[Federal Register Volume 65, Number 213 (Thursday, November 2, 2000)]
[Notices]
[Pages 65831-65834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28041]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-357-812, A-570-863]


Initiation of Antidumping Duty Investigations: Honey From 
Argentina and the People's Republic of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: November 2, 2000.

FOR FURTHER INFORMATION CONTACT: Charles Rast, Angelica Mendoza, 
Melissa Blackledge, or Donna Kinsella at, (202) 482-1324, (202) 482-
3019, (202) 482-3518, and (202) 482-0194 respectively; Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230.

Initiation of Investigations

The 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 
references to the provisions codified at 19 CFR part 351 (1999).

The Petition

    On September 29, 2000, the Department of Commerce (``the 
Department'') received a petition on honey from Argentina and the 
People's Republic of China filed in proper form by the American Honey 
Producers Association (``AHPA'') and the Sioux Honey Association 
(``SHA'') (collectively ``petitioners''). On October 4, 2000, the 
Department requested clarification of certain areas of the petition, 
and on October 6 and 10, 2000, petitioners responded to the 
Department's request for additional information. In addition, we 
received submissions from the parties with regard to industry support 
on October 16, 18, and 24.
    In accordance with section 732(b) of the Act, petitioners allege 
that imports of honey from Argentina and the People's Republic of China 
(``China'') are being, or are likely to be, sold in the United States 
at less than fair value within the meaning of section 731 of the Act, 
and that such imports are materially injuring an industry in the United 
States.
    Pursuant to section 732(c)(1)(B) the Department extended the 
deadline for initiation to no later than October 27, 2000.
    The Department finds that petitioners filed these petitions on 
behalf of the domestic industry because they are interested parties as 
defined in sections 771(9)(C) and (D) of the Act and they have 
demonstrated sufficient industry support with respect to each of the 
antidumping investigations they are requesting the Department to 
initiate (see ``Determination of Industry Support for the Petitions'' 
below).

Scope of Investigations

    For purposes of these investigations, the products covered are 
natural honey, artificial honey containing more than 50 percent natural 
honey by weight, preparations of natural honey containing more than 50 
percent natural honey by weight, and flavored honey. The subject 
merchandise includes all grades and colors of honey whether in liquid, 
creamed, comb, cut comb, or chunk form, and whether packaged for retail 
or in bulk form.
    The merchandise subject to these investigations is currently 
classifiable under subheadings 0409.00.00, 1702.90, and 2106.90.99 of 
the Harmonized Tariff Schedule of the United States (``HTSUS''). 
Although the HTSUS subheadings are provided for convenience and U.S. 
Customs Service (``U.S. Customs'') purposes, the Department's written 
description of the merchandise under investigation is dispositive.
    During our review of the petition, we discussed the scope with the 
petitioners to ensure that the scope in the petition accurately 
reflects the product for which the domestic industry is seeking relief. 
Moreover, as discussed in the preamble to the Department's regulations 
(Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27323 (May 19, 1997)), we are setting aside a period for parties to 
raise issues regarding product coverage. The Department encourages all 
parties to submit such comments by November 9, 2000. Comments should be 
addressed to Import Administration's Central Records Unit at Room 1870, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, D.C. 20230. The period of scope consultations is intended 
to provide the Department with ample opportunity to consider all 
comments and consult with parties prior to the issuance of the 
preliminary determination.

[[Page 65832]]

Determination of Industry Support for the Petitions

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) At least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition.
    In addition, section 732(c)(4)(D) of the Act provides that if the 
petition does not establish support of domestic producers or workers 
accounting for more than 50 percent of the total production of the 
domestic like product, the administering authority shall poll the 
industry or rely on other information in order to determine if there is 
support for the petition as required by subparagraph (A). Because the 
petitions at issue did not establish support of domestic producers or 
workers accounting for more than 50 percent of the total production of 
the domestic like product, the Department has relied on other 
information in order to determine whether they meet the statutory 
requirements for industry support.
    Section 771(4)(A) of the Act defines the ``industry'' as ``the 
producers as a whole of a domestic like product, or those producers 
whose collective output of a domestic like product constitutes a major 
proportion of the total domestic production of the product.'' Thus, to 
determine whether the petition has the requisite industry support, the 
statute directs the Department to look to producers and workers who 
produce the domestic like product. The International Trade Commission 
(``ITC''), which is responsible for determining whether ``the domestic 
industry'' has been injured, must also determine what constitutes a 
domestic like product in order to define the industry. While both the 
Department and the ITC must apply the same statutory definition 
regarding the domestic like product (section 771(10) of the Act), they 
do so for different purposes and pursuant to separate and distinct 
authority. In addition, the Department's determination is subject to 
limitations of time and information. Although this may result in 
different definitions of the like product, such differences do not 
render the decision of either agency contrary to the law. (See Algoma 
Steel Corp. Ltd. v. United States, 688 F. Supp. 639, 642-44 (CIT 1988); 
High Information Content Flat Panel Displays and Display Glass from 
Japan: Final Determination; Rescission of Investigation and Partial 
Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991)).
    Section 771(10) of the Act defines the domestic like product as ``a 
product that is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    The domestic like product referred to in the petitions is the 
single domestic like product defined in the ``Scope of Investigation'' 
section above. The Department has no basis on the record to find the 
petitioners' definition of the domestic like product to be inaccurate. 
The Department, therefore, has adopted the domestic like product 
definition set forth in the petition.
    Moreover, the Department has determined that the petition (and 
subsequent amendments) and supplemental information obtained through 
the Department's research contain adequate evidence of industry 
support; therefore, polling is unnecessary. It is undisputed that 
parties expressing support for the petition represent more than 25 
percent of domestic production, and thus meet the requirements of 
section 732(c)(4)(A)(i). Moreover, knowing the 1999 total production of 
the domestic like product, and the portion of production represented by 
those supporting the petition, as well as those who have explicitly 
declined to take a position, the Department is able to conclude that, 
even if all parties whose production is not accounted for were to 
oppose the petition, parties expressing support for the petition would 
represent more than 50 percent of those expressing support or 
opposition. Therefore, the petition meets the requirements of section 
732(c)(4)(A)(ii). For a detailed discussion of this analysis, see 
Attachment to the Initiation Checklist re: Industry Support, dated 
October 26, 2000.
    Accordingly, the Department determines that these petitions are 
filed on behalf of the domestic industry within the meaning of section 
732(b)(1) of the Act.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of honey from Argentina and China are being, or 
are likely to be, sold at less than fair value.
    The following are descriptions of the allegations of sales at less 
than fair value upon which the Department based its decision to 
initiate these investigations. A more detailed description of these 
allegations is provided in the respective IA Initiation Checklists. 
Should the need arise to use any of this information in our preliminary 
or final determinations for purposes of facts available under section 
776 of the Act, we may re-examine the information and revise the margin 
calculations, if appropriate.

Argentina

    Petitioners identified four export trading companies which 
accounted for the majority of the natural honey exported to the United 
States during 1999: Conagra, CEASA, Honeymax, and ACA. Petitioners 
provided export prices on the average F.O.B. Buenos Aires prices for 
natural honey exported to the United States from Argentina during 1999 
by each of the four principal export trading companies. Petitioners 
used information obtained through foreign market research to 
demonstrate that the prices charged by Argentina's exporting trading 
companies are the prices that should be used to determine dumping 
margins for honey exported from Argentina. (See Confidential Statement 
of {Foreign Market Researcher}, Attachment 1 of petitioners' October 6, 
2000 submission.) Section 772(a) of the Tariff Act of 1930 (``the 
Act''), as amended, 19 U.S.C. 1677a(a), defines the U.S. price as the 
price at which the subject merchandise is first sold by a producer or 
exporter to an unaffiliated U.S. customer. In addition, to the best of 
petitioners' knowledge, the export trading companies are the first 
party in the chain of distribution that have knowledge of the ultimate 
destination of the merchandise and, therefore, set prices for U.S. 
sales. The average FOB Buenos Aires prices obtained through foreign 
market research are consistent with the average FOB values in the 
official U.S. import statistics. (See Exhibit A-2 of the petition.)
    With respect to normal value (``NV''), the petitioners provided 
home market prices based on foreign market research. Information 
contained in the petition does not definitively establish whether or 
not the home market is viable. The issue of home market viability will 
be further addressed during the course of the investigation. For 
purposes of initiation, NV will be based on home market prices. These 
products are comparable to the products exported to

[[Page 65833]]

the United States which serve as the basis for Export Price.
    On October 10, 2000, the petitioner provided information 
demonstrating reasonable grounds to believe or suspect that sales of 
honey in the home market were made at prices below the cost of 
production (``COP''), in accordance with section 773(b) of the Act, and 
requested that the Department conduct a country-wide sales-below-cost 
investigation.
    Pursuant to section 773(b)(3) of the Act, COP consists of the cost 
of manufacturing (``COM''), sales, general, and administrative 
(``SG&A'') expenses, and packing. To calculate the foreign producers' 
COP at the grower level, the petitioners used publicly available cost 
data obtained from Argentine honey producer bi-monthly trade journal 
articles. Based upon the comparison of the prices of the foreign like 
product in the home market to the calculated COP of the product at the 
grower level, we find reasonable grounds to believe that sales of the 
foreign like product were made below the COP, within the meaning of 
section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is 
initiating a country-wide cost investigation.
    Pursuant to section 773(a)(4) and 773(e) of the Act, the 
petitioners also based NV for sales in Argentina on constructed value 
(``CV''). Petitioners calculated CV using the same COM and SG&A 
expenses used to compute home market COP. In addition to these costs, 
petitioners added the SG&A expenses incurred by the exporters because 
the honey growers sell their merchandise to exporters who in turn sell 
to customers in the United States. These costs are more appropriately 
classified as selling expenses incurred for U.S. sales. Therefore, we 
have included them as an adjustment to the U.S. sales price. Consistent 
with section 773(e)(2) of the Act, the petitioners also added to CV an 
amount for profit which was based upon CEASA and Conagra's financial 
statements. Because the product sold in the home market was produced by 
the growers and not by the exporters, we have included a profit rate of 
zero. However, if we need to resort to the use of facts otherwise 
available in the future, we will then pursue the growers' profit rates.
    The estimated dumping margins, based on a comparison between U.S. 
price, as adjusted above, and CV, range from 28.84 to 30.17 percent.

Initiation of Cost Investigation

    As noted above, pursuant to section 773(b) of the Act, petitioners 
provided information demonstrating reasonable grounds to believe or 
suspect that sales of honey in Argentina were made at prices below the 
average COP of the honey producers in Argentina and, accordingly, 
requested that the Department conduct a country-wide sales-below-COP 
investigation in connection with the requested antidumping 
investigation for Argentina. The Statement of Administrative Action 
(``SAA''), submitted to the U.S. Congress in connection with the 
interpretation and application of the URAA, states that an allegation 
of sales below COP need not be specific to individual exporters or 
producers. SAA, H.R. Doc. No. 103-316, vol. 1, at 833 (1994). The SAA 
goes on to state that ``Commerce will consider allegations of below-
cost sales in the aggregate for a foreign country, just as Commerce 
currently considers allegations of sales at less than fair value on a 
country-wide basis for purposes of initiating an antidumping 
investigation.'' Id.
    Further, the SAA provides that ``new section 773(b)(2)(A) retains 
the current requirement that Commerce have 'reasonable grounds to 
believe or suspect' that below cost sales have occurred before 
initiating such an investigation. `Reasonable grounds' * * * exist when 
an interested party provides specific factual information on costs and 
prices, observed or constructed, indicating that sales in the foreign 
market in question are at below-cost prices.'' Id. Based upon the 
comparison of the prices from the petition for the representative 
foreign like products to their costs of production, we find 
``reasonable grounds to believe or suspect'' that sales of these 
foreign like products in Argentina were made below their respective 
COPs within the meaning of section 773(b)(2)(A)(i) of the Act. 
Accordingly, the Department is initiating the requested country-wide 
cost investigations.

China

    Petitioners based EP on two comparison methodologies. First, 
petitioners calculated EP on an August 17, 2000 offer for the sale of 
subject merchandise produced in China to a customer in the United 
States. The offer for sale represents a quotation for natural honey to 
be sold to an unaffiliated U.S. purchaser prior to the date of 
importation. The price quote provides per-unit prices in U.S. dollars 
for six different grades of natural honey produced in China. The terms 
of sale are delivered and duty paid. Petitioners adjusted the quoted 
prices for freight and insurance incurred to transport the honey from 
the port in China to the U.S. port, U.S. import duties, and insurance 
charges. Petitioners made an additional deduction for brokerage and 
handling charges incurred in China. Second, petitioners calculated EP 
based on average unit values (``AUVs'') for natural honey reported in 
the U.S. Import Statistics for the period January through June 2000. 
Petitioners calculated the AUVs using import data from January 1, 2000, 
through June 30, 2000, based on HTSUS numbers 0409.00.0042, 
0409.00.0044, 0409.00.0062, and 0409.00.0064. The terms of delivery are 
CIF. Petitioners adjusted the AUVs for brokerage and handling charges 
incurred in China and freight and insurance charges incurred to 
transport the honey from the port in China to the U.S. port.
    Petitioners asserted that China is a non-market economy (``NME'') 
country to the extent that available information does not permit the 
calculation of normal value using Chinese producers' own prices or 
costs for the subject merchandise or comparable merchandise. 
Petitioners, therefore, constructed a normal value based on the factors 
of production methodology pursuant to section 773(c) of the Act. In 
previous investigations, the Department has determined that China is an 
NME. See, e.g., Heavy Forged Hand Tools, Finished or Unfinished, With 
or Without Handles, From the People's Republic of China, 64 FR 5770, 
5773 (Feb. 5, 1999). In accordance with section 771(18)(C)(i) of the 
Act, the presumption of NME status remains in effect until revoked by 
the Department. The presumption of NME status for China has not been 
revoked by the Department and, therefore, remains in effect for 
purposes of this investigation. Accordingly, the normal value of the 
product is based on factors of production valued in a surrogate market 
economy country in accordance with section 773(c) of the Act. In the 
course of this investigation, all parties will have the opportunity to 
provide relevant information related to the issues of China's NME 
status and the granting of separate rates to individual exporters. See, 
e.g., Final Determination of Sales at Less Than Fair Value: Silicon 
Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994).
    Petitioners selected India as the appropriate surrogate country. 
Petitioners stated that India is the most suitable surrogate, because: 
(1) It is comparable in terms of overall economic development, per 
capita gross national product (``GNP''), the national distribution of 
labor, and the growth rate in per capita GNP; and (2) as the seventh 
largest producer of honey in the world in 1999, India is a significant

[[Page 65834]]

producer of the subject merchandise. Petitioners also stated that the 
Department selected India as the preferred surrogate in the 1994-95 
antidumping investigation of honey from China. See Notice of 
Preliminary Determination of Sales at Less Than Fair Value: Honey from 
the People's Republic of China, 60 FR 14725, 14729 (March 20, 1995) 
(``Honey from China''). Based on the information provided by 
petitioners and Department practice, we believe that petitioners' use 
of India as a surrogate country is appropriate for purposes of 
initiation of this investigation.
    In accordance with section 773(c)(4) of the Act, petitioners valued 
factors of production, where possible, on reasonably available, public 
surrogate country data. For the normal value calculation, petitioners 
obtained surrogate value information on the cost of producing natural 
honey in India, including direct costs (i.e., raw honey), indirect 
costs (i.e., factory overhead and SG&A), and profit. Raw honey was 
valued using Indian domestic prices as reported in the Mahabaleshwar 
Honey Producers Cooperative Society Ltd. (``MHPC'') 1998-99 Annual 
Report. The number of labor hours was derived from the Chinese 
producer's February 28, 1995 questionnaire response in Honey from 
China, and labor was valued using the Department's regression-based 
wage rate in accordance with 19 CFR 351.408(c)(3). Factory overhead, 
SG&A, and profit were valued using financial data reported in MHPC's 
1998-99 Annual Report. Additional amounts for export packing were based 
on an offer for sale from an Indian manufacturer of steel drums and on 
the consumption rate for packing labor as reported by the Chinese 
producers in Honey from China. As necessary, petitioners inflated non-
contemporaneous surrogate values to the period of investigation using 
IMF International Financial Statistics. Petitioners converted the 
Indian Rupee prices to U.S. dollars using the exchange rates published 
in the Federal Reserve Statistical Release H.10 for the period April 
2000 through August 2000. Based on the information provided by 
petitioners, we believe that their surrogate values represent 
information reasonably available to petitioners and are acceptable for 
purposes of initiation of this investigation.
    Based on comparisons of EP to NV, the calculated dumping margins 
for natural honey from China range from 169.40 to 183.80 percent.

Allegations and Evidence of Material Injury and Causation

    The petition alleges that the U.S. industry producing the domestic 
like product is being materially injured, and is threatened with 
material injury, by reason of the individual and cumulated imports of 
the subject merchandise sold at less than NV. Petitioners explained 
that the industry's injured condition is evident in the declining 
trends in (1) U.S. market share, (2) average unit sales values, (3) 
share of domestic consumption, (4) operating income, (5) output, and 
(6) sales.
    The allegations of injury and causation are supported by relevant 
evidence including U.S. Customs import data, lost sales, and pricing 
information. The Department assessed the allegations and supporting 
evidence regarding material injury and causation and determined that 
these allegations are supported by accurate and adequate evidence and 
meet the statutory requirements for initiation (see Attachments to 
Initiation Checklist, Re: Material Injury, October 26, 2000).

Initiation of Antidumping Investigations

    Based upon our examination of the petition, our discussions on 
October 12, 2000, with the author of the foreign market research report 
supporting the petition, measures to confirm the information contained 
in this report (see Memorandum to the File; Re: Foreign Market 
Research, dated October 26, 2000), and all other information on the 
record regarding industry support, we have found that the petition 
meets the requirements of section 732 of the Act. Therefore, we are 
initiating antidumping duty investigations to determine whether imports 
of honey from Argentina and China, are being, or are likely to be, sold 
in the United States at less than fair value. Unless this deadline is 
extended, we will make our preliminary determinations no later than 140 
days after the date of this initiation.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of each petition has been provided to the 
representatives of the governments of Argentina and China. We will 
attempt to provide a copy of the public version of each petition to 
each exporter named in the petition, as appropriate.

International Trade Commission Notification

    We have notified the ITC of our initiations, as required by section 
732(d) of the Act.

Preliminary Determinations by the ITC

    The ITC will determine, by no later than November 20, 2000, whether 
there is a reasonable indication that imports of honey from Argentina 
and China are causing material injury, or threatening to cause material 
injury, to a U.S. industry. A negative ITC determination for any 
country will result in the investigation being terminated with respect 
to that country; otherwise, these investigations will proceed according 
to statutory and regulatory time limits.
    This notice is published pursuant to section 777(i) of the Act.

    Dated: October 26, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-28041 Filed 11-1-00; 8:45 am]
BILLING CODE 3510-DS-P