01-8820. Notice of Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review: Canned Pineapple Fruit From Thailand

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to requests by producers/exporters of subject merchandise and by the petitioners, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on canned pineapple fruit (CPF) from Thailand. This review covers ten producers/exporters of the subject merchandise. The period of review (POR) is July 1, 1999, through June 30, 2000.

We preliminarily determine that sales have been made below normal value (NV). If these preliminary results are adopted in our final results, we will instruct the U.S. Customs Service to assess antidumping duties based on the difference between the export price (EP) or the constructed export price (CEP), as applicable, and the NV.

Interested parties are invited to comment on the preliminary results. Parties who submit arguments are requested to submit with each argument: (1) a statement of the issue and (2) a brief summary of the argument. Further, we would appreciate parties submitting written comments to provide the Department with an additional copy of the public version of any such comments on diskette.

EFFECTIVE DATE:

April 10, 2001.

FOR FURTHER INFORMATION CONTACT:

Constance Handley or Charles Riggle, at [phone] or [phone], respectively; AD/CVD Enforcement OfficeV, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

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 (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to 19 CFR Part 351 (April 2000).

Case History

On July 18, 1995, the Department issued an antidumping duty order on CPF from Thailand. See Notice of Antidumping Duty Order and Amended Final Determination: Canned Pineapple Fruit From Thailand, 60 FR 36775 (July 18, 1995). On July 20, 2000, we published in the Federal Register the notice of opportunity to request the fifth administrative review of this order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 65 FR 45037 (July 20, 2000).

On July 20, 2000, July 24, 2000, and August 3, 2000, the following companies requested that the Department conduct an administrative review for the period from July 1, 1999, through June 30, 2000 respectively: Vita Food Factory (1989) Co., Ltd. (Vita), Kuiburi Fruit Canning Company Limited (KFC) and Malee Sampran Public Co., Ltd. (Malee); The remaining companies requested reviews for the same period on July 31, 2000: Siam Food Products Public Co. Ltd. (SFP), The Thai Pineapple Public Co., Ltd. (TIPCO), Thai Pineapple Canning Industry (TPC), and Dole Food Company, Inc., Dole Packaged Foods Company, and Dole Thailand, Ltd. (collectively, “Dole”);

In addition, on July 28, 2000, the petitioners, Maui Pineapple Company and the International Longshoremen's and Warehousemen's Union, in accordance with 19 CFR 351.213(b)(1), requested a review of KFC, Malee, Prachuab Fruit Canning Company (Praft), Siam Fruit Canning (1988) Co., Ltd. (SIFCO), SFP, TIPCO, TPC, Vita, Dole, and Siam Agro Industry Pineapple and Others Co., Ltd. (SAICO).

On August 3, 2000, Malee withdrew its own request for an administrative review and requested that the Department reject the petitioners' request for an administrative review of Malee. Malee argued that the petitioners' request does not comply with 19 CFR 351.213(b)(1) governing review requests by domestic interested parties because the petitioners did not explain sufficiently why they had “reason to believe” that the current antidumping duty rates do not reflect the true margin of less-than-normal-value sales. However, based on the Department's precedent for granting requests for administrative reviews, the Department deemed the petitioners' request to be adequate and decided to initiate an administrative review of Malee along with other companies for which reviews had been requested.

On September 6, 2000, we published the notice of initiation of this antidumping duty administrative review, covering the period July 1, 1999, through June 30, 2000. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 65 FR 53980 (September 6, 2000).

On September 12, 2000 and September 15, 2000 respectively, in response to the Department's questionnaire, Praft and SAICO stated that they made no shipments to the United States of the subject merchandise during the POR. On September 26, 2000, the Department issued a letter to SAICO requesting confirmation that SAICO had made no sales through other pineapple companies or trading companies. On October 3, 2000, SAICO confirmed that it had no shipments to the United States through any channel. The Department independently confirmed with the U.S. Customs Service that there were no shipments from Praft or SAICO during the POR. Therefore, in accordance with section 351.213(d)(3) of the Department's regulations, and consistent with our practice, we are treating these firms as non-shippers for purposes of this review and are preliminarily rescinding this review with respect to Praft and SAICO.

Scope of the Review

The product covered by this review is CPF, defined as pineapple processed and/or prepared into various product forms, including rings, pieces, chunks, tidbits, and crushed pineapple, that is packed and cooked in metal cans with either pineapple juice or sugar syrup added. CPF is currently classifiable under subheadings 2008.20.0010 and 2008.20.0090 of the Harmonized Tariff Schedule of the United States (HTSUS). HTSUS 2008.20.0010 covers CPF packed in a sugar-based syrup; HTSUS 2008.20.0090 covers CPF packed without added sugar (i.e., juice-packed). Although these HTSUS subheadings are provided for convenience and for customs purposes, the written description of the scope is dispositive.

Verification

As provided in section 782(i)(3) of the Act, we verified information provided by Dole and TPC. We used standard verification procedures, including on-site inspection of the respondent producers' facilities and examination of relevant sales and financial records. Our verification findings are outlined in the verification reports, which are in the case file in Room B-099 of the Main Department of Commerce Building. Additionally, since the petitioners have submitted a written request for verification of the factual information submitted by SIFCO, and since SIFCO has not been verified in the last three reviews in which it participated, verification is mandatory in accordance with 19 CFR 531.307(b)(1)(v). For this review, due to limited staffing resourses, SIFCO will be verified after the preliminary determination.

Fair Value Comparisons

We compared the EP or the CEP, as applicable, to the NV, as described in the Export Price and Constructed Export Price and Normal Value sections of this notice. We first attempted to compare contemporaneous sales in the U.S. and comparison markets of products that were identical with respect to the following characteristics: weight, form, variety, and grade. Where we were unable to compare sales of identical merchandise, 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. Where there were no appropriate comparison market sales of comparable merchandise, we compared the merchandise sold in the United States to constructed value (CV), in accordance with section 773(a)(4) of the Act. For all respondents except SIFCO, we based the date of sale on the date of the invoice. For SIFCO, we based the date of sale on the contract date. According to SIFCO, there were no changes to the material terms of sale after the original contract was signed, and these terms did not change once the contract was issued. Therefore, because the material terms of sale were set on this date, we relied on contract date as the date of sale, as we had in the 1998/1999 review involving SIFCO.

Export Price and Constructed Export Price

For the price to the United States, we used, as appropriate, EP or CEP as defined in sections 772(a) and 772(b) of the Act, respectively. Section 772(a) of the Act defines EP as the price at which the subject merchandise is first sold by the exporter or producer outside the United States to an unaffiliated purchaser for exportation to the United States, before the date of importation, or to an unaffiliated purchaser for exportation to the United States.

Section 772(b) of the Act defines CEP as the price at which the subject merchandise is first sold inside the United States before or after the date of importation, by or for the account of the producer or exporter of the merchandise, or by a seller affiliated with the producer or exporter, to an unaffiliated purchaser, as adjusted under subsections 772(c) and (d) of the Act.

For all respondents, we calculated EP and CEP, as appropriate, based on the packed prices charged to the first unaffiliated customer in the United States.

In accordance with section 772(c)(2) of the Act, we reduced the EP and CEP by movement expenses, export taxes and U.S. import duties, where appropriate. Section 772(d)(1) of the Act provides for additional adjustments to CEP. Accordingly, for all relevant sales we deducted direct and indirect selling expenses incurred in the United States and an amount for profit.

We determined the EP or CEP for each company as follows:

TIPCO

For TIPCO's U.S. sales, the merchandise was sold either directly by TIPCO or indirectly through its U.S. affiliate, TIPCO Marketing Co. (TMC), to the first unaffiliated purchaser in the United States prior to importation. We calculated an EP for all of TIPCO's sales because CEP was not otherwise warranted based on the facts of record. Although TMC is a company legally incorporated in the United States, the company has neither business premises nor personnel in the United States. All activities transacted on behalf of TMC, including invoicing, paperwork processing, receipt of payment, and arranging for customs and brokerage, are conducted in Thailand where all TMC employees are located. Accordingly, as the merchandise was sold before importation by TMC outside the United States, we have determined these sales to be EP transactions. See Circular Welded Non-Alloy Steel Pipe from Mexico: Final Results of Antidumping Duty Administrative Review, 65 FR 37518 (June 15, 2000) and accompanying Decision Memo at Hylsa Comment 3.

We calculated EP based on the packed FOB or CIF price to unaffiliated purchasers for exportation to the United States. In accordance with section 772(c)(2)(A) of the Act, we made deductions from the starting price for foreign movement expenses (including brokerage and handling, port charges, stuffing expenses, and inland freight), international freight, U.S. customs duties, and U.S. brokerage and handling. In addition, we revised the stuffing cost to reflect an arms-length price. See Analysis Memorandum for the Thai Pineapple Public Co., Ltd., dated April 2, 2001 (TIPCO Analysis Memo).

SFP

We calculated an EP for all of SFP's sales because the merchandise was sold directly by SFP outside the United States to the first unaffiliated purchaser in the United States prior to importation, and CEP was not otherwise indicated. SFP has one employee in the United States; however, this employee does not: (1) Take title to the subject merchandise; (2) issue invoices or receive payments; or (3) arrange for other aspects of the transaction. The merchandise was shipped directly by SFP in Bangkok to the unaffiliated customer in the United States. The information on the record indicates that SFP's Bangkok office is responsible for confirming orders and for issuing the invoice directly to the customer. Payment also is sent directly from the unaffiliated U.S. customer to SFP in Bangkok. Therefore, the Department has determined that these sales were made in Bangkok prior to importation and, thus, are properly classified as EP transactions.

We calculated EP based on the packed FOB or C&F price to unaffiliated purchasers for exportation to the United States. We made deductions for foreign movement expenses and international freight in accordance with section 772(c)(2)(A) of the Act. See Analysis Memorandum for Siam Food Products Public Co. Ltd., dated April 2, 2001 (SFP Analysis Memo).

Vita

We calculated an EP for all of Vita's sales because the merchandise was sold directly by Vita outside the United States to the first unaffiliated purchaser in the United States prior to importation, and CEP was not otherwise indicated. We calculated EP based on the packed FOB price to unaffiliated purchasers for exportation to the United States. In accordance with section 772(c)(2)(A) of the Act, we made deductions from the starting price for foreign movement expenses (including brokerage and handling, terminal handling charge, bill of lading fee, customs clearance (shipping) charge, port charges, document fee, stuffing expenses, inland freight and other miscellaneous charges), U.S. customs duties, and U.S. brokerage and handling. See Analysis Memorandum for Vita Food Factory (1989) Co., Ltd., dated April 2, 2001 (Vita Analysis Memo).

KFC

We calculated an EP for all of KFC's sales because the merchandise was sold directly by KFC outside the United States to the first unaffiliated purchaser in the United States prior to importation, and CEP was not otherwise indicated. We calculated EP based on the packed, FOB or C&F price to unaffiliated purchasers for exportation to the United States. In accordance with section 772(c)(2)(A) of the Act, we made deductions from the starting price for foreign movement expenses and international freight. See Analysis Memorandum for Kuiburi Fruit Canning Company Limited, dated April 2, 2001 (KFC Analysis Memorandum).

SIFCO

We calculated an EP for all of SIFCO's sales because the merchandise was sold directly by SIFCO outside the United States to the first unaffiliated purchaser in the United States prior to importation, and CEP was not otherwise indicated. We calculated EP based on the packed, FOB or C&F price to unaffiliated purchasers for exportation to the United States. In accordance with section 772(c)(2)(A) of the Act, we made deductions from the starting price for foreign movement expenses including inland freight (which consisted of brokerage and handling, port/ gate charges, staffing charges, document charges, and truck costs), international freight, and U.S. brokerage and handling. See Analysis Memorandum for Siam Fruit Canning (1988) Co., Ltd., dated April 2, 2001 (SIFCO Analysis Memo).

TPC

During the POR, TPC had both EP and CEP transactions. We calculated an EP for sales where the merchandise was sold directly by TPC outside the United States to the first unaffiliated purchaser in the United States prior to importation, and CEP was not otherwise warranted based on the facts of record. We calculated a CEP for sales made by TPC's affiliated U.S. reseller, Mitsubishi International Corporation (MIC), after importation of the subject merchandise into the United States. EP and CEP were based on the packed FOB, ex-warehouse, or delivered price to unaffiliated purchasers in, or for exportation to, the United States. We made deductions for discounts and rebates, including early payment discounts, promotional allowances, freight allowances, and billback discounts and rebates. We also made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Act. These include inland freight from plant to port of exportation, foreign brokerage and handling, other miscellaneous foreign port charges, international freight, marine insurance, U.S. customs brokerage, U.S. customs duty, harbor maintenance fees, merchandise processing fee, and U.S. inland freight expenses (freight from port to warehouse and freight from warehouse to the customer).

In accordance with section 772(d)(1) of the Act, for CEP sales, we deducted from the starting price those selling expenses that were incurred in selling the subject merchandise in the United States, including commissions, direct selling expenses (credit costs, warranty expenses), and indirect selling expenses incurred by MIC in the United States. We also deducted from CEP an amount for profit in accordance with section 772(d)(3) of the Act. See Analysis Memorandum for the Thai Pineapple Canning Industry, dated April 2, 2001 (TPC Analysis Memo).

Malee

For this POR, the Department found that all of Malee's U.S. sales were properly classified as CEP transactions because these sales were made in the United States by Malee's affiliated trading company, Icon Foods.

CEP was based on the packed ex-dock U.S. port price to unaffiliated purchasers in the United States. We made deductions from the starting price for discounts in accordance with 19 CFR 351.401(c). We also made deductions for foreign inland movement expenses, insurance and international freight in accordance with section 772(c)(2)(A) of the Act. Because all of Malee's sales were CEP, in accordance with section 772(d)(1) of the Act, we deducted from the starting price those selling expenses associated with selling the subject merchandise in the United States, including direct selling expenses and indirect selling expenses incurred by Icon Foods in the United States. We also deducted from CEP an amount for profit in accordance with section 772(d)(3) of the Act. See Analysis Memorandum for Malee Sampran Public Co., Ltd., dated April 2, 2001 (Malee Analysis Memo).

Dole

For this POR, the Department found that all of Dole's U.S. sales were properly classified as CEP transactions because these sales were made in the United States by Dole Packaged Foods (DPF), a division of Dole.

CEP was based on DPF's price to unaffiliated purchasers in the United States. We made deductions from the starting price for discounts in accordance with 19 CFR 351.401(c). We also made deductions for foreign inland movement expenses, insurance and international freight in accordance with section 772(c)(2)(A) of the Act. Because all of Dole's sales were CEP, in accordance with section 772(d)(1) of the Act, we deducted from the starting price those selling expenses associated with selling the subject merchandise in the United States, including direct and indirect selling expenses incurred by DPF in the United States. We also deducted from CEP an amount for profit in accordance with section 772(d)(3) of the Act.

In addition, based on verification findings we made changes to Dole's control numbers, marine insurance, advertising expense, indirect selling expenses, early payment discounts, the shipment ratio between Dole Thailand and Dole Philippines, inventory carrying cost, packing materials and the standard case factor for one product. We also added certain sales reported by Dole at verification and made an adjustment to the vendor allowance reported for these sales. See Memorandum to Gary Taverman from Constance Handley and Christopher Riker, Verification of the U.S. and Comparison Market Sales Information and the Cost Information in the Response of The Thai Pineapple Public Company Ltd. in the 1999-2000 Administrative Review of Canned Pineapple Fruit from Thailand, dated April 2, 2001, (Dole Verification Report) (at X); see also Analysis Memorandum for Dole Food Company, Dole Packaged Foods and Dole Thailand, dated April 2, 2001 (Dole Analysis Memo).

Normal Value

A. Selection of Comparison Markets

Based on a comparison of the aggregate quantity of home market sales and U.S. sales, we determined that, with the exception of Malee, the quantity of foreign like product each respondent sold in Thailand did not permit a proper comparison with the sales of the subject merchandise to the United States because the quantity of each company's sales in its home market was less than five percent of the quantity of its sales to the U.S. market. See section 773(a)(1) of the Act. Therefore, for all respondents except Malee, in accordance with section 773(a)(1)(B)(ii) of the Act, we based NV on the price at which the foreign like product was first sold for consumption in each respondent's largest viable third-country market, i.e., Germany for Vita, France for SIFCO, Netherlands for TPC, the United Kingdom for SFP, Finland for TIPCO, and Canada for Dole and KFC. With respect to Malee, we based NV on the price at which the foreign like product was first sold for consumption in the home market.

B. Cost of Production Analysis

Pursuant to section 773(b)(1) of the Act, we initiated a cost of production (COP) investigation of comparison-markets for each respondent. Because we disregarded sales that failed the cost test in the last completed review of TIPCO, SFP, TPC, Malee, KFC, SIFCO, and Vita, and in the investigation (i.e., the last segment in which Dole participated) for Dole, we had reasonable grounds to believe or suspect that sales by these companies of the foreign like product under consideration for the determination of NV in this review were made at prices below the COP, as provided by section 773(b)(2)(A)(ii) of the Act.^[1] We conducted the COP analysis as described below.

1. Calculation of COP/Fruit Cost Allocation

In accordance with section 773(b)(3) of the Act, for each respondent, we calculated the weighted-average COP, by model, based on the sum of the costs of materials, fabrication, selling, general and administrative expenses (SG&A), and packing costs. We relied on the submitted COPs except in the specific instances noted below, where the submitted costs were not appropriately quantified or valued.

The Department's long-standing practice, now codified at section 773(f)(1)(A) of the Act, is to rely on a company's normal books and records if such records are in accordance with home country generally accepted accounting principles (GAAP) and reasonably reflect the costs associated with production of the merchandise. In addition, as the statute indicates, the Department considers whether an accounting methodology, particularly an allocation methodology, has been historically used by the company. See section 773(f)(1)(A) of the Act. In previous segments of this proceeding, the Department has determined that joint production costs (i.e., pineapple and pineapple processing costs) cannot be reasonably allocated to canned pineapple on the basis of weight. See Final Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit From Thailand, 60 FR 29553, 29561 (June 5, 1995), and Notice of Final Results of Antidumping Duty Administrative Review: Canned Pineapple Fruit From Thailand, 63 FR 7392, 7398 (February 13, 1998).^[2] For instance, cores and shells are used in juice production, while trimmed and cored pineapple cylinders are used in CPF production. Because these various parts of a pineapple are not interchangeable when it comes to CPF versus juice production, it would be unreasonable to value all parts of the pineapple equally by using a weight-based allocation methodology.

Several respondents that revised their fruit cost allocation methodologies during the 1995-96 POR changed from their historical net realizable value (NRV) methodology to weight-based methodologies and did not incorporate any measure of the qualitative factor of the different parts of the pineapple. As a result, such methodologies, although in conformity with Thai GAAP, do not reasonably reflect the costs associated with production of CPF. Therefore, for companies whose fruit cost allocation methodology is weight-based, we requested that they recalculate fruit costs allocated to CPF based on NRV methodology.

Consistent with prior segments of this proceeding, the NRV methodology that we requested respondents to use was based on company-specific historical amounts for sales and separable costs during the five-year period of 1990 through 1994. We made this request of all companies in this review except for Malee. Because Malee already allocates fruit costs on a basis that reasonably takes into account qualitative differences between pineapple parts used in CPF versus juice products in its normal accounting records, we have not required it to recalculate its reported costs using the NRV methodology.

We made the following company-specific adjustments to the cost data submitted in this review.

• Dole. We revised the NRV ratio reported by Dole. In the questionnaire, we requested that Dole report the NRV by deducting the separable cost of processing, which was defined as “post-split off costs,”^[3] from the revenues earned on the sale of all joint products (i.e. solid products and pineapple juice). Dole provided a chart purporting to show that it had done so, and therefore we had no reason to believe that the submission was deficient.^[4] At verification, we discovered that Dole had in fact deducted all costs except pineapple, including processing costs incurred before the split off-point. See Dole Verification Report (at 12).

As noted in past reviews, to capture the actual cost of the pineapple, it is necessary to deduct processing costs after the split-off point from the revenue earned. See Notice of Final Results of Antidumping Duty Administrative Review and Final Determination Not to Revoke Order in Part: Canned Pineapple Fruit from Thailand, 65 FR 77851 (December 13, 2000) and accompanying Decision Memo at Comment 4. By also deducting non-separable costs, Dole failed to arrive at the correct NRV. Pursuant to section 782(d) the Department is required to provide the respondent an opportunity to remedy its deficient submission, to the extent practicable and provided that such remedy can be made within the applicable deadlines. Because verification has already taken place and the deadline for submitting factual information has passed, we have determined that it is not practicable to provide Dole with an opportunity to correct its deficient submission. Because Dole failed to follow the explicit directions provided by the Department and did not provide the requested information, we have determined that it failed to act to the best of its ability. Therefore, pursuant to section 776(b) of the Act, we are making an adverse inference and assigning Dole, as adverse facts available, the highest NRV ratio from among the other companies in this segment of the proceeding.^[5]

We also revised Dole's fruit cost to assign the same per-standard-case fruit cost to all solid products. See Dole Verification Report, (at 10) and the Dole Analysis Memo, (at 3).

• Malee. We revised Malee's fruit cost allocation to reflect its historic fruit cost allocation for the entire POR. As noted above, we did not require Malee to recalculate its reported costs using the Department's prescribed NRV methodology because, in its normal accounting records, Malee had consistently allocated fruit costs on a basis that reasonably takes into account qualitative differences between pineapple parts used in CPF versus juice products. However, in Malee's February 6, 2001 response to the Department's supplemental questionnaire, Malee stated that, effective January 2000, it revised its cost allocation methodology used in the ordinary course of business, and calculated fruit costs for the last six months of the POR based on a revised fruit cost allocation methodology.

In its February 6, 2001 supplemental questionnaire response, Malee explained that it allocated fruit costs to each particular product, based on the “expected” net realizable value of the finished good. In a second supplemental questionnaire issued on March 2, 2001, the Department asked Malee to explain further its revised methodology and to provide details on how selling expenses and other separable costs were deducted from the overall revenue in order to calculate the NRV. On March 14, 2001, Malee provided information on how fruit costs are calculated after the “expected sales value” factors are established. However, it is not clear from Malee's response how selling expenses and other separable costs were deducted from overall revenue to obtain the NRV.

Since Malee did not provide sufficient information to support its claim that the new fruit cost allocation methodology is based on NRV, we are using Malee's historic fruit cost allocation as used in prior reviews to calculate fruit costs for this POR. We have adjusted the overall model-specific fruit costs accordingly using information already on the record for this review. For further discussion of this adjustment, see the Malee Analysis Memo.

• TPC. Based on cost verification findings, we made changes to TPC's reported juice costs. See Verification Exhibit C-18, and TPC Analysis Memo, for a further discussion of these changes.

2. Test of Comparison Market Sales Prices

As required under section 773(b) of the Act, we compared the adjusted weighted-average COP for each respondent to the comparison market sales of the foreign like product, in order to determine whether these sales had been made at prices below the COP within an extended period of time in substantial quantities, and whether such prices were sufficient to permit the recovery of all costs within a reasonable period of time. On a product-specific basis, we compared the revised COP to the comparison market prices, less any applicable movement charges, taxes, rebates, commissions and other direct and indirect selling expenses.

Consistent with the third and fourth reviews, we have not deducted from the COP the value of certain tax certificate revenues. In the third review, we determined that the certificate is not tied to any duty drawback scheme, but rather, represents revenue paid to companies upon the export of domestically-produced merchandise. See Notice of Final Results of Antidumping Duty Administrative Review: Canned Pineapple Fruit From Thailand, 64 FR 69481, 69485 (December 13, 1999). Therefore, no adjustment was made to our dumping calculation for this payment.

3. Results of the COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of a respondent's sales of a given product were made at prices below the COP, we did not disregard any below-cost sales of that product because the below-cost sales were not made in “substantial quantities.” Where (1) 20 percent or more of a respondent's sales of a given product were made at prices below the COP and thus such sales were made within an extended period of time in substantial quantities in accordance with sections 773(b)(2)(B) and (C) of the Act, and (2) based on comparisons of price to weighted-average COPs for the POR, we determined that the below-cost sales of the product were at prices which would not permit recovery of all costs within a reasonable time period, in accordance with section 773(b)(2)(D) of the Act, we disregarded the below-cost sales.

We found that for certain CPF products, Dole, TIPCO, SFP, SIFCO, Malee, TPC and Vita made comparison-market sales at prices below the COP within an extended period of time in substantial quantities. Further, we found that these sales prices did not permit the recovery of costs within a reasonable period of time. We therefore excluded these sales from our analysis in accordance with section 773(b)(1) of the Act.

C. Calculation of Normal Value Based on Comparison Market Prices

We determined price-based NVs for each company as follows. For all respondents, we made adjustments for differences in packing in accordance with sections 773(a)(6)(A) and 773(a)(6)(B)(i) of the Act, and we deducted movement expenses consistent with section 773(a)(6)(B)(ii) of the Act. In addition, where applicable, we made adjustments for differences in cost attributable to differences in physical characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) of the Act, as well as for differences in circumstances of sale (COS) in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We also made adjustments, in accordance with 19 CFR 351.410(e), for indirect selling expenses incurred on comparison market or U.S. sales where commissions were granted on sales in one market but not in the other (the “commission offset”). Specifically, where commissions were granted in the U.S. market but not in the comparison market, we made a downward adjustment to NV for the lesser of (1) the amount of the commission paid in the U.S. market, or (2) the amount of indirect selling expenses incurred in the comparison market. If commissions were granted in the comparison market but not in the U.S. market, we made an upward adjustment to NV following the same methodology. Company-specific adjustments are described below.

TIPCO

We based third-country market prices on the packed, FOB prices to unaffiliated purchasers in Finland. We adjusted for the following movement expenses: brokerage and handling, port charges, stuffing expenses, liner expenses and foreign inland freight. We made COS adjustments by deducting direct selling expenses incurred for third-country market sales (commissions, credit expenses and bank charges) and adding U.S. direct selling expenses (commissions, credit expenses and bank charges). See TIPCO Analysis Memorandum, dated April 2, 2001 (at 2).

SFP

We based third-country market prices on the packed, FOB or C&F prices to unaffiliated purchasers in the United Kingdom. We adjusted for foreign movement expenses and international freight. We made COS adjustments by deducting direct selling expenses incurred for third-country market sales (credit expenses, bank charges, warranties and commissions) and adding U.S. direct selling expenses (credit expenses and bank charges). We applied the commission offset in the manner described above.

Vita

We based third-country market prices on the packed, FOB or C&F prices to unaffiliated purchasers in Germany. We adjusted for foreign movement expenses and international freight. We made COS adjustments by deducting direct selling expenses incurred for third-country market sales (credit expenses, warranty expenses, commissions, and bank charges) and adding U.S. direct selling expenses (credit expenses, commissions and bank charges).

SIFCO

We based third-country market prices on the packed, FOB or C&F prices to unaffiliated purchasers in France. We adjusted for foreign movement expenses and international freight. We made COS adjustments by deducting direct selling expenses incurred for third-country market sales (credit expenses, bank charges, and commissions) and adding U.S. direct selling expenses (credit expenses, bank charges and commissions).

TPC

We based third-country market prices on the packed, FOB or C&F prices to unaffiliated purchasers in the Netherlands. We adjusted for foreign movement expenses and international freight. For comparisons to EP, we made COS adjustments by deducting direct selling expenses incurred for third-country market sales (credit expenses, letter of credit charges, and bank charges) and adding U.S. direct selling expenses (credit expenses, letter of credit charges, bank charges, and warranties). For comparisons to CEP, we made COS adjustments by deducting direct selling expenses incurred on third-country market sales and adding U.S. direct selling expenses other than those deducted from the starting price in calculating CEP pursuant to section 772(d) of the Act (i.e., we added expenses for letters of credit and bank charges incurred by TPC in Thailand).

In addition, because we verified that TPC's affiliate, Princes, could in fact report billing adjustments on an invoice-specific basis, we are, where possible, relying on the verification exhibits to correct the sales database to reflect actual adjustments on an invoice-specific basis. Where we do not have verified, invoice-specific information on billing adjustments, we are disallowing the allocated adjustment on sales made through Princes for purposes of the preliminary determination in accordance with 19 CFR 351.401(g)(2). In addition, we have disallowed royalties paid by Princes to Princes Ltd. See TPC Analysis Memorandum, dated April 2, 2001.

KFC

We based third-country market prices on the packed, FOB prices to unaffiliated purchasers in Canada. We adjusted for foreign movement expenses. We made COS adjustments by deducting direct selling expenses incurred for third-country market sales (credit expenses, bank charges and commissions) and adding U.S. direct selling expenses (credit expenses, bank charges and commissions).

Malee

We based home market prices on the packed, delivered prices to unaffiliated purchasers in Thailand. We adjusted for foreign inland freight. We made COS adjustments by deducting direct selling expenses incurred for home market sales (credit expenses, warranty expenses, advertising expenses and commissions) and adding U.S. direct selling expenses (credit expenses, bank charges and commissions). We also made a level of trade (LOT) adjustment where appropriate.

Dole

We based third-country market prices on Dole Foods of Canada Ltd.'s (DFC) prices to unaffiliated purchasers in Canada. We adjusted for foreign movement expenses and international freight. We made COS adjustments by deducting direct selling expenses incurred on third-country market sales. In addition, because the NV level LOT is more remote from the factory than the CEP LOT (see the LOT section below), and there is no basis for determining whether the difference in the levels of trade between NV and CEP affects price comparability, we made a CEP offset pursuant to section 773(a)(7)(B) of the Act.

In addition, based on verification findings we made changes to Dole's control numbers and the shipment ratio between Dole Thailand and Dole Philippines. See Dole Verification Report.

D. Calculation of Normal Value Based on Constructed Value

For those CPF products for which we could not determine the NV based on comparison market sales because there were no contemporaneous sales of a comparable product in the ordinary course of trade, we compared the EP or CEP to CV. In accordance with section 773(e) of the Act, we calculated CV based on the sum of the COM of the product sold in the United States, plus amounts for SG&A expenses, comparison market profit, and U.S. packing costs. We calculated each respondent's CV based on the methodology described in the “Calculation of COP” section of this notice, above. In accordance with section 773(e)(2)(A) of the Act, we used the actual amounts incurred and realized by each respondent in connection with the production and sale of the foreign like product, in the ordinary course of trade, for consumption in the comparison market to calculate SG&A expenses and comparison market profit.

For price-to-CV comparisons, we made adjustments to CV for COS differences, in accordance with section 773(a)(8) of the Act and 19 CFR 351.410. We made COS adjustments by deducting direct selling expenses incurred on comparison market sales and adding U.S. direct selling expenses.

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 LOT as the EP or CEP transaction. The NV LOT is that of the starting-price sales in the comparison market or, when NV is based on CV, that of the sales from which we derive SG&A expenses and profit. For EP sales, the U.S. level of trade is also the level of the starting-price sale, which is usually from exporter to importer. For CEP sales, it is the level of the constructed sale from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP or CEP transactions, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison-market sales are at a different 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 a level-of-trade 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 implementing these principles in this review, we obtained information from each respondent about the marketing stage involved in the reported U.S. and comparison market sales, including a description of the selling activities performed by the respondents for each channel of distribution. In identifying levels of trade for EP and third-country market sales, we considered the selling functions reflected in the starting price before any adjustments. For CEP sales, we considered only the selling activities reflected in the price after the deduction of expenses and profit under section 772(d) of the Act. We expect that, if claimed LOTs are the same, the functions and activities of the seller should be similar. Conversely, if a party claims that LOTs are different for different groups of sales, the functions and activities of the seller should be dissimilar.

We note that the U.S. Court of International Trade (“CIT”) has held that the Department's practice of determining levels of trade 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 (1998); and Micron Technology, Inc. v. United States, 40 F.Supp.2d 481 (1999). The U.S. Court of Appeals for the Federal Circuit, however, has reversed the Court of International Trade's holdings in both Micron and Borden on the level of trade issue. The Federal Circuit held that the statute unambiguously requires Commerce to deduct the selling expenses set forth in section 772(d) from the CEP starting price prior to performing its LOT analysis. See Micron Technology, Inc. v. United States, Court Nos. 00-1058,-1060 (Fed. Cir. March 7, 2001); see also Borden, Inc. v. United States, Court Nos. 99-1575,-1576 (Fed. Cir. March 12, 2001)(unpublished opinion). Consequently, the Department will continue to adjust the CEP, pursuant to section 772(d), prior to performing the LOT analysis, as articulated by the Department's regulations at § 351.412.

In this review, all respondents except Malee and Dole claimed that all of their sales involved identical selling functions, irrespective of channel of distribution or market. We examined these selling functions for Vita, SIFCO, SFP, TIPCO, TPC, and KFC, and found that sales activities were limited to negotiating sales prices, processing of purchase orders/contracts, invoicing, and collecting payment. There was little or no strategic and economic planning, advertising or sales promotion, technical services, technical assistance, or after-sale service performed in either market by the respondents. Therefore, for all respondents except Malee and Dole, we have preliminarily found that there is an identical LOT in the U.S. and relevant comparison market, and no level-of-trade adjustment is required for comparison of U.S. sales to third-country sales.

Malee

Malee reported that all of its sales made to the United States were to importer/distributors and involved minimal selling functions on the part of Malee. Malee reported two different channels of distribution for its sales in the home market: (1) sales through Malee Supply (1994) Co. Ltd. (Malee Supply), an affiliated reseller which are made at a more advanced marketing stage than the factory-direct sales, and (2) factory-direct sales involving minimal selling functions and which are at a marketing stage identical to that of the CEP transactions after deductions.

In the home market, Malee reported numerous selling functions undertaken by Malee Supply for its resales to small wholesalers, retailers and end-users. In addition to maintaining inventory, Malee Supply also handled all advertising during the POR. The advertising was directed at the ultimate consumer. Malee also reported that Malee Supply replaces damaged or defective merchandise and, as necessary, breaks down packed cases into smaller lot sizes for many sales. Malee made direct sales to hotels, restaurants and industrial users. Malee claimed that its only selling function on direct sales was delivery of the product to the customer.

Our examination of the selling activities, selling expenses, and customer categories involved in these two channels of distribution indicates that they constitute separate levels of trade, and that the direct sales are made at the same level as Malee's U.S. sales. Where possible, we compared sales at Malee's U.S. LOT to sales at the identical home market LOT. If no match was available at the same LOT, we compared sales at Malee's U.S. LOT to Malee's sales through Malee Supply at the more advanced LOT.

To determine whether a LOT adjustment was warranted, we examined the prices of comparable product categories, net of all adjustments, between sales at the two home market LOTs we had designated. We found a pattern of consistent price differences between sales at these LOTs.

In making the LOT adjustment, we calculated the difference in weighted-average prices between the two different home market LOTs. Where U.S. sales were compared to home market sales at a different LOT, we reduced the home market price by the amount of this calculated LOT difference.

Dole

Dole reported six specific customer categories and one channel of distribution (sales through an affiliated reseller) for both its home market and U.S. sales. In its response, Dole claims that all of its sales to unaffiliated comparison market customers (i.e., the six customer categories) are at the same LOT because these sales are made through the same channel of distribution and involve the same selling functions.

Dole had only CEP sales in the U.S. market. Dole reported that its CEP sales were made through a single channel of distribution (i.e., sales through its U.S. affiliate, Dole Packaged Foods (DPF)), which we have treated as one LOT because there is no apparent difference in the selling functions performed by DPF for the different customers. After making the appropriate deductions under section 772(d) of the Act for these CEP sales, we found that the remaining expenses associated with selling activities performed by Dole are limited to expenses related to the arrangement of freight and delivery to the port of export that are reflected in the CEP price. In contrast, the normal value prices include a number of selling expenses attributable to selling activities performed by DFC in the comparison market, such as inventory maintenance, warehousing, delivery, order processing, advertising, rebate and promotional programs, warranties, and market research. Accordingly, we concluded that CEP is at a different LOT from the normal value LOT.

Having determined that the comparison market sales were made at a level more remote from the cannery than the CEP transactions, we then examined whether a LOT adjustment or CEP offset may be appropriate. In this case, Dole only sold at one LOT in the comparison market; therefore, there is no information available to determine a pattern of consistent price differences between the sales on which normal value is based and the comparison market sales at the LOT of the export transaction, in accordance with the Department's normal methodology as described above. See Porcelain-on-Steel Cookware from Mexico Final Results of Administrative Review, 65 FR 30068 (May 10, 2000). Further, we do not have information which would allow us to examine pricing patterns based on respondent's sales of other products, and there are no other respondents or other record information on which such an analysis could be based. Accordingly, because the data available do not provide an appropriate basis for making a LOT adjustment, but the LOT in the comparison market is at a more advanced stage of distribution than the LOT of the CEP transactions, we made a CEP offset adjustment in accordance with section 773(a)(7)(B) of the Act. This offset is equal to the amount of indirect expenses incurred in the comparison market not exceeding the amount of indirect selling expenses deducted from the U.S. price in accordance with 772(d)(1)(D) of the Act.

Currency Conversion

We made currency conversions into U.S. dollars in accordance with section 773A of the Act, based on exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the following weighted-average margins exist for the period July 1, 1999, through June 30, 2000:

Manufacturer/exporter	Margin (percent)
Siam Food Products Company Ltd. (SFP)	0.18
Dole Food Company, Inc. (Dole)	1.02
The Thai Pineapple Public Company, Ltd. (TIPCO)	4.73
Kuiburi Fruit Canning Co. Ltd. (KFC)	1.66
Thai Pineapple Canning Industry (TPC)	2.33
Siam Fruit Canning (1988) Co. Ltd. (SIFCO)	1.41
Vita Food Factory (1989) Co. Ltd. (Vita)	4.57
Malee Sampran Public Co., Ltd. (Malee)	10.45

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 publication. See 19 CFR 351.310(c). If requested, a hearing will be held 44 days after the publication of this notice, or the first workday thereafter. Interested parties may submit case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than 37 days after the date of publication. Interested parties are invited to comment on the preliminary results. Parties who submit arguments are requested to submit with each argument: (1) A statement of the issue, (2) a brief summary of the argument and (3) a table of authorities. Further, we would appreciate it if parties submitting written comments would provide the Department with an additional copy of the public version of any such comments on a diskette. 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 or hearing, within 120 days from publication of this notice.

Pursuant to 19 CFR 351.212(b), the Department calculated an assessment rate for each importer of subject merchandise. Upon completion of this review, the Department will instruct the U.S. Customs Service to assess antidumping duties on all entries of subject merchandise by that importer. We have calculated each importers' duty assessment rate based on the ratio of the total amount of antidumping duties calculated for the examined sales to the total entered value of examined sales. Where the assessment rate is above de minimis, the importer-specific rate will be assessed uniformly on all entries made during the POR.

Cash Deposit Requirements

The following deposit rates will be effective upon publication of the final results of this administrative review for all shipments of CPF from Thailand entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate for companies listed above 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 period; (3) if the exporter is not a firm covered in this review, a prior review, or the less than fair value (LTFV) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) if neither the exporter nor the manufacturer is a firm covered in this or any previous review or the LTFV investigation conducted by the Department, the cash deposit rate will be 24.64 percent, the “All Others” rate established in the LTFV investigation.

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)(2) 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. Effective January 20, 2001, Bernard T. Carreau is fulfilling the duties of the Assistant Secretary for Import Administration.

Dated: April 2, 2001.

Bernard T. Carreau,

Deputy Assistant Secretary, Import Administration.

Footnotes

1.  The 1998/1999 review was not completed until three months after the current review was initiated. Therefor, at the time the questionnaires were issued, we initiated the COP investigations based on the results of the completed 1997/1998 review for all companies except KFC and SIFCO. With regard to KFC and SIFCO, we initiated a COP investigation on March 21, 2001, based on the results of the 1998/1999 review. See. Memorandum from Christopher Riker to Gary Taverman, Re: Initiation of COP Investigations, (March 21, 2001).

2.  This determination was upheld by the Court of Appeals for the Federal Circuit. The Thai Pineapple Public Co. v. United States, 187 F. 3d 1362 (Fed. Cir. 1999).

3.  In pineapple processing the split-off point occurs after the fruit is cored and peeled by the Ginaca machine.

4.  On September 15, 1999, Dole submitted a letter requesting that it be permitted to submit NRV data for 1990-1993 rather than through 1994, as requested by the Department. Dole did not mention in this request that it was having trouble determining the non-separable costs of production.

5.  Corroboration of this figure is not necessary because it is not secondary information.