair Value: Certain Pasta from Turkey, 61 FR
38546 (July 24, 1996)).
These cash 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 determination is issued and published in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: August 2, 1999.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-20448 Filed 8-6-99; 8:45 am]
BILLING CODE 3510-DS-P
