65 FR 77851 December 13, 2000 
                                                                 A-549-813
                                                                 98/99 Review
                                                                 Public Document
                                                                 GRP II Off. 5 

MEMORANDUM TO: Troy H. Cribb
               Assistant Secretary
                 for Import Administration

FROM:          Holly A. Kuga
               Acting Deputy Assistant Secretary 
                 for Group II, Import Administration


SUBJECT:       Issues and Decision Memorandum for the Final Results of the
               Antidumping Duty Administrative Review and Final Determination 
               Not to Revoke in Part: Canned Pineapple Fruit from Thailand

Summary

We have analyzed the case briefs and rebuttals of interested parties for these
final results of the antidumping duty review covering canned pineapple fruit
(CPF) from Thailand. Comments were received from the petitioners and some of
the respondents. We recommend that you approve the positions we have developed
in the Department Position sections of this memorandum. 

Background

On August 8, 2000, the Department of Commerce (the Department) published the
preliminary results of the antidumping duty review of CPF from Thailand. The
period of review (POR) is July 1, 1998 through June 30, 1999. The respondents
in this case are: Vita Food Factory (1989) Co., Ltd. (Vita); Siam Fruit Canning
(1988) Co., Ltd. (SIFCO); Siam Food Products Public Co. Ltd. (SFP); The Thai
Pineapple Public Co., Ltd. (TIPCO); Malee Sampran Public Co., Ltd. (Malee); The
Prachuab Fruit Canning Company Ltd. (PRAFT); Thai Pineapple Canning Industry
(TPC); and Tropical Food Industries Co., Ltd. (TROFCO) and Kuiburi Fruit
Canning Co. Ltd. (KFC). We gave interested parties an opportunity to comment on
the preliminary results. On September 7 and 14, 2000, we received case briefs
and/or rebuttal briefs, respectively, from the petitioners, (1) SFP, TIPCO,
Malee, TPC, and SIFCO. No party requested a public hearing.



List of Comments in the Issues and Decision Memorandum

I. ISSUES SPECIFIC TO MALEE

	Comment 1: Revocation
	Comment 2: Imputed Credit Expenses
	Comment 3: Export Price (EP) vs. Constructed Export Price (CEP)

ISSUES SPECIFIC TO PRAFT 

	Comment 4: Fruit Cost Allocation
	Comment 5: Direct vs. Indirect Selling Expenses 

ISSUES SPECIFIC TO SIFCO 

	Comment 6: Correction of Errors in Database
	Comment 7: Calculation of General and Administrative (G&A) Expense Ratio
	Comment 8: Calculation of Interest Expense Ratio

ISSUES SPECIFIC TO TIPCO 

	Comment 9: Expenses Related to Compliance with the Antidumping Duty Order
	Comment 10: Foreign Exchange Gains and Losses
	Comment 11: Calculation of Interest Expense Ratio
	Comment 12: Offset to G&A
	Comment 13: Purchase of Input from Affiliated Party
	Comment 14: Offset to Cost of Manufacturing (COM)
	Comment 15: Clerical Error Allegation

ISSUES SPECIFIC TO TPC 

	Comment 16: Date of Sale
	Comment 17: EP vs. CEP 
	Comment 18: Allocation of G&A to Arbitrage Activity
	Comment 19: Allocation of Interest Expense to Arbitrage Activity
	Comment 20: Clerical Error Allegation

VI. ISSUES SPECIFIC TO SFP

	Comment 21: Clerical Error Allegation




DISCUSSION OF ISSUES


ISSUES SPECIFIC TO MALEE: 


Comment 1: Revocation

Malee states that, the order should be revoked with respect to its
merchandise, arguing that when certain clerical errors are corrected, Malee
will have a de minimis margin, and will have satisfied all requirements for
revocation of the order. Malee contends that it has satisfied all threshold
requirements for revocation set forth in 19 CFR 351.222(b)(2) and 351.222(d)
based on consecutive zero or de minimis margins for three years. Furthermore,
Malee states that it has provided the appropriate certifications to the
Department agreeing to immediate reinstatement of the order, should the
Department determine subsequent to revocation that the company is selling at
less than normal value. Malee contends that the Department should presume that
an antidumping order is no longer necessary based on Malee's demonstration of
the absence of dumping for a three year period, adding that the petitioners
have put no information on the record showing that the maintenance of the order
is necessary. Citing to the discussion in Amended Regulation Concerning the
Revocation of Antidumping and Countervailing Duty Orders, 64 FR 51236, 51239
(September 22, 1999) (Amended Regulation) Malee states that the Department "can
only retain an antidumping . . . order if there is positive evidence on the
record indicating the continued necessity of such an order to offset dumping .
. . ." In this regard, Malee suggests that the petitioners' failure to request
a review for the 1997-98 period is probative evidence that Malee was not
dumping in this period. (2)

Malee further asserts that it has satisfied the Department's requirement in 19
CFR 351.222(d) that the subject merchandise to which revocation will apply was
shipped in commercial quantities during each of the three consecutive years
covered by the revocation request. Although the Department has not defined the
meaning of "commercial quantities" in its regulations, Malee notes that the
Department stated in Memorandum to Holly Kuga: Determination Not to Revoke in
Part the Antidumping Order on Canned Pineapple Fruit from Thailand (July 28,
2000) (Determination Not to Revoke Memorandum) (at 2) that Malee had not
satisfied the commercial quantities requirement because Malee's shipments "have
declined considerably when compared to shipment levels prior to the imposition
of the AD order." Malee disputes the Department's assertion that a simple
decline in shipments is conclusive proof that Malee has not shipped in
commercial quantities, arguing that neither the regulations nor the statute
support this position. Rather, Malee contends that "the Department simply
interprets the commercial quantity requirement as an inquiry into whether the
respondent meaningfully participated in the U.S. market during those three
years." (3) Malee contends that the existence of multiple shipments not only
satisfies the commercial quantities requirement, but also serves as a positive
indication that the respondent is not likely to resume sales at less than
normal value. Malee argues that the Department should interpret the term
"commercial" to mean simply that the respondent has made bona-fide transactions
in the ordinary course of business, asserting that, if the Department's
determination of whether there have been commercial quantities is based on
relative volume of shipments before and after the order, it may be difficult
for respondents to satisfy this standard, given that shipments of subject
merchandise typically decrease due to initial uncertainty about deposits and
assessments once an antidumping order is imposed. Malee claims that its U.S.
sales during each of the three revocation years involved multiple bona-fide
transactions made in the ordinary course of business to U.S. customers.
Moreover, Malee argues, the level of its shipments should be considered
substantial for the period in light of three other factors: the Thai financial
crisis, a severe drought which limited the supply of pineapples, and a
significant restructuring of Malee's operations.

The petitioners respond that Malee has not met the requirements for revocation
and, in particular, Malee has not shown that it made sales of the subject
merchandise in commercial quantities in any of the three revocation years. The
petitioners argue that the Department routinely uses pre-order sale levels as
the benchmark for determining whether annual sales levels constitute normal
commercial activities, and note that the Department has found that Malee's
annual sales fell by 96 to 99 percent from the sales levels in the 12-month
period that preceded the antidumping order. (4) In other cases, the petitioners
state, the Department has found very similar declines -- i.e. declines of over
95 percent -- to constitute grounds for not revoking, based on the argument
that such drastically reduced sales do not provide any meaningful information
on the respondent's normal commercial experience. (5) 

The petitioners contest Malee's explanation that drought, currency devaluation
and company restructuring were decisive factors behind its limited U.S. sales
activities during the three-year period. Claiming that Malee failed to discuss
sales levels in other markets, the petitioners observe that the company's
financial statements indicate that 1998 sales dropped about 10 percent vis-a-
vis 1997 sales. (6) The petitioners argue that drought and restructuring might
account for a 10 or 20 percent decline if declines in the U.S. market were
commensurate with declines in other markets. Instead, the petitioners conclude,
the more dramatic drops in Malee's U.S. sales can only be attributed to the
deterrent effect of the antidumping order. Finally, the petitioners dispute
Malee's suggestion that their failure to request an administrative review for
Malee in the 1997-98 review period implied a lack of interest on their part,
contending that they would have requested a review for that period if Malee had
continued shipping to the United States in commercial quantities following the
imposition of the antidumping duty order.

Department Position: For these final results, we find that Malee does not
qualify for partial revocation of the order under section 351.222(b) of the
Department's regulations.

The Department "may revoke, in whole or in part" an antidumping duty order
upon completion of a review under section 751 of the Act. While Congress has
not specified the procedures that the Department must follow in revoking an
order, the Department has deveiloped a procedure for revocation described in 19
CFR 351.222. Pursuant to 19 CFR 351.222(b)(2), the Department may revoke an
order in part if the Department concludes that: (1) one or more exporters or
producers covered by the order have sold the merchandise at not less than NV
for a period of at least three consecutive years; (2) it is unlikely that those
persons will sell the subject merchandise at less than NV in the future; and
(3) for any exporter or producer that he Secretary previously has determined to
have sold the subject merchandise at less than NV, the exporter or producer
agrees in writing to its immediate reinstatement in the order, as long as any
exporter or producers is subject to the order, if the Secretary concludes that
the exporter of producer, subsequent to the revocation, sold the subject
merchandise at less than NV. In addition, 19 CFR 351.222(e) requires that
during each of the three consecutive years being considered, the person
requesting the revocation must certify that they were shipping in commercial
quantities.

In this review, we have determined a weighted-average margin of 1.04 percent
for Malee. Therefore, Malee does not have three consecutive years of selling at
not less than fair value.

In addition, we also find that Malee has not shipped in commercial quantities
during the same period. The Department has found in earlier cases that, unless
a respondent has demonstrated the ability to participate in the U.S. market in
a commercially meaningful way without dumping with the discipline of the order,
the order remains necessary to offset dumping. (7) 

We disagree with Malee's characterization of what constitutes commercial
quantities for revocation purposes. The Department analyzes the question of
whether respondents have shipped in commercial quantities on a case-by-case
basis, and considers comparisons between aggregate sales in the relevant review
periods and sales in a benchmark period before the imposition of the order to
be a valid basis for determining whether a respondent continues to participate
meaningfully in the U.S. market. In Polyvinyl Alcohol from Taiwan: Final
Results of the Third Administrative Review and Determination not to Revoke, 65
FR 60615 (October 12, 2000), the Department stated that:

"[r]evocation determinations are particularly fact-intensive and industry-
/company-specific, and the Department's practice has been to make its
revocation determinations on a case-by-case basis with a particular focus on
the comparative sales volume during the PORs in question and the [period of
investigation]. Commercial quantities have not been found where aggregate sales
are determined to be of an abnormally small quantity, either in absolute terms
or in comparison to an appropriate benchmark period, because there was not a
sufficient breadth of information regarding a company's normal commercial
practice." (8) 

Based on the precedents we have referenced, we disagree that Malee has
demonstrated meaningful participation in the U.S. market. The question of how
many sales are necessary to constitute commercial quantities must be addressed
on a case-specific basis, and in this case the wide disparity between the
aggregate amounts in the pre-order and post-order periods discredits Malee's
argument that the multiple shipments are enough. 

In our preliminary Determination Not to Revoke Memorandum, we provided
analysis of Malee's aggregate sales which showed that during the 1996-97 review
period, Malee's volume of U.S. sales was approximately 1.25 percent of the
volume of sales during the 12-month period prior to the imposition of the
order. For the 1997-98 and the 1998-99 review periods, Malee's volume of U.S.
sales was 0.70 percent and 3.54 percent, respectively, of the volume shipped
during the 12-month period preceding the imposition of the order. We maintain
that this dramatic decline from the pre-order sales level in itself
demonstrates that Malee was not meaningfully participating in the U.S. market
in a way that would provide a basis for us to evaluate whether revocation of an
order with respect to Malee is appropriate. 

While we do not dispute Malee's suggestion that a reduction of the fresh
pineapple inputs due to the drought, or the company restructuring and the
financial crisis, would reduce the amount of subject merchandise Malee was able
to ship, we find that Malee's failure to discuss export levels in other markets
in the same period makes it difficult for us to conclude that the three factors
were the principal cause of the dramatic decrease in shipments of subject
merchandise. Therefore, we are not revoking order with regard to Malee.

Comment 2: Imputed Credit Expenses

The petitioners argue that for Malee's home market sales through Malee Supply,
Malee's home market sales subsidiary, the Department should recalculate the
imputed credit expense using Malee's reported average interest rate instead of
Malee Supply's. The petitioners state that Malee reported imputed credit
expenses for sales through Malee Supply based on Malee Supply's average
borrowing rate; however, at verification the Department found all of Malee
Supply's interest expense amounts to be based on interest payments on loans
from Malee. Accordingly, the petitioners argue, the imputed credit expense
should be calculated based on interest rates paid on loans from unaffiliated
parties. Furthermore, the petitioners state that the interest expenses that
Malee Supply paid to Malee were intercompany transactions that were eliminated
for the purpose of preparing Malee's 1998 consolidated financial statements
because Malee Supply is 99.99 percent owned by Malee, citing Malee's October
29, 1999 questionnaire response at A-9 and at Exhibit A-18, n.6.

Malee argues that, while Malee Supply's interest rate on loans from Malee was
higher than the rate paid by Malee to unaffiliated bankers, this fact alone
does not demonstrate that Malee Supply's loans were not arm's-length
transactions.

Department Position: We agree with the petitioners. All of Malee Supply's
loans were from Malee, and the respondent did not establish that they were made
at arm's length. Therefore we have used Malee's short-term borrowing rate to
calculate imputed credit expense for all home market sales. (9) 


Comment 3: EP vs. CEP

Malee argues that the Department improperly classified Malee's U.S. sales as
CEP sales, and did not explain in detail its rationale for doing so. While the
Department's analysis memorandum indicated that the Department chose to treat
all of Malee's U.S. sales as CEP sales because the sales to the first
unaffiliated customer were made in the United States by Icon Foods, Malee's
affiliated reseller, Malee argues that the paper-processing activities
performed by Icon Foods do not constitute the "making" of a sale in the United
States by Icon Foods. According to Malee, the Department verified that it is
Malee, acting out of its Bangkok office, that performs the essential steps in
making the final U.S. sale to the ultimate customer, including negotiating the
terms of sale with the customer, arranging for shipment to the customer and
issuing shipping instructions.

Malee claims that the Department also verified that the sale is completed in
Bangkok prior to Icon Foods' involvement and, as a result, the Department used
as date of sale Malee's bill of lading date rather than Icon Foods' subsequent
invoice date in its preliminary results. Malee asserts that the Department is
thus precluded from treating Icon Foods' sales as CEP sales under the reasoning
by the Court of Appeals for the Federal Circuit (CAFC) in AK Steel v. United
States, 203 F.3d 1330 (Fed. Cir. 2000) (AK Steel I). According to Malee, AK
Steel I made clear that the statute distinguishes CEP from EP sales based on
whether the transaction occurs inside or outside the United States and, as is
clear from the Department's verification findings, all material terms of sale
were controlled and made by Malee in Bangkok, not by Icon Foods in the United
States. Malee argues further that Icon Foods merely memorializes in its own
invoices the agreement already reached between Malee in Bangkok and the
ultimate customer in the United States, a fact further supported by Malee's
shipping of the merchandise before Icon Foods issues its commercial invoice.

Treating Malee's U.S. sales as EP sales would be, according to Malee,
consistent with the Department's past practice, where the Department has
normally required that, as a necessary condition of CEP sales, the U.S.
affiliate take some active role in negotiating the sale, or that it inventories
the merchandise. While Malee acknowledges that decisions rendered with respect
to other companies during prior segments of the instant proceeding predated the
CAFC's decision in AK Steel, Malee claims that recent decisions indicate that
the Department continues to base its decision on whether to classify a sale as
a CEP sale on the U.S. affiliate's involvement in the negotiation of the sales
terms. As support Malee cites Circular Welded Non-Alloy Steel Pipe and Tube
From Mexico: Final Results of Antidumping Duty Administrative Review, 65 FR
37518, 37520 (June 15, 2000), where the Department determined that CEP was
appropriate for an affiliated reseller because the reseller had "negotiate{d}
all of the material terms of the sale," and that the foreign parent had "no
contact with the customer whatsoever."

The petitioners hold that the Department's decision to treat all of Malee's
U.S. sales as CEP transactions is consistent with AK Steel Corp. v. United
States 226 F.3d 1361 (Fed. Cir. 2000) (AK Steel II), where the CAFC stated
"that if the contract for the sale was between a U.S. affiliate of a foreign
producer or exporter and an unaffiliated U.S. purchaser, then the sale must be
classified as a CEP sale."

According to the petitioners, the test enunciated by the CAFC is based on the
geographic location of the party that signed the sales agreement with the
unaffiliated U.S. customer. The petitioners point out that information in
Malee's questionnaire responses demonstrates that the contracts for Malee's
U.S. sales were between Icon Foods and the unaffiliated U.S. customer.
Furthermore, the petitioners argue, Malee claimed in its October 29, 1999
section A response (at A-23) that the final terms of price and quantity are not
always fixed until the invoice date.

The petitioners claim that Malee has attempted to downplay the importance of
the contract between Icon Foods and the U.S. customer. The petitioners assert
that, absent any contracts directly between Malee and the U.S. customer, the
contracts between Icon Foods and the U.S. customers were the only written
agreements for these sales. Accordingly, the petitioners argue, pursuant to AK
Steel, Malee's U.S. sales must be classified as CEP sales.

Department Position: The fact pattern of the instant case resembles the facts
found in Notice of Final Determination of Sales at Less Than Fair Value:
Expandable Polystyrene Resins from the Republic of Korea, 65 FR 69284 (November
16, 2000) (EPS Resin). There is no argument as to the affiliation between Malee
and Icon Foods. Icon Foods, for purposes of our dumping analysis, is an
affiliate of Malee based in the United States. For sales made through Icon
Foods, Malee negotiates the terms of the sale directly with the first
unaffiliated U.S. customers. Once the terms are negotiated, Icon Foods accepts
and confirms the contract. Icon Foods subsequently invoices the unaffiliated
customer and collects payment from this customer. Therefore, we find that the
first sale to an "unaffiliated purchaser" occurs in the United States and was
made by Icon Foods. Based on this fact pattern, consistent with AK Steel II and
the Department's recent decision in EPS Resin, we have continued to treat
Malee's sales through Icon Foods as CEP transactions. 

ISSUES SPECIFIC TO PRAFT 


Comment 4: Fruit Cost Allocation

The petitioners argue that the Department should not rely on the fruit cost
allocation methodology used in PRAFT's normal books and records. Although the
petitioners acknowledge that the methodology is value-based, they contend that
the methodology is insufficient to account for the qualitative differences
between pineapple parts, because it does not obtain the net realizable value
(NRV) at the split-off point (i.e., the point at which it is possible to
separate the cost of processing fruit from that of processing juice). 

The petitioners cite to the investigation in this case where the Department
stated that a reasonable fruit cost allocation methodology was to compare the
NRV of the fruit used in CPF to that used in pineapple juice, defining NRV as
"the predicted selling price in the ordinary course of business less reasonably
predictable costs of completion and disposal." See Final Determination of Sales
at Less Than Fair Value: Canned Pineapple fruit from Thailand, 60 FR 29553,
29560 (June 5, 1995). PRAFT, the petitioners argue, failed to subtract
processing costs and therefore failed to arrive at the NRV. The petitioners
contend that, consequently, the Department should reject PRAFT's methodology
and base fruit cost allocation on the historical five-year NRV data used in the
previous review. 

PRAFT did not rebut.

Department Position: We agree with the petitioners. PRAFT's methodology, while
value-based, does not account for the separable costs of processing CPF and
pineapple juice and therefore distorts the real cost of the pineapple fruit. 

The Department's long-standing practice, now codified at section 773(f)(1)(A)
of the Act, is to rely on data from a respondent's normal books and records if
they are prepared in accordance with home country generally accepted accounting
principles (GAAP) and reasonably reflect the costs of producing the
merchandise. In the less than fair value (LTFV) investigation, the Department
determined that a reasonable fruit cost allocation methodology would reflect
the significantly different quality of the fruit parts that are used in the
production of CPF versus those used in the production of juice products. Id. at
29560. PRAFT's methodology, although it is value-based, does not capture the
actual cost of the pineapple, because it does not deduct processing costs after
the split-off point from the revenue earned on CPF in determining the
percentage of pineapple cost to assign to CPF. We do not have information on
the record that would enable us to deduct the separable processing costs.
Therefore, for the final results we have recalculated PRAFT's costs using the
five-year historical NRV data that PRAFT filed in response to the Department's
supplemental questionnaire in this review.

Comment 5: Direct vs. Indirect Selling Expenses 

The petitioners contend that certain selling expenses incurred by PRAFT are
indirect, rather than direct expenses. The petitioners make note of the
definition of direct selling expenses included in the antidumping
questionnaire: "[d]irect expenses generally must be 1) variable and 2)
traceable in a company's financial records to sales of the merchandise under
investigation." Of the expenses PRAFT claimed as direct selling expenses (bank
charges, shipping expenses, containerization expenses and miscellaneous
expenses), the petitioners point out that containerization was the only expense
PRAFT was able to trace specifically to sales of CPF. As the other expenses
were allocated between CPF and juice, the petitioners contend that they are
common costs, not traceable to the merchandise under investigation, and should
therefore be treated as indirect selling expenses.

PRAFT did not rebut.

Department Position: We disagree with the petitioners. Direct expenses are
typically expenses that are incurred as a direct and unavoidable consequence of
the sale (i.e., in the absence of the sale these expenses would not be
incurred), whereas indirect expenses are fixed expenses that are incurred
whether or not a sale is made. All of the expenses reported by PRAFT as direct
selling expenses, including the miscellaneous expenses (e.g. gate charge,
quality control analysis, and bill of lading receiving), would not have been
incurred if the sale had not been made. 

Although PRAFT did not separate the expenses incurred on CPF from those
incurred on juice in its accounting records, it did demonstrate that these
expenses were incurred for export sales, which included the subject
merchandise, with no indication that such expenses were sensitive to specific
markets or customers. See Memorandum to the File from Charles Riggle and David
Goodman: Verification of the Home Market and Comparison Market Sales
Information and the Cost Information in the Response of Prachuab Fruit Canning
Co., Ltd. in the 1998-99 Administrative Review of Canned Pineapple Fruit from
Thailand, dated July 14, 2000. Therefore, in accordance with 19 CFR 351.410(c),
we determine that these expenses result from, and bear a direct relationship
to, the particular sales in question. Therefore, we have not recategorized
these expenses for the final results.

ISSUES SPECIFIC TO SIFCO: 



Comment 6: Correction of Errors in Database

SIFCO claims that a non-subject merchandise sale was inadvertently included in
the dumping margin calculation. SIFCO states that the Department should delete
observation 1 from the database because it is actually a sale of pineapple
juice. SIFCO makes reference to a commercial invoice, bill of lading and
customer contract to illustrate that observation 1 is not a subject merchandise
sale. (10) Furthermore, SIFCO claims that it found an error in the reporting of
several other observations. The gross unit price of these observations was
based on sales terms of cost and freight instead of free on board (FOB), and
SIFCO had inadvertently not reported the cost of international freight for
those sales. In its response, SIFCO had stated that all its sales were made on
an FOB basis. As support, SIFCO provided the relevant shipping invoices. In
addition, on two sales, the gross unit price had been calculated incorrectly
because SIFCO had not taken into account that the shipment contained cases with
different actual weights. SIFCO provided the invoices for these sales as well.

Pursuant to19 CFR section 351.301(b)(2), the petitioners claim that the
Department should reject SIFCO's case brief because it consists of entirely new
factual information which was submitted long after the deadline for submission
of new information. First, the petitioners object to SIFCO's claim that its
disputed sale is non-subject merchandise. Second, the petitioners object to
SIFCO's late submission of sample sales documents with its case brief.
Furthermore, the petitioners argue, the Department should not permit SIFCO to
make selective changes to its data after the deadline for submission of
information. (11) Lastly, the petitioners claim that if the Department were to
revise SIFCO's calculations, it would result in an overstatement of the freight
costs for these sales because the sale-specific freight costs in SIFCO's case
brief were included in the total movement charges that SIFCO used to calculate
its reported average freight costs.

Department Position: We acknowledge the petitioners' reference to 19 CFR
351.301(b)(2), which states that for the final results of an administrative
review, the submission of factual information is due no later than 140 days
after the last day of the anniversary month. However, the Department's
practice, as discussed in Certain Fresh Cut Flowers from Colombia: Notice of
Final Results of Antidumping Duty Administrative Reviews, 61 FR 42833, 42834
(August 19, 1996), is to accept clerical error corrections after the 140 day
deadline under the following conditions: 1) the error in question must be
demonstrated to be a clerical error, not a methodological error, an error in
judgment, or a substantive error; 2) the Department must be satisfied that the
corrective documentation provided in support of the clerical error allegation
is reliable; 3) the respondent must have availed itself of the earliest
reasonable opportunity to correct the error; 4) the clerical error allegation,
and any corrective documentation, must be submitted to the Department no later
than the due date for the respondent's administrative case brief; 5) the
clerical error must not entail a substantial revision of the response; and 6)
the respondent's corrective documentation must not contradict information
previously determined to be accurate at verification.

We believe that SIFCO's submission of information in its case brief generally
meets the above standard. We tested SIFCO's changes against the criteria set
forth in the aforementioned case and found that they were not substantial, as
they affect only a small percentage of the total sales volume. Second, with
regard to the sale of juice and the international freight, we consider SIFCO's
information reliable because it comes directly from SIFCO's actual sales
documents. Third, SIFCO availed itself of the earliest reasonable opportunity
to correct the error. Fourth, the clerical error allegation was received by the
due date of the case brief. Fifth, the error did not entail a substantial
revision of the response. Sixth, SIFCO's revision did not contradict previously
submitted information. Therefore, we have accepted SIFCO's clerical revisions
with regard to the juice sale and the international freight. However, with
regard to the claim regarding the change in gross unit price due to a change in
the weight per carton, the only documentation provided was hand-written figures
on the invoice indicating the weight per carton. We do not find this to be
sufficiently reliable, and therefore, we will not correct this alleged error in
reporting.


With regard to the petitioners' claim that the freight would be overstated if
we were to assign a separate international freight to the sales in question, we
find no evidence that SIFCO included any international freight in its
calculation of inland freight from the plant to the port, which was the only
freight charge reported. We note that SIFCO did not include any brokerage or
port charges in the international freight amount shown in its case brief, and
that it maintains a separate account for ocean freight in its books. Therefore,
we have used the shipment-specific international freight amounts provided by
SIFCO. 

Comment 7: Calculation of G&A Expense Ratio

The petitioners state that the Department should correct errors in the G&A
expense ratio calculation for SIFCO. According to the petitioners, SIFCO used
an incorrect cost of goods sold (COGS) amount in the denominator to calculate
its reported G&A expense ratio. SIFCO used the COGS from its financial
statement which was inclusive of G&A and interest. The petitioners believe that
the correct figure to use was the COGS before the addition of G&A and interest
expenses.

In addition, the petitioners claim that the Department should revise the
preliminary G&A expense calculation for SIFCO to include exchange losses on
sales of fixed assets. The petitioners state that SIFCO's chart of accounts
demonstrates that some of SIFCO's reported foreign exchange losses were from
losses on sales of fixed assets rather than on accounts receivable.

Department Position: With regard to the denominator used in the calculation of
G&A, we agree with the petitioners. Because we are applying the G&A ratio to a
total cost of manufacturing that does not include G&A and interest expenses, it
is appropriate to calculate the ratio over a COGS denominator that is also
exclusive of G&A and interest expense. We have corrected the error in SIFCO's
G&A expense ratio calculations for these final results. 

However, we did not revise the G&A expense calculations for SIFCO to include
alleged losses on sales of fixed assets. The account name mentioned by the
petitioners seems to be a translation error, which SIFCO subsequently corrected
in its section D response. Lacking evidence to the contrary, we are accepting
SIFCO's statement that all of its foreign exchange losses were incurred on
accounts receivable.

Comment 8: Calculation of Interest Expense Ratio

The petitioners state that, as with its G&A calculation, SIFCO used an
incorrect denominator to calculate its reported interest expense ratio. The
petitioners argue that SIFCO reported an interest expense ratio that was
calculated by dividing net interest expense by a COGS inclusive of G&A and
interest. The petitioners argue that the Department should correct this error
for the final results.

Department Position: We agree with the petitioners. For the reasons described
in Comment 7, above, we have recalculated SIFCO's interest expense for the
final results.

ISSUES SPECIFIC TO TIPCO: 



Comment 9: Expenses Related to Compliance with the Antidumping Duty Order


TIPCO argues that the Department improperly included the accounting expenses
incurred by its affiliate TIPCO Marketing Company (TMC) as part of its indirect
selling expenses. According to TIPCO, the fees paid to the U.S. accounting firm
(which, among other things, processed antidumping duty deposits from U.S.
Customs antidumping duty refunds), were incurred by TMC solely to assist in
complying with antidumping duty laws in the United States. TIPCO points out
that in past cases the Department has not deducted business expenses that are
incurred solely as the result of the existence of an antidumping duty order.
See e.g., Certain Cold-Rolled Carbon Steel Flat Products from The Netherlands;
Final Results of Antidumping Duty Administrative Review, 63 FR 13204,13210
(March 18, 1998). Therefore, TIPCO contends that, consistent with Department
precedent, these expenses should not be included as selling expenses.

The petitioners argue that the verification report states that not all of the
duties performed by TMC's accounting firm are directly related to complying
with antidumping duty laws. For example, the petitioners point out, the
accounting firm files TMC's taxes and prepares its financial statements. See
Memorandum to Gary Taverman from Constance Handley and David Layton,
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
1998-99 Administrative Review of Canned Pineapple Fruit from Thailand, dated
August 18, 2000, (TIPCO Verification Report) (at 7). Since TIPCO did not
segregate accounting fees incurred on activities related to antidumping duties,
the petitioners argue that TMC's accounting expenses should continue to be
included in its indirect selling expenses.

Department Position: We agree with the petitioners. Documentation from TIPCO's
accounting firm presented at verification shows that it also performs duties
which are not related to complying with the antidumping order. Id. at 7. Since
TIPCO did not demonstrate which portion of the fee may be related solely to
antidumping compliance, we have continued to include it in TMC's indirect
selling expenses.

Comment 10: Foreign Exchange Gains and Losses


TIPCO argues that the Department did not take its exchange gains and loses, as
determined at verification, into account in calculating its interest expenses
for the preliminary determination. TIPCO states that using the exchange gain
offset determined at verification reduces TIPCO's interest expenses to zero
during the 1998 fiscal year.

The petitioners contend that TIPCO must show that the exchange gains were
directly related to the production of the subject merchandise. They claim that
TIPCO failed to do this and that, therefore, the Department should recalculate
interest expenses to exclude the offset for exchange gains.

Department: Position: We agree with TIPCO. Because the preliminary results
were issued before the verification report, they did not reflect all changes
made pursuant to verification. We have corrected TIPCO's interest expense
factor to reflect the verified interest amount. Consistent with our past
practice, we included the exchange gains and losses generated from financial
transactions in the calculation of the financial expense rate and included the
exchange gains and losses generated from accounts payable in the calculation of
the G&A expense rate. See Notice of Final Determination of Sales at Less Than
Fair Value: Certain Polyester Staple Fiber From Taiwan, 65 FR 16877 (March 30,
2000) and accompanying Decision Memorandum at Comment 13. For a further
discussion of the calculation of TIPCO's interest expense, see Memorandum To
the File, Analysis Memorandum for Thai Pineapple Public Co. Ltd. re: Final
Results of the Fourth Antidumping Duty Administrative Review, dated December 6,
2000.

Comment 11: Calculation of Interest Expense Ratio

TIPCO contends that the Department incorrectly disallowed TIPCO's income
expense offset for its investment in an associated company. TIPCO argues that
interest paid on money borrowed in association with investments in TIPCO
Asphalt Co. Ltd. (TASCO) is not related to TIPCO's manufacturing operations.
TIPCO believes that inclusion of this amount causes its interest expenses to be
overstated.

The petitioners point out that the verification report specifically stated
that "TIPCO was unable to support its contention that the interest expense was
related to [its investment in TASCO]." See TIPCO Verification Report at 27.
Therefore, they contend, TIPCO's deduction of the interest allegedly paid on
investments in TASCO should be disallowed. 

Department Position: We agree with the petitioners. As stated in the
verification report, TIPCO borrowed money from an overdraft account, which it
stated was for the purchase of shares in TASCO. However, regardless of whether
TIPCO was able to provide documentation directly linking the loans to the
purchase of the shares, it is our practice to use the interest expense of the
company as a whole and not to divide interest expense between divisions or
among business activities. See Comment 19, below. Therefore, we have continued
to include this expense in TIPCO's interest expense calculation.

Comment 12: Offset to G&A

The petitioners argue that the Department should disallow TIPCO's use of
rental income to offset its G&A expenses. The rental income, the petitioners
state, is from rental of unused manufacturing space and, therefore, not part of
the general operations of the company. The petitioners argue that it is the
Department's longstanding practice to exclude from the G&A calculation
supplemental income that is not part of the general operations of the company.
See Final Determination of Sales at Less Than Fair Value: Stainless Steel Round
Wire from Taiwan, 64 FR 17336, 17338 (April 9, 1998). 

TIPCO maintains that if the Department were to disallow this offset to G&A,
its decision would run contrary to its decision in all previous reviews. TIPCO
contends that because the rented space is for storage in the manufacturing
plant, it is associated with the general operations of the company. Further,
TIPCO states that the petitioners have offered no evidence demonstrating why
the Department should deviate from its past practice.

Department Position: We agree with TIPCO. Consistent with past reviews, we
consider the rental of storage space in the factory to be of a general nature,
arising from the company's operations, (i.e. the rental of storage space does
not constitute a separate line of business). Therefore, we have allowed it as
an offset to G&A. See, e.g., Circular Welded Non-Alloy Steel Pipe From the
Republic of Korea; Final Results of Antidumping Duty Administrative Review, 63
FR 32833, 32838 (June 16, 1998). In addition, we note that the income is minor.

Comment 13: Purchase of Input from Affiliated Party

The petitioners argue that the Department should apply facts available to
TIPCO's purchases of fuel oil from its affiliate TASCO. According to the
petitioners, TIPCO supplied only one invoice as proof that the sales were made
at arm's length, and this is insufficient to demonstrate that its purchases
from TASCO were made at arm's length.


TIPCO states that the one example the petitioners pointed out does demonstrate
that the sales were made at arm's-length prices. Further, TIPCO notes that fuel
oil prices make up a minuscule portion of total costs, and are not a major
input.

Department Position: We agree with TIPCO. In addition to the example provided
by TIPCO in its response, we examined the relationship between TIPCO and TASCO
at verification and retained more examples showing the arm's-length nature of
the transactions. See TIPCO Verification Report, Exhibit C-36.

Comment 14: Offset to COM

The petitioners contend that the Department should disallow TIPCO's claimed
offset to COM for service income. They claim that the services provided to
related companies, which include storage, telephone, lab tests and water
treatment, are not related to the cost of manufacturing CPF, and therefore the
offset should be disallowed.

TIPCO argues that the income from the services, which are performed at its CPF
factory, reduce its overall factory costs, and should, therefore, be deducted
from COM. Moreover, TIPCO states that the Department has allowed these offsets
in each of the past reviews.

Department Position: We agree with TIPCO. The service income is part of the
general operations of the company. The types of services TIPCO provides at the
factory are related to its running the factory and the costs of providing these
services to the affiliate were not deducted from TIPCO's overhead. The service
income is therefore permissible as an offset to COM.

Comment 15: Clerical Error Allegation

The petitioners argue that the Department failed to input the revised COM for
certain control numbers.

Department Position: We disagree with the petitioners. The revision to the COM
was caused by a change in the per-unit juice cost and did not affect all
control numbers. The control numbers in question were either packed in syrup
and therefore had no change to the COM or, in the case of control numbers
petitioners requested be corrected prior to the cost test, not sold in third
country market. For further discussion of this issue see TIPCO Analysis
Memorandum, dated December 6, 2000.

ISSUES SPECIFIC TO TPC 


Comment 16: Date of Sale

The petitioners argue that the Department should use the date of contract as
the date of sale for the portion of TPC's EP sales where no changes occurred
between date of contract and date of invoice. They further assert that invoice
date should be used in lieu of contract date for those sales where the
respondent provided evidence of post-contract-date changes. 

The respondent points out that, in this administrative review, there were
numerous changes to the terms of sale after the contract date for EP sales. The
company notes that, unlike in past reviews where the Department used contract
date as date of sale for this respondent, in this review period TPC was able to
demonstrate that the contracted terms did in fact change after the contract
date. 

Department Position: We agree with TPC. Where the material terms of sale have
in fact changed after the date of contract, it is established practice for the
Department to rely on invoice date as the date of sale. TPC has demonstrated on
the record of this review that there were in fact changes to a significant
number of EP sales after the date of contract. Regarding the petitioners'
suggestion that we rely on date of invoice only for those EP sales where no
changes actually occurred, we note that the regulations state that the
Department will normally use the date of invoice as the date of sale, unless a
different date better reflects the date on which material terms of sale are
established. See 19 CFR 351.401(i). We find that the evidence on the record
that there were numerous changes to EP sales after the date of contract
indicates that TPC's material terms of sale are not firmly set on the contract
date. We are therefore relying on invoice date, as we did at the preliminary
determination, as the date of sale for all EP sales. 

Comment 17: EP vs. CEP 

The petitioners argue that the Department should treat all of TPC's U.S. sales
as CEP sales because the selling functions provided by TPC for sales classified
by the respondent as EP sales are the same as those selling functions provided
for CEP sales.

The respondent points out that no affiliated party has any role in the
transactions classified as EP sales, and that this fact has been verified in
past administrative reviews. 

Department Position: We agree with the respondent. According to AK Steel II: 

"sales must be classified as either: (1) between an unaffiliated U.S.
purchaser and the producer or exporter, and thus EP; or (2) between the
unaffiliated U.S. purchaser and another entity in the United States, that must,
by definition, be related to the producer, and thus CEP. Sales in the United
States between unaffiliated purchasers and unaffiliated sellers are never at
issue; such a sale could never be the first sale to an unaffiliated purchaser." 

Since the TPC sales in question are direct sales made to unaffiliated U.S.
importers, we have continued to classify these sales as EP sales. 

Comment 18: Allocation of G&A to Arbitrage Activity

The petitioners argue that the Department should recalculate TPC's G&A expense
ratio using the adjusted COGS from the company's 1998 financial statements. A
recalculation is necessary, according to the petitioners, because TPC allocated
a sizeable portion of its total G&A expense to interest income from arbitrage,
without demonstrating that there is a relationship between arbitrage operations
and G&A expenses. 

TPC asserts that it is Department practice to exclude expenses from G&A that
involve unrelated production and investment activities. The company further
asserts that it has set forth direct evidence that at least some portion of its
G&A expense in 1998 was directly attributable to arbitrage activities and not
other operations. Accordingly, TPC argues that at least some portion of its G&A
expenses should be attributed to arbitrage. 

Department Position: We agree with the petitioners. Department practice
requires the G&A expense rate to be calculated as the ratio of total company-
wide G&A expenses divided by COGS. See EPS Resin, and accompanying Decision
Memorandum at Comment 7 (November 8, 2000). This approach recognizes the
general nature of these expenses and the fact that they relate to the
activities of the company as a whole rather than to a particular production
process or business activity. The Department's methodology also avoids any
distortions that may result if, for business reasons, greater amounts of
company-wide general expenses are allocated disproportionally between
divisions. In keeping with Department practice, we are not allocating TPC's G&A
between arbitrage and operations. We have recalculated G&A using the rate from
the 1998 financial statements. 


Comment 19: Allocation of Interest Expense to Arbitrage Activity

As with G&A expenses noted supra in Comment 18, the petitioners assert that
the Department should not allow TPC to allocate a portion of its interest
expense to arbitrage. Moreover, the petitioners assert that TPC has not
substantiated its claim that all of its interest income is short- term. The
petitioners therefore propose that the Department recalculate TPC's interest
expense by relying on the total interest expense shown in TPC's 1998 financial
statements as a percentage of TPC's adjusted COGS. 

The respondent asserts that interest expense should be allocated to arbitrage
activities and, further, that there is no reason to disregard the company's
claim that its interest income is short-term. The respondent also notes that,
even if the Department were to disallow the allocation of interest expense
between interest arbitrage and operations, the change would have no effect on
the final results since TPC's interest income more than offsets the interest
expense incurred during the period. 

Department Position: We agree with the petitioners in part and with the
respondent in part. Because money is fungible, it is the Department's practice
not to allocate gains and losses on interest and foreign exchange gains and
losses among divisions. For this reason, we find that interest expense should
not be allocated between arbitrage and operations. See, e.g., Gulf States Tube
Division of Quanex Corp. v. United States, 981 F. Supp. 630, 650 (Ct. Int'l
Trade 1997). Regarding the claim that all of TPC's interest income was short-
term, we agree with the respondent that there is no reason for the Department
to reject this claim. We therefore are disallowing the segregation of interest
from arbitrage and interest from operations, but are accepting TPC's interest
expense as submitted in its questionnaire response. We note that this change
does not have any effect on the interest expense used in the final results,
since TPC's short-term interest income is sufficient to offset interest expense
incurred during the period. 

Comment 20: Clerical Error Allegation

TPC asserts that, in the preliminary results, the Department incorrectly
adjusted CEP for direct selling expenses incurred by TPC in Thailand and
reported in the U.S. direct selling expense field. The company claims that U.S.
law limits the CEP adjustment to direct expenses incurred in the United States,
and suggests that the Department revise its margin calculation accordingly.

The petitioners contend that TPC has failed to provide evidence that the
direct selling expenses reported in this field are not connected to commercial
activities in the United States. 

Department Position: We agree with the petitioners. TPC has not shown that the
expenses reported in the U.S. direct selling expense field are not associated
with commercial activities in the United States. In fact, the respondent stated
on the record in its November 23, 1999 questionnaire response (at 47) that this
field included "bank fees incurred by TPC for CEP sales." We note that 19 CFR
351.402(b) instructs us to adjust for direct expenses associated with
commercial activities in the United States related to the sale to an
unaffiliated purchaser "no matter where or when paid." Therefore, in accordance
with section 772(d) of the Act, we are continuing to adjust CEP sales for the
direct selling expenses reported by the respondent in this field. 

VI. ISSUE SPECIFIC TO SFP

Comment 21: Clerical Error Allegation

SFP points out two clerical errors made in the preliminary results margin
calculation program. First, SFP states that the Department incorrectly revised
variable overhead where it intended to revise fixed overhead by the same
amount, leaving variable overhead unchanged. Second, SFP states that the
Department failed to revise the variable COM and total COM for all of the
reported U.S. sales. SFP notes that, in making revisions to certain components
of the COM in the constructed value database, the Department inadvertently
revised costs only for products listed in the cost of production (COP)
database. The COP database contained cost information for products sold in the
United Kingdom. Accordingly, SFP points out that the Department failed to
revise the cost for products sold in the United States but not in the United
Kingdom.

The petitioners did not comment on these issues.

Department Position: We agree with SFP and have corrected these clerical errors.

Recommendation

Based on our analysis of the comments received, we recommend adopting the
above positions.

If this recommendation is accepted, we will publish the final results in the
Federal Register.



AGREE____ DISAGREE____



_________________________

Troy H. Cribb
Assistant Secretary
  for Import Administration


_________________________
Date 



_________________________________________________________________________
footnotes:


1. The petitioners in this case are Maui Pineapple Company and the
International Longshoremen's and Warehousemen's Union. 

2. See Malee Case Brief (September 7, 2000) at 8, footnote 13. 

3. See id. at 10. 

4. Petitioners cite Determination Not to Revoke at 2-3. 

5. Petitioners cite Certain Corrosion-Resistant Carbon Steel Flat Products and
Certain Cut-to-Length Carbon Steel Plate from Canada: Final Results of
Antidumping Duty Administrative Reviews, and Determination Not To Revoke in
Part, 65 FR 742, 752 (January 6, 2000) (Carbon Steel Plate from Canada) and
Notice of Final Results of Antidumping Duty Administrative Reviews, and
Determination Not To Revoke the Antidumping Order: Brass Sheet and Strip from
the Netherlands, 65 FR 742, 752 (January 6, 2000) (Brass Sheet and Strip from
the Netherlands) 

6. Malee Section Questionnaire Response (October 29, 1999) at Exhibit A-18. 

7. See Pure Magnesium from Canada; Final Results of Antidumping Duty
Administrative Review and Determination Not To Revoke the Antidumping Duty
Order in Part, 65 FR 55503 (September 14, 2000) (Pure Magnesium from Canada)
and accompanying Decision Memorandum at Comment 4: Procedural Requirements 
for Revocation. 

8. See Polyvinyl Alcohol from Taiwan: Final Results of the Third
Administrative Review and Determination Not to Revoke 65 FR 60615 (October 12,
2000) and accompanying Decision Memorandum at Comment 1a. (October 12, 2000).
See, also, Brass Sheet and Strip from the Netherlands, 65 FR 742,750 (January
6, 2000) and Pure Magnesium from Canada, 65 FR 55503 (September 17, 2000)and
accompanying Decision Memorandum at Comment 4. 

9. As stated in the Malee analysis memorandum, we have corrected certain
clerical errors in our margin calculation program to exclude prices for Malee
Supply sales from the calculation of the weighted-average monthly normal values
used for price-to-price comparisons. Malee Supply sales are not made at the
same level of trade as the U.S. sales, and we were able to find matches at the
same level of trade for all sales. 

10. SIFCO cites to Exhibit 1 of its case brief. 

11. The petitioners cite to Pistachio Group of the Ass'n of Food Indus. v.
United States, 685 F. Supp. 848, 850 (May 17, 1988)