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[Federal Register Volume 63, Number 111 (Wednesday, June 10, 1998)]
[Notices]
[Pages 31724-31735]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15349]

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DEPARTMENT OF COMMERCE

International Trade Administration
[A-301-602]

Certain Fresh Cut Flowers From Colombia: Final Results of 
Antidumping Duty Administrative Review

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

ACTION: Notice of final results of antidumping duty administrative 
review.

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SUMMARY: On February 2, 1998, the Department of Commerce published the 
preliminary results of the administrative review of the antidumping 
duty order on certain fresh cut flowers from Colombia. This review 
covers a total of 424 producers and/or exporters of fresh cut flowers 
to the United States during the period March 1, 1996 through February 
28, 1997.
    We gave interested parties an opportunity to comment on the 
preliminary results. Based on our analysis of the comments received, we 
have made certain changes for the final results. The review indicates 
the existence of dumping margins for certain firms during the review 
period.

EFFECTIVE DATE: June 10, 1998.

FOR FURTHER INFORMATION CONTACT: Rosa Jeong, Hong-Anh Tran or Todd 
Hansen, Office 1, Group 1, AD/CVD Enforcement, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone 
(202) 482-1278, (202) 482-0176 or (202) 482-1276, respectively.

APPLICABLE STATUTE AND REGULATIONS: The Department of Commerce (the 
Department) is conducting this administrative review in accordance with 
section 751 of the Tariff Act of 1930, as amended (the Act). 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 Act by the Uruguay Round Agreements Act (URAA). 
In addition, unless otherwise indicated, all citations to the 
Department's regulations are to those codified at 19 CFR Part 353 
(April 1997).

SUPPLEMENTARY INFORMATION:

Background

    On February 2, 1998, we published a notice of Preliminary Results 
and Partial Termination of Antidumping Duty Administrative Review 
(Preliminary Results), wherein we invited interested parties to 
comment. See 63 FR 5354. At the request of the interested parties, we 
held a public hearing on April 14, 1998.

Scope of Review

    Imports covered by this review are shipments of certain fresh cut 
flowers from Colombia (standard carnations, miniature (spray) 
carnations, standard chrysanthemums and pompon chrysanthemums). These 
products are currently classifiable under item numbers 0603.10.30.00, 
0603.10.70.10, 0603.10.70.20, and 0603.10.70.30 of the Harmonized 
Tariff Schedule of the United States (HTSUS). The HTSUS item numbers 
are provided for convenience and customs purposes. The written 
description of the scope of this order remains dispositive.

Fair Value Comparisons

Export Price and Constructed Export Price

    For the price to the United States, we used export price (EP) or 
constructed export price (CEP) as defined in section 772(a) and 772(b) 
of the Act. We calculated EP and CEP based on the same methodology used 
in the Preliminary Results with the following exceptions: (1) we 
recalculated Tuchany's credit expenses net of commission and 
international freight expenses (see infra Comment 14); (2) we accounted 
for the returns for Clavecol and Caicedo for the months reported rather 
than allocating them over the period of review (POR) (see infra Comment 
16).

Normal Value

    As discussed in the Preliminary Results, we determined that home 
market and third-country sales are not an appropriate basis for normal 
value (NV) and, therefore, used constructed value (CV) as defined in 
section 773(e) of the Act as the basis for determining NV. We used the 
same methodology to calculate NV as that described in the Preliminary 
Results.

Analysis of Comments Received

    We received case and rebuttal briefs from the Floral Trade Council 
(FTC), the domestic interested party, and the Asociacion Colombiana de 
Exportadores de Flores (Asocolflores), an association of Colombian 
flower producers representing many of the respondents in this case.

General Issues

    Comment 1: Asocolflores argues that zero and de minimis margins 
should be included in the calculation of the rate for non-selected 
respondents since it is reasonable to assume that some of the non-
selected respondents would have received the same had they been 
individually reviewed. Citing to Serampore Indus. Pvt. Ltd. v. United 
States, 696 F. Supp. 665, 668-69 (CIT 1988), Asocolflores argues that 
excluding zero and de minimis margins amounts to a presumption of 
dumping on behalf of non-selected firms.
    Asocolflores further argues that if the rates of selected companies 
are not, in some way, ``representative,'' then there is no legal basis 
for using such rates for non-selected respondents. Referring to 
National Knitwear & Sportswear Association v. United States, 779 F. 
Supp. 1364, 1372 (CIT 1991), Asocolflores elaborates that the benefits 
of zero or de minimis margins made available to selected respondents 
should be extended to non-selected respondents. Acknowledging that the 
Act provides for the exclusion of zero and de minimis margins in 
calculating the cash deposit rate for non-examined producers in an 
investigation, Asocolflores differentiates this situation

[[Page 31725]]

from the final results of an administrative review which give rise to 
actual duty payments. Asocolflores emphasizes that because of the 
Department's decision to limit the number of respondents, all exporters 
and importers do not have the ability to obtain their own assessment 
rates as they normally would in an administrative review.
    Asocolflores claims that the Department's decision to exclude zero 
and de minimis margins is arbitrary and denies non-selected respondents 
their substantive and procedural due process rights. Moreover, 
Asocolflores asserts that because no adverse facts available (AFA) 
rates were applied in this review, the Department's approach of 
excluding zero and de minimis rates alone would in effect result in an 
``unbalanced'' approach, defeating the rationale for a ``balanced'' 
approach (i.e., excluding both AFA and zero and de minimis margins), 
taken by the Department in Certain Fresh Cut Flowers from Colombia: 
Final Results and Partial Rescission of Antidumping Duty Administrative 
Review, 62 FR 53287 (October 14, 1997) (Ninth Review Final Results).
    In the event the Department continues to exclude zero, de minimis 
and AFA margins, Asocolflores claims that Tuchany's rate should be 
excluded because it is mostly derived from information based on facts 
available (FA). By excluding Tuchany's rate, Asocolflores asserts that 
a more ``balanced'' result will be maintained.
    The FTC contends that there is no valid basis for excluding margins 
based on AFA on the one hand while including de minimis margins on the 
other. The FTC argues that Asocolflores' argument ignores the fact that 
the Department's methodology, one of selecting only the largest 
producers in this case, is not intended to be a statistically 
representative sampling of the whole population. The FTC asserts that 
over the past twelve years, all respondents have had many opportunities 
to request partial revocation, by demonstrating that they were not 
dumping. Those respondents who have succeeded in obtaining revocation, 
the FTC states, are properly excluded from the universe from which a 
sample would be drawn in future administrative reviews. Consequently, 
the FTC asserts that the remaining universe is fairly presumed to 
consist of those producers that continue to dump. Therefore, the FTC 
argues that the Department's practice of excluding zero and de minimis 
margins in calculating the rate for non-selected respondents is 
appropriate. The FTC states that margins such as Tuchany's that are not 
based entirely on AFA should be included in the non-selected respondent 
rate.
    Department's Position: Consistent with our practice in Ninth Review 
Final Results, we are not including zero or de minimis rates or rates 
based entirely on AFA in the calculation of the rate for non-selected 
respondents. As stated in that segment of this proceeding, there is no 
over-arching rule as to the inclusion or exclusion of zero and de 
minimis rates in calculating the rate to be applied to non-selected 
respondents. The approach we have adopted parallels the statutorily 
mandated formula for calculating the all-others rate, i.e., the 
weighted-average rate of uninvestigated companies not including AFA and 
zero and de minimis rates. See section 735(c)(5) of the Act. This 
approach is both reasonable and one that yields a balanced result.
    We disagree with Asocolflores that due process is being denied to 
non-selected respondents because we have not included zero and de 
minimis margins. Asocolflores misread the relevant case law. The cases 
cited by Asocolflores stand for the proposition that the parties' 
procedural and substantice rights are limited to those set forth in the 
antidumping statute and regulations. Arjay Associates, Inc. v. Bush, 
891 F. 2d 894, 896 (Fed. Cir. 1989); Gulf States Tube Division of 
Quanex Corp. v. United States, 981 F. Supp. 630, 652 (CIT 1997); see 
also Kemira Fibres Oy v. United States, 858 F.Supp. 229, 235 (CIT 
1994). In the instant case, our methodology of excluding zero and de 
minimis margins in the calculation of rates applicable to non-
respondents in no way prevents non-selected respondents from obtaining 
revocation of the antidumping duty order in this case. Rather, they 
have the opportunity for revocation as set forth in Ninth Review Final 
Results at 53290 (Comment 4). Specifically, companies that requested 
reviews in prior reviews but were not selected for examination may 
request revocation by certifying and demonstrating that they have not 
sold subject merchandise at not less than normal value during the 
current and two prior periods of review (POR).
    We also disagree with Asocolflores that because there is no AFA-
based rate applicable in this review, zero and de minimis margins must 
be included in the non-selected respondents' rate calculation in order 
to maintain a ``balanced'' result. The fact that there is no AFA-based 
rate in the present review does not affect the validity of our 
methodology of excluding zero and de minimis rates and rates based on 
AFA from the calculation of the non-selected respondent rate. For 
instance, if there had been a rate based on AFA but no zero or de 
minimis rate in the present review, we would have followed the same 
approach by excluding the AFA rate from the calculation of the non-
selected respondent rate.
    As we stated in the Ninth Review Final Results at 53290, we do not 
find that the selected respondents, who represent the largest 
producers/exporters of the subject merchandise, are necessarily 
representative of the whole population. Therefore, we do not treat the 
selected companies as a statistical sample and compute a margin that is 
based on the results of all the selected companies.
    Finally, we have included Tuchany's rate in the calculation of the 
rate for non-selected respondents. Because its rate is not entirely 
based on AFA, it would be included in calculating an all-others rate, 
the same approach that we are adopting here.
    Comment 2: The FTC argues that the Department's reasons for 
rejecting third-country prices as the basis for determining NV in past 
reviews are insufficient to support a finding that third-country prices 
should not be used for any of the respondents in this review. The FTC 
notes that the Department has rejected the use of prices from sales to 
European markets in past reviews because of evidence indicating that 
prices in European markets are more stable than those in the U.S. 
market, and that the demand pattern in European markets differs 
significantly from the U.S. market due to differences in the flower-
giving holidays. In the present review, however, the FTC claims that 
the Department has no reason to reject non-European third-country 
prices as the basis for determining NV. The FTC notes that Canada and 
Japan have become increasingly important markets for Colombian flower 
exporters, and that in this review the Department found that several 
exporters had viable markets in Japan and/or Canada. The FTC claims 
that there is no evidence on the record indicating that either the 
Japanese or the Canadian market differs significantly from the U.S. 
market. Moreover, the FTC argues that the Department has consistently 
determined the proper basis for NV on a company-specific basis. 
Therefore, the Department should use sales to Japan or Canada as the 
basis for determining NV whenever these markets are found to be viable 
for individual respondents.
    Asocolflores argues that the non-European third-country markets are 
not

[[Page 31726]]

representative markets for the majority of Colombian growers and that 
sales to these markets should not be used as the basis of NV for any of 
the responding companies. Asocolflores notes that all of the major 
third-country markets for Colombian flower growers are European, and 
that the Canadian and Japanese are not significant third-country 
markets for the Colombian industry as a whole. Asocolflores argues that 
the Department was correct not to use third-country prices to Japan or 
Canada to calculate NV for certain respondents in the Preliminary 
Results because reliance on such data would not produce representative 
results for the non-selected respondents.
    Department's Position: We disagree with the FTC. Because Japan and 
Canada are not significant export markets for Colombia, we determined 
that, under the facts of this case, prices to Canada or Japan are not 
representative within the meaning of section 773(a)(1)(B)(ii)(I) of the 
Act. As discussed in the Preliminary Results at 5355, we limited our 
analysis to a subset of the Colombian companies exporting to the United 
States and are basing the antidumping duty assessments for the non-
selected companies on the margins calculated for the selected 
companies. Given this, it is important that our analysis be as 
representative as possible of the companies that were not selected to 
respond to our questionnaire.
    It is clear that neither Japan nor Canada is an important export 
market for Colombian flower growers. Evidence on the record indicates 
that Canada represents less than three percent of flower exports from 
Colombia and Japan represents less than one percent. Thus, to use sales 
to Japan or Canada as the basis of our margin calculations for the few 
exporters that have viable markets in Japan and Canada and then include 
those results in calculating the rate used for assessing duties on the 
non-selected respondents would be inappropriate for the vast majority 
of growers. Consequently, in accordance with section 773(a)(4) of the 
Act, we based NV on CV.
    As an alternative method of ensuring that NV was representative, we 
considered using third-country sales for those companies with viable 
third-country markets, but excluding those companies from the 
calculation of the assessment rate for non-selected exporters. However, 
such a methodology would substantially reduce the percentage of exports 
during the POR that would form the basis of the assessment calculation 
for non-selected exporters. Therefore, we determine that the use of CV 
is a more reasonable means of establishing a representative NV for 
purposes of calculating the assessment rates for all exporters under 
review.

Export Price or Constructed Export Price

    Comment 3: The FTC claims that section 772(d)(1) of the Act 
explicitly requires the Department to reduce CEP first by deducting 
commissions and then by deducting any indirect selling expenses for 
both affiliated and unaffiliated parties. The FTC contends that the Act 
recognizes that a CEP reseller, whether or not affiliated, should be 
treated as a separate entity. Consequently, because all CEP 
transactions are made at the same level of trade (LOT), the FTC argues 
that commissions should be treated the same whether the CEP sale is 
made through an affiliated reseller or through an unaffiliated 
reseller. The FTC further argues that, because of changes which 
resulted from the URAA, no double-counting would result if the 
Department deducts commissions paid by the exporter to an affiliated 
importer and then deducts any additional indirect expenses.
    Asocolflores counters that the FTC's commission argument has been 
repeatedly rejected by the Department in earlier reviews of this same 
case, as well as in Fresh Cut Roses from Ecuador: Final Determination 
of Sales at Less Than Fair Value, 60 FR 7019, 7028 (Feb. 6, 1995) 
(Roses from Ecuador), and in Fresh Cut Roses from Colombia: Final 
Determination of Sales at Less Than Fair Value, 60 FR 6980, 6992 (Feb. 
6, 1995) (Roses from Colombia). Asocolflores also points out that the 
Department's rejection of the FTC's argument that related party 
commissions should be deducted from U.S. price was recently affirmed by 
the U.S. Court of International Trade (CIT). See Asociacion Colombiana 
de Exportadores de Flores v. United States, Slip Op. 98-33 at 74-81 
(March 25, 1998) (Asociacion Colombiana).
    Department's Position: We disagree with the FTC. Consistent with 
Asociacion Colombiana and the Department's practice in prior reviews of 
this case, the Department will make adjustments for commissions paid to 
unaffiliated U.S. consignees, while adjusting for actual U.S. selling 
expenses of affiliated consignees of the exporter. See Ninth Review 
Final Results at 53294; see also Asociacion Colombiana at 78-81. 
Notwithstanding the fact that the decision in Asociacion Colombiana is 
based on pre-URAA practice, the principle remains the same: to avoid 
double-counting, we deduct commissions paid to unaffiliated resellers 
in the United States, but for affiliated resellers, we deduct the 
actual selling expenses of the affiliated importer and allocate profit.
    Comment 4: Asocolflores contends that the Department should 
calculate the CEP profit rate on a monthly rather than an annual basis. 
Asocolflores points to the holiday-driven demand patterns for flowers 
in the United States, noting that the price for flowers can vary by 
more than 100 percent between peak and off-peak months. Asocolflores 
states that this variability in demand for flowers results in highly 
variable profit rates when comparing peak to off-peak months.
    Asocolflores argues that calculating the CEP profit rate on a 
monthly basis is necessary to avoid the distortion inherent in 
deducting a constant profit percentage from monthly sales when actual 
profit margins are demonstrably and radically different. Asocolflores 
notes that nothing in the Act or the Department's regulations requires 
the CEP profit deduction be calculated on an annual basis. Asocolflores 
points to the preamble to the Department's 1997 regulations where the 
Department states that paragraph (d) of section 351.402 affords the 
Department the flexibility to calculate the CEP profit deduction on the 
basis of something less than all sales of the subject merchandise and 
the foreign like product throughout the period of investigation or 
review. See Antidumping Duties; Countervailing Duties; Final Rule, 62 
FR 27296, 27354 (May 19, 1997). Because both CEP and EP prices reflect 
huge swings in monthly prices, a monthly calculation of the CEP profit 
rate would, according to Asocolflores, be more consistent with the 
contemplated purpose of the CEP profit adjustment as described in the 
Statement of Administrative Action, H. Doc. 316, 103d Cong., 2nd 
Session 870 (SAA) at page 153, i.e., calculating CEP price to be, as 
closely as possible, a price corresponding to EP.
    The FTC argues that an arm's length price to an unrelated importer 
would incorporate some element of profit, whereas a methodology that 
isolates holiday sales from other transactions, as proposed by 
Asocolflores, may result in a zero profit rate for several months of 
the POR because CEP profit is calculated based on the total profit for 
both the grower and the reseller. The FTC contends that while importers 
may realize different monthly profits based on seasonal price swings, 
growers' profit expectations are annual. Use of an annual rate, the FTC 
argues, ensures that some profit is assigned to all months, reflecting 
the reasonable

[[Page 31727]]

expectations of arm's length importers. The FTC notes that the use of 
an annual rate still results in a variation in the amount of CEP profit 
when prices vary.
    The FTC further cites to Antifriction Bearings (Other Than Tapered 
Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan, 
Singapore, and the United Kingdom; Final Results of Antidumping Duty 
Administrative Reviews, 62 FR 2081, 2125 (January 15, 1997) (AFBs from 
France, et al), where the Department indicated a preference for a 
single rate for CEP profit. The FTC argues that Asocolflores' logic 
that the use of monthly prices requires the use of monthly profit rates 
leads to the conclusion that sale-by-sale comparisons require the use 
of sale-by-sale CEP profit rates, a proposition that would undermine 
the very purpose of the CEP profit deduction.
    Department's Position: Consistent with our practice in Ninth Review 
Final Results and the Preliminary Results, we have used an annual CEP 
profit rate for purposes of these final results. As the FTC has noted, 
the Department's practice has been to apply a single rate for CEP 
profit. Although Asocolflores has argued that profit rates may vary due 
to changes in demand conditions, this is true, to some extent, for many 
products. Moreover, the CEP profit calculation is normally based on the 
overall profit of home market and U.S. sales rather than on the profit 
of a particular U.S. sale. Although a respondent may have few or no 
home market sales, we nonetheless use an average profit rate for those 
U.S. and home market sales that were made. We determine that the 
circumstances surrounding this case do not compel a departure from our 
usual practice of using a single rate for CEP profit.
    Comment 5: Asocolflores argues that the Department erred in 
calculating CEP profit, because the calculation of the ratio of total 
profit to total selling expenses did not include imputed selling 
expenses, while this ratio was applied to a U.S. selling expense figure 
that included imputed selling expenses. According to Asocolflores, this 
treatment is inconsistent and overstates profit on U.S. selling 
activities. Asocolflores argues that the Department's past rationales 
for this practice do not withstand analysis. Asocolflores contends that 
the Department's statement that `` `actual' profit is calculated on the 
basis of `actual' rather than imputed expenses'' in Certain Cold-Rolled 
and Corrosion-Resistant Carbon Steel Flat Products From Korea: Final 
Results of Antidumping Duty Administrative Reviews, 62 FR 18404, 18440 
(April 15, 1997) is unfounded, because the Act makes no distinction 
between ``actual'' and ``imputed'' expenses. According to Asocolflores, 
imputed credit represents a real expense to the company because payment 
today is worth more than payment in the future. Additionally, 
Asocolflores notes that the Department ``imputes'' inflation in 
calculating the growers' CV and includes this imputed inflation 
adjustment when calculating ``actual'' profit and the CEP profit ratio.
    Asocolflores also disagrees with the Department's explanation that, 
``if [the Department] were to account for imputed expenses in the 
denominator of the CEP allocation ratio, we would double-count the 
interest expense incurred for credit and inventory carrying costs 
because these expenses are already included in the denominator.'' Id. 
Asocolflores notes that in calculating CEP, the Department makes an 
adjustment for both imputed credit expense and indirect selling 
expenses, which already include actual interest expense. Asocolflores 
contends that to the extent the Department believes that imputed credit 
expenses and interest expense overlap, the Department should be 
consistent and eliminate all double-counting by either reducing U.S. 
indirect selling expenses by the amount of imputed credit expense or 
according the same treatment to both actual and imputed credit as 
expenses for purposes of calculating and allocating CEP profit.
    Department's Position: We disagree with Asocolflores. Consistent 
with our practice in the Ninth Review Final Results and the Preliminary 
Results, we excluded imputed selling expenses in deriving total actual 
profit for these final results. As described in a recent policy 
bulletin, we included these expenses in the pool of U.S. selling 
expenses used to allocate a portion of total actual profit to each 
sale. See Import Administration Policy Bulletin number 97/1, issued on 
September 4, 1997, concerning the Calculation of Profit for Constructed 
Export Price Transactions, at 3 and note 5; see also Notice of Final 
Results of Antidumping Duty Administrative Review: Canned Pineapple 
Fruit From Thailand, 63 FR 7392, 7395-96 (February 13, 1998).
    Asocolflores' argument confuses actual interest expenses with 
adjustments for imputed credit. While interest expense components 
included in the calculation of indirect selling expenses and CV are 
actual expenses, imputed credit is an opportunity cost, and not an 
actual, recorded expense. Contrary to Asocolflores' claims, the 
inflation adjustment to depreciation expense does not represent an 
opportunity cost, but rather, reflects a restatement of the value of 
fixed assets to account for the effects of inflation.
    When allocating a portion of the actual profit to each CEP sale, we 
include imputed credit as part of the total U.S. expenses allocation 
factor, consistent with section 772(f)(2) of the Act which defines the 
term ``total U.S. expenses'' as those described under sections 
772(d)(1) and (2) of the Act. We note that credit expense is 
specifically enumerated in section 772(d)(1)(B) of the Act.

Normal Value

    Comment 6: While acknowledging that the Department's practice was 
recently upheld in Asociacion Colombiana at 27-34, Asocolflores 
maintains that the Department must allocate production costs equally to 
national and export quality flowers when calculating CV. Asocolflores 
relies on IPSCO, Inc. v. United States, 965 F.2d 1056 (Fed. Cir. 1992) 
(IPSCO) in which, according to Asocolflores, the court held that lower 
quality grades of the same primary product which are used for the same 
purpose and produced by the same process may not be treated as a by-
product to which no production costs are allocated. Asocolflores also 
notes that the court in Thai Pineapple Public Co. v. United States, 946 
F. Supp. 11 (CIT 1996) (Thai Pineapple) had rejected the Department's 
attempt to allocate production costs on the basis of relative sales 
value. Asocolflores argues that the Department must follow its post-
IPSCO practice of allocating the same production costs to different 
grades of product that are produced in the same manner, citing to such 
cases as Polyethylene Terephthalate Film, Sheet, and Strip from the 
Republic of Korea; Final Results of Antidumping Duty Administrative 
Reviews and Notice of Revocation in Part, 61 FR 35177, 35182-83 (July 
5, 1996); Porcelain-on-Steel Cookware from Mexico: Final Results of 
Antidumping Duty Administrative Review, 62 FR 25908, 25911-912 (May 12, 
1997); and Canned Pineapple Fruit From Thailand; Final Determination of 
Sales at Less Than Fair Value, 60 FR 29553, 29561 (June 5, 1995). In 
accordance with these precedents and the above-cited court decisions, 
Asocolflores argues that the Department should allocate production 
costs to all flowers sold regardless of grade.
    Noting that Asocolflores' argument has been raised and rejected in 
Roses from Colombia and that the Department's practice has been upheld 
by the court in Asociacion Colombiana,

[[Page 31728]]

the FTC argues that the Department should continue to reject 
Asocolflores' argument that production costs should be allocated to 
national quality flowers or culls.
    Department's Position: We disagree with Asocolflores. Our general 
practice in cases involving agricultural goods has been to treat 
``reject'' products as by-products and to offset the total cost of 
production with revenues earned from the sale of any such ``reject'' 
products. This approach has been upheld by the CIT in Asociacion 
Colombiana. Specifically, the CIT found that our approach ``represents 
a permissible construction of the Act and a longstanding agency 
practice.'' Asociacion Colombiana at 31. Furthermore, the CIT held that 
Asocolflores' reliance on IPSCO and Thai Pineapple was misguided (Id. 
at 29), noting that those two cases involved the accounting treatment 
of co-products, not by-products. In light of the fact that our 
treatment of national quality flowers as by-products for cost 
allocation purposes has been upheld by the CIT, we see no reason to 
depart from our methodology.
    Comment 7: Asocolflores maintains that the Department's failure to 
make an adjustment to financial expenses for ``net monetary 
correction,'' while including an adjustment for the effects of 
inflation in respondents' depreciation and amortization costs, leads to 
significant distortions in the calculation of CV. Asocolflores argues 
that in addition to requiring an inflation adjustment to asset values, 
Colombian law and generally accepted accounting principles (GAAP) also 
require the adjustment for ``monetary correction,'' which represents 
the net gain or loss to the company caused by inflation on its net 
exposed monetary assets and liabilities.
    Asocolflores explains that under Colombian GAAP, financial costs, 
along with depreciation and amortization expense, must be adjusted from 
nominal pesos to current value pesos because the costs incurred by a 
company in the current period but not payable until later periods, such 
as accounts payable and peso loan balances, will be paid in the future 
when the pesos will be cheaper in current value terms. According to 
Asocolflores, the Department's methodology results in a distorted cost 
calculation that mixes nominal pesos for some costs with inflation 
adjusted, current value pesos for other costs. Asocolflores contends 
that the Department must either disregard all inflation adjustments or 
include the net monetary correction.
    Asocolflores asserts that under section 773(f)(1)(A) of the Act, 
the Department must calculate costs based on the records of the 
exporter, unless such costs are distortive or do not reasonably reflect 
costs. According to Asocolflores, the Department violates the Act by 
disregarding the net monetary correction without making a finding that 
the inclusion of the adjustment distorts costs or otherwise does not 
reasonably reflect the cost associated with the production and sale of 
the merchandise. Asocolflores also cites past cases involving inflation 
accounting where the Department recognized that the monetary correction 
must be included. See Gray Portland Cement and Clinker from Mexico; 
Final Results of Antidumping Duty Administrative Review, 58 FR 25803 
(April 28, 1993) (Cement from Mexico (1993)); Gray Portland Cement and 
Clinker from Mexico; Final Results of Antidumping Duty Administrative 
Review, 62 FR 17148 (April 9, 1997) (Cement from Mexico (1997)); 
Aimcor, Ala. Silicon, Inc. v. United States, slip op. No. 95-130, 1995 
WL 431186 (CIT July 20, 1995). Asocolflores further argues that the 
Department's rationale for excluding monetary correction in the Ninth 
Review Final Results, that inflation effects to financial expenses are 
``largely confined within the POR,'' is unreasonable because the 
significance of inflation upon costs is based not only on the age of 
the asset or loan but also on its amount.
    The FTC asserts that the Department's rejection of the monetary 
correction adjustment is supported by past cases such as Roses from 
Colombia, where the Department specifically declined to include 
inflation adjustments resulting from the annual revaluation of non-
monetary assets because the adjustment ``merely reflects an increase to 
respondent's financial statement equity due to the restatement of non-
monetary assets to account for inflation.'' 60 FR at 6993. The FTC 
distinguishes Cement from Mexico (1993) in that the Mexican inflation 
adjustment was determined to pertain solely to monetary assets and 
liabilities whereas the Colombian monetary correction is an adjustment 
to non-monetary assets. The FTC also points out that the court in 
Asociation Colombiana has upheld the Department's rejection of the 
adjustment.
    Department's Position: We disagree with Asocolflores. Consistent 
with our practice in Ninth Review Final Results, we have continued to 
adjust only fixed asset costs for the effects of inflation and have not 
revised CV to include the monetary correction suggested by 
Asocolflores. With the exception of cases involving countries with 
``hyperinflationary'' economies, the Department typically ignores the 
effects of inflation on costs incurred during the period of 
investigation or review. However, as in this review, the Department has 
recognized the effect that high levels of inflation may have on the 
historical cost of certain production assets when compounded over 
periods prior to the period of investigation or review. In these 
instances, the Department adjusts the historical cost of these assets 
such that they reflect the currency value during the period for which 
costs are calculated.
    In Asociacion Colombiana, the CIT upheld the Department's method of 
accounting for the longer-term effects of significant inflation on 
assets that were purchased or placed into service before the POR, but 
that were not recognized as production costs until some time during the 
POR. The CIT also rejected Asocolflores' argument that, where the 
Department adjusts fixed asset costs for inflation, it must also 
recognize the monetary correction for inflationary effects arising 
within the POR. See Budd Co. v. United States, 773 F. Supp. 1549 (CIT 
1991) (holding that full accounting for inflation is neither necessary 
nor possible).
    Comment 8: Asocolflores argues that the Department should adjust 
the CV in the final results by either excluding an amount allocable to 
the actual cost of financing trade accounts receivable or by reducing 
the CV by an amount for imputed credit expense. Citing Amended Final 
Results of Antidumping Duty Administrative Review: Silicon Metal from 
Brazil, 62 FR 54087, 54091 (October 17, 1997) (Silicon Metal from 
Brazil), Asocolflores states that the Department recently acknowledged 
that an inaccurate result arises when comparing the CV inclusive of all 
actual financing costs to a U.S. price exclusive of imputed credit 
costs. Asocolflores charges that the Department's failure to make such 
an adjustment in the instant case results in an unfair comparison of 
U.S. price to CV.
    Asocolflores contends that it was the Department's practice prior 
to the Ninth Review Final Results to include in the CV interest expense 
only the portion of respondents' borrowing costs associated with 
production. Asocolflores states that the Department either should 
reduce the CV interest expense by the ratio of accounts receivable to 
total assets or it should make a circumstance-of-sale (COS) adjustment 
to CV. Asocolflores argues that by including all actual financing 
expenses in the CV, the Department included the cost of

[[Page 31729]]

financing sales to all markets. Because a majority of respondents' 
sales are made to the United States, Asocolflores suggests that the 
Department use the imputed credit expenses on U.S. sales as a COS 
adjustment. Specifically, Asocolflores recommends that the Department 
use the percentage of U.S. price attributable to credit expense on a 
customer-specific basis as the adjustment to the CV.
    The FTC asserts that the cases cited by Asocolflores show that it 
is the Department's practice to use only home market imputed credit 
expenses as a COS adjustment. In the instant case, however, the FTC 
states that the Department should not make a COS adjustment to CV 
because there are no home market credit costs associated with 
Colombia's non-viable market. Additionally, the FTC argues that on CEP 
sales, the U.S. importer incurs the U.S. credit expenses rather than 
the producer. Because the reported CV interest expense does not include 
these costs, the FTC argues, it would be inappropriate to deduct them 
from CV.
    Department's Position: Since the adoption of the URAA, we no longer 
make a reduction to interest expense to account for the percentage of 
total assets accounted for by accounts receivable because we no longer 
include an amount for imputed credit in the CV. However, we agree with 
the parties that it is our practice to make a COS adjustment for 
differences in credit costs between the home and U.S. markets in the 
calculation of CV. See, e.g., Silicon Metal from Brazil; Certain 
Stainless Steel Bar from India: Final Results of Antidumping Duty 
Administrative Review, 63 FR 13622, 13624 (Comment 5) (March 20, 1998). 
Addressing this same issue in Ninth Review Final Results at Comment 24, 
we explained that:

    It is no longer appropriate to do as Asocolflores suggests and 
reduce actual interest expense * * *. Any differences in credit 
expense between the U.S. and foreign market are taken into account 
as a circumstance of sale adjustment, but not as part of the actual 
calculation of net interest expense incurred for the product.

The Department's practice is to reduce CV by home market imputed credit 
expenses. See, e.g., Certain Stainless Steel Wire Rods from France: 
Final Results of Antidumping Duty Administrative Review, 62 FR 7206, 
7209 (February 18, 1997). However, respondents reported no home market 
credit expenses. Thus, as in the Preliminary Results and in the Ninth 
Review Final Results, we have reduced CV by home market credit expenses 
of zero as a COS adjustment for these final results.
    Comment 9: Asocolflores argues that the Department's use of the 
profit rate of Compania Nacional de Chocolates S.A. (CNC), a Colombian 
producer of chocolate and other processed agricultural products, as FA 
in the calculation of CV is inconsistent with the Act. Asocolflores 
contends that for those selected respondents whose home market sales of 
export quality flowers were made below cost (i.e., zero profit), the 
Department should use the profit rate of zero pursuant to section 
773(e)(2)(B)(i) of the Act. With respect to the remaining respondents, 
Asocolflores argues that the application of the ``profit cap'' 
described in section 773(e)(2)(B)(iii) of the Act is mandatory. 
Therefore, Asocolflores claims that because none of the responding 
companies had profits on sales of flowers in the home market, the 
profit cap applicable to all selected respondents must be zero.
    Asocolflores states that basic principles of statutory construction 
preclude the Department from construing the Act as requiring profit to 
be a positive amount. Asocolflores points out that the methodologies of 
calculating profit set forth in sections 773(e)(2)(A) and 
773(e)(2)(B)(ii) of the Act specifically include an ordinary course of 
trade test, which by its terms excludes certain below cost sales and 
ensures that the profit margins using these methodologies are above 
zero. Asocolflores argues that by omitting the ordinary course of trade 
test in sections 773(e)(2)(B)(i) and (iii) of the Act, while including 
it in the methodologies under other sections as above, Congress must 
have intended that the profit rate is not required to be above zero. 
Asocolflores also contends that in other sections of the Act where the 
Department is required to calculate an amount for profit, such as 
sections 772(d) and (f), which relate to an adjustment to CEP for 
profit allocable to certain expenses incurred in the United States, the 
Department has not construed the Act as requiring a positive profit 
figure.
    Asocolflores argues the Department's reasoning, as explained in the 
Ninth Review Final Results, that the profit figure used cannot be zero 
and must be positive is flawed and contrary to the Act and the SAA. 
Asocolflores states that by noting that for ``below-cost sales * * * 
the profit is zero,'' the SAA (on page 169) makes clear that while 
profit cannot be a negative number, it is zero when all sales are below 
cost. Citing to the same page of the SAA, Asocolflores contends that 
the statement that CV ``must include an amount * * * for profit'' in no 
way precludes the ``amount'' from being zero. Asocolflores argues that 
in Shop Towels from Bangladesh; Final Results of Antidumping Duty 
Administrative Review, 61 FR 55957 (October 30, 1996) (Shop Towels from 
Bangladesh), and Bicycles from the People's Republic of China; Notice 
of Final Determination of Sales at Less Than Fair Value, 61 FR 19026 
(April 30, 1996) (Bicycles from the PRC), the Department included zero 
profit for the companies that had shown losses in deriving the average 
of the profit rates to be used in calculating CV. Asocolflores also 
cites to three initiations of antidumping duty investigations where the 
Department used zero as the profit in the calculation of CV: Initiation 
of Antidumping Duty Investigation: Clad Steel Plate from Japan, 60 FR 
54666 (October 25, 1995); Initiation of Antidumping Duty Investigation: 
Large Newspaper Printing Presses and Components Thereof, Whether 
Assembled or Unassembled, from Germany and Japan, 60 FR 38546 (July 27, 
1995); and Initiation of Antidumping Duty Investigation: Light-Walled 
Rectangular Pipe and Tube from Mexico, 60 FR 20963 (April 28, 1995). 
Asocolflores argues that the exception allowed in the SAA to the profit 
cap applies only when, ``due to the absence of data,'' the Department 
cannot calculate the profit cap. Here, Asocolflores contends, there is 
no absence of data; the data merely indicate that the profit rate is 
zero.
    Asocolflores further argues that the use of CNC's profit rate is 
inconsistent with the purpose of the Act and violates due process. 
According to Asocolflores, the profit rate used is arbitrary, 
unpredictable and random, thereby providing the Colombian producers of 
flowers no basis on which to price their products to avoid dumping. 
Asocolflores contends that although there is no evidence of any 
similarity between the Colombian market for chocolate and the Colombian 
market for fresh cut flowers, dumping is arbitrarily found by the 
Department in any month in which the Colombian flower grower does not 
earn a profit margin equal to the annual profit margin earned by CNC.
    The FTC counters that the Department correctly interpreted the Act 
and SAA in determining that the profit must be a positive amount. The 
FTC argues that because respondents' home market sales consist of 
culls, not export quality flowers, such sales are neither a ``foreign 
like product'' nor ``in the ordinary course of trade'' as described in 
the Act. As such, the FTC contends that such sales cannot be used as 
the basis for profit pursuant to section 773(e)(2)(A) or

[[Page 31730]]

773(e)(2)(B) of the Act. The FTC further claims that the ``fair sales 
price'' described at page 171 of the SAA cannot be at price levels 
which lack profit thereby not providing any return on investment.
    Where home market sales of the ``same general category of 
products'' include sales of culls, the FTC argues there is insufficient 
basis for calculating the profit cap. Because culls are treated as by-
products in the Department's calculations and are assigned a cost basis 
of zero, the FTC argues that the profit rate on such sales would be 
equal to the full revenue received. Although section 773(e)(2)(B)(iii) 
of the Act does not impose the ``ordinary course'' constraint on sales 
within the ``same general category,'' the FTC contends that Congress 
could not have intended for cull sales to be rejected under 773(b) or 
773(e)(2)(A) of the Act but then to be accepted under 773(e)(2)(B)(iii) 
as the basis for calculating profits or the profit cap. Department's 
Position: We disagree with Asocolflores. Although the URAA eliminated 
the use of a minimum profit rate, the presumption of a profit element 
in the calculation of CV was not eliminated. The SAA (at page 169) 
states: ``Because CV serves as a proxy for a sales price, and because a 
fair sales price would recover [selling, general and administrative 
(SG&A)] expenses and would include an element of profit, CV must 
include an amount for SG&A expenses and for profit.'' We find that ``a 
fair sales price,'' as intended by the SAA, is a price that necessarily 
includes a positive amount for profit, therefore providing a return on 
investment.
    Asocolflores' argument that the Department has used a zero profit 
figure in the calculation of profit pursuant to other sections of the 
Act such as 772(d) and (f) which refer to CEP profit is inapplicable. 
This adjustment to CEP represents a portion of the company's total 
actual profit allocable to economic activities incurred in the United 
States, which may be zero.
    We also disagree with Asocolflores' argument that a zero rate of 
profit would be consistent with Shop Towels from Bangladesh and 
Bicycles from the PRC. An average that includes some zeroes but still 
yields a positive number, as was the case in Shop Towels from 
Bangladesh and Bicycles from the PRC, is different from using a profit 
rate of zero. We also find that Asocolflores' reliance on the three 
initiations is misplaced. Given the general constraints in the 
availability of data in the initiation stage of an investigation, the 
Department's use of a zero profit figure was reasonable in that it was 
the most conservative approach.
    By providing three alternative methodologies for calculating CV 
profit in section 773(e)(2)(B), the Act enables the Department to use 
an overall positive profit rate whenever the calculation of CV profit 
under section 773(e)(2)(A) is not appropriate. The inclusion of a 
positive profit rate is consistent with the Department's past practice. 
See, e.g., Silicomanganese from Brazil; Final Results of Antidumping 
Duty Administrative Review, 62 FR 37869, 37877 (July 15, 1997) (``[I]f 
a company has no home market profit or has incurred losses in the home 
market, the Department is not instructed to ignore the profit element, 
include a zero profit or even consider the inclusion of a loss; rather, 
the Department is directed to find an alternative home market 
profit.'').
    Consistent with our practice in the Ninth Review Final Results, we 
have continued to use CNC's profit rate since there is no information 
on the record that would enable us to calculate a home market profit 
rate on the same general category of merchandise as flowers or a profit 
cap. As discussed above, a profit rate of zero is not appropriate for 
use in calculating CV; therefore, we do not have appropriate 
information to use as the basis for a profit cap. Accordingly, we have 
applied the alternative of section 773(e)(2)(B)(iii) of the Act on the 
basis of ``the facts available,'' as instructed by the SAA at 171.
    Comment 11: The FTC maintains that the Department's use of CNC's 
profit rate is inappropriate. The FTC asserts that because CNC's 
products are primarily processed agricultural products, they do not 
entail the same risks of perishability and, therefore, investors would 
expect a different (lower) rate of return on equity. Instead, the FTC 
urges the Department to base profit upon the projected return on equity 
of Banco Ganadero, a Colombian bank that, in 1994, made approximately 
23.06 percent of its loans to the agricultural sector. The FTC contends 
that this bank, whose profitability is based on the experience of its 
borrowers, is a better gauge of the return that would need to be earned 
by producers in the Colombian agricultural sector than a chocolate 
manufacturer.
    In the alternative, the FTC argues that the Department should base 
the profit rate on the third-country sales of Colombian flower growers. 
While noting that the court in Asociacion Colombiana has affirmed the 
Department's rejection of third-country sales as the basis for profit 
in prior reviews, the FTC asserts that section 773(e)(2)(B)(iii) of the 
Act, as amended by the URAA, explicitly provides the Department the 
authority to use ``any reasonable method'' to calculate profit where 
other alternative bases are not available. As such, the FTC draws a 
distinction with the court decision, which arose under the pre-URAA 
law. The FTC further argues that because profit is determined on an 
annual basis, the Department's reasoning in rejecting third-country 
sales as basis of determining NV, i.e., differences in price patterns 
due to different demand, does not apply in the context of calculating 
profit. The FTC asserts that third-country profits realized by 
respondents are more closely related to the foreign like product or 
general category of merchandise and better reflect the profit of the 
specific respondents. According to the FTC, the use of third-country 
profits is appropriate since dumping in the United States is made 
possible by profits earned from higher prices charged in third-country 
markets such as Europe.
    Asocolflores disagrees with the suggestion of basing the profit 
rate on the Colombian bank's rate of equity. According to Asocolflores, 
a return on equity, which is equal to a company's total profits divided 
by its total equity, is fundamentally different from a profit rate, 
which is a rate applicable to the sale of goods. Asocolflores also 
argues that there is no evidence that the profitability of Banco 
Ganadero, whose product is a service rather than goods, is in any way 
representative of the profitability of the agricultural sector in 
Colombia.
    With respect to the use of third-country profit, Asocolflores 
asserts that the third-country profit margin presented by the FTC 
should be rejected because the FTC's calculation ignores expenses such 
as movement charges and selling expenses. Referring to section 
351.405(b)(1) of the Department's final regulations as well as the 
proposed regulations, Asocolflores contends that the Department, having 
rejected third-country prices as the basis for NV, is not permitted to 
use third-country profit as the basis for CV profit. Asocolflores 
maintains that no respondents are using home market profits or third-
country profits to subsidize U.S. sales, which are profitable on their 
own.
    Department's Position: We disagree with the FTC. As stated by 
Asocolflores, we find that the rate of return on equity of a financial 
institution is not appropriate for this case. While we were unable to 
locate a profit rate on home-market sales for a Colombian producer of 
merchandise in the same general category of flowers, we determine that 
using the profit rate of CNC, a

[[Page 31731]]

Colombian producer of processed agricultural goods, is more appropriate 
than the rate of return on equity of a Colombian bank.
    We also reject the FTC's suggestion that we base profit on third-
country sales. As we have found third-country sales to be an 
inappropriate basis for calculating NV, it would likewise be 
inappropriate to base CV profit on third-country sales. Accordingly, 
consistent with our practice in Ninth Review Final Results, we have 
used CNC's profit rate as FA in calculating CV profit.
    Comment 12: The FTC argues that if the Department continues using 
CNC data to calculate CV profit in the final results, the Department 
should either adjust the calculation of CNC's profit rate by excluding 
SG&A expenses or add CNC's SG&A expenses to CV. The FTC contends that 
section 773(e)(2)(B)(iii) of the Act does not distinguish SG&A from 
profit or contemplate that these values will come from different 
sources. The FTC states that the reason respondents lack home market 
selling expenses is the same reason that they lack profits: sales in 
the home market are not in the ordinary course of trade. The FTC notes 
that while respondents had neither profit nor selling expenses in the 
home market, CNC has both profits and selling expenses. If profits are 
determined using CNC's profit rate, according to the FTC, it follows 
that selling expenses should be determined likewise in order to reflect 
the selling expenses that would have been incurred if respondents had 
home market sales in the ordinary course of trade.
    The FTC further argues that to the extent selling expenses incurred 
with respect to export sales are incurred in the home market and are 
not deducted from CV, then the CEP sales will reflect selling 
activities that are not reflected in CV. The FTC argues that some proxy 
for selling expenses must be identified or there is an inconsistency 
between the LOT for actual sales and CV.
    Asocolflores argues that it would be inappropriate to recalculate 
CNC's profitability by assuming it did not incur costs which, in fact, 
it did incur. Asocolflores notes that profitability is dependent on 
costs being incurred to generate revenues, and that the FTC is 
incorrect in its assertion that if a company reduces expenditures the 
result will be a higher level of profitability.
    Asocolflores also contends that there is no legal basis for adding 
hypothetical selling expenses to CV when respondents incurred no actual 
selling expenses on their home market sales. Asocolflores asserts that, 
contrary to the FTC's argument, there is no statutory preference for 
using the same source of data for SG&A and profits.
    Asocolflores asserts that the FTC's argument that growers incur no 
selling expenses in the home market because home market sales are 
outside the ordinary course of trade is not relevant because sections 
773(e)(2)(B)(i) and (iii) of the Act contain no ordinary course of 
trade test. Asocolflores contends that the Department is correct to use 
the actual amount of selling expenses in the home market in calculating 
CV.
    Department's Position: We disagree with the FTC that we should 
adjust CV profit or CV selling expenses to account for selling expenses 
incurred by CNC. As noted by Asocolflores, there is no requirement or 
preference that profit and SG&A expenses be drawn from the same source. 
The Department has used different sources for selling expenses and for 
profit in other cases where respondents had no profitable home market 
sales. See, e.g., Shop Towels From Bangladesh, 61 FR at 55959. 
Moreover, we are not persuaded by the FTC's argument that a potential 
difference in LOT compels the inclusion of the selling expenses of CNC 
or another proxy. Section 773(e)(2)(B) of the Act, which describes the 
sources on which the Department may base selling expenses for 
determining CV, does not require us to reject the use of the 
respondent's actual selling expenses due to a potential difference in 
LOT. See also Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or 
Less in Outside Diameter, and Components Thereof, From Japan; Final 
Results of Antidumping Duty Administrative Reviews, 63 FR 2557, 2578 
(January 15, 1998 ) (``We base home market LOTs on a respondent's 
actual experience in selling in the home market. * * * [T]here is no 
statutory basis for us to ``construct'' levels in the home market or 
elsewhere.''). Accordingly, we based selling expenses on the actual 
amounts incurred and realized by the respondents in selling in the home 
market (i.e., zero) for purposes of calculating CV.
    Comment 13: Asocolflores claims that the Department should compare 
the annual average CV with annual average U.S. prices, in light of the 
extreme seasonality of U.S. demand and prices. The FTC argues that the 
Department has consistently rejected Asocolflores' position that annual 
averages should be used when comparing CV with U.S. price. The FTC 
further maintains that use of annual averages as the basis for CV and 
U.S. price would eliminate the seasonality issue and allow the 
Department to use viable third-country market prices as the basis of 
determining NV.
    Department's Position: In accordance with our past practice and as 
affirmed by the CIT, we have continued to use monthly weighted averages 
in calculating CV and U.S. price. See Floral Trade Council v. United 
States, 775 F. Supp. 1492, 1499-1501 (CIT 1991). By relying on monthly 
averages, we are able to use the exporters' actual price information, 
which is often available only on a monthly basis. As in prior reviews, 
we have not adopted Asocolflores' suggestion that we move to annual 
averages. In our view, use of an annual average would allow respondents 
to dump during periods of low demand, a result that is not consistent 
with the Act.

Company Specific Comments

    Comment 14: Asocolflores argues that because Tuchany's U.S. sales 
were mainly made through unaffiliated U.S. importers, the Department 
should deduct freight and commissions before computing Tuchany's 
imputed credit expense on sales to unaffiliated customers. Asocolflores 
explains that when an exporter sells through an unaffiliated 
consignment importer, or, as with Tuchany, makes EP sales with a 
commission payable, it finances a receivable equal to the sales value 
less the commission and less any international freight. Asocolflores 
argues that because the exporter does not finance the international 
freight or commission, no credit expense should be imputed on these 
amounts.
    The FTC contends that because Asocolflores does not cite any 
authority in support of its position, the Department should reject its 
argument.
    Department's Position: We agree with Asocolflores. For these final 
results, we calculated credit expenses net of commission and 
international freight. While Asocolflores has not cited to any 
statutory authority in support of its credit calculation formula, we 
find that it has nonetheless articulated reasonable grounds that are 
consistent with the Department's practice of calculating imputed credit 
on the basis of net accounts receivable.
    Comment 15: The FTC contends that the Department should use AFA to 
determine Tuchany's cost for the review period because Tuchany failed 
to supply complete cost data. The FTC asserts that Tuchany is among the 
top ten groups of exporters in this review and is well versed in 
antidumping procedures. As such, the FTC argues that Tuchany should 
have been aware of

[[Page 31732]]

its obligation to collect and maintain the necessary cost data.
    Asocolflores claims that at the time the questionnaires were issued 
in the current review, three of the Tuchany Group companies had already 
gone out of business and had fired all employees. Asocolfores further 
explains that because the cost data were kept individually by each of 
the companies, the cost data for the defunct companies were no longer 
available. Despite the best efforts of two remaining companies, Xue and 
Tikiya, Asocolflores claims that they were unable to recover the cost 
data for the defunct companies. Given the circumstances and the effort 
made by Xue and Tikiya to obtain the cost data of the other three 
companies, Asocolflores argues that the Tuchany Group as a whole should 
not be penalized by the application of AFA.
    Department's Position: We agree with Asocolflores. We believe that 
it is inappropriate to draw adverse inferences from Xue's and Tikiya's 
failure to provide cost data for the three defunct companies of the 
Tuchany Group under these circumstances. The descriptions provided by 
Tuchany with respect to the efforts to locate the missing information 
and the difficulties that arose from the dissolution of the group 
demonstrate these two companies have acted to the best of their ability 
to respond to our request for cost information. Therefore, we believe 
that it is appropriate to use the standard carnation CV data for the 
two farms for which we have cost data to calculate a margin for 
standard carnations and also apply this same margin to the sales of 
other flower types.
    Comment 16: Asocolflores claims that while it may be reasonable to 
allocate returns for companies that do not match returns to the month 
of the initial sale, the Department should not have disregarded the 
monthly reported returns for Clavecol and the Caicedo groups because 
both groups report their returns in the month that the flowers subject 
to the claim were sold, not in the month the claim was made. Given 
these circumstances, Asocolflores argues that the reported data 
relating to returns more accurately reflect the relevant month for the 
returns than the Department's methodology. Asocolflores further states 
that the Department's reallocation introduces an unnecessary 
distortion, since the monthly average price for flowers is highly 
variable over the POR.
    The FTC argues that there is no legal authority or agency precedent 
to support a change in the Department's return methodology here. 
According to the FTC, Caicedo's and Clavecol's U.S. prices and 
adjustment for returns through numerous past reviews have been 
calculated in the same manner as all other respondents. Moreover, the 
FTC contends that the verification reports do not show that the 
reporting methodology for returns is accurate or complete and some 
returns may represent a credit to customers when the market is slow, 
rather than by reason of the quality of the flowers.
    Department's Position: We agree with Asocolflores and have made 
appropriate changes to our calculation of these final results for 
Caicedo and Clavecol. Since the Ninth Review Final Results, the 
Department's practice has been to allocate returns over the POR because 
most companies report returns in the month the claim was made, not in 
the month the flowers were initially sold. However, because Caicedo and 
Clavecol report their returns in the month the flowers were initially 
sold, their reporting of returns is more accurate than an allocation. 
Therefore, it is inappropriate to allocate their returns over the POR.
    Although not specifically detailed in the verification report, the 
accuracy of Caicedo's return methodology was fully verified in the 
present review. In general, verification reports tend to place greater 
emphasis on describing any inconsistencies found at verification, 
rather than restating the information from the responses that are 
verified to be accurate. Clavecol was not verified in the present 
review, and because we have no reason to believe that its return 
methodology is inaccurate, we have accepted Clavecol's return values as 
reported.
    Comment 17: Asocolflores asserts that the additional interest 
expenses associated with the freeze of Floraterra's U.S. bank accounts 
during the POR qualify as an excludable extraordinary expense that are 
unrelated to the production or sale of flowers. According to 
Asocolflores, the additional costs are ``unusual in nature'' and 
``infrequent in occurrence,'' and, thereby meet the Department's 
requirements of extraordinary expenses that are to be excluded from COP 
or CV. Asocolflores refers to Roses from Ecuador, where the Department 
excluded expenses incurred due to wind damage from the CV calculation.
    Asocolflores further argues that the Department routinely excludes 
costs associated with defending against U.S. Government investigations 
unrelated to a company's normal business operations. See Certain 
Corrosion-Resistant Carbon Steel Flat Products and Certain Cut to 
Length Carbon Steel Plate from Canada: Final Results of Antidumping 
Duty Administrative Reviews, 63 FR 12725, 12731 (March 16, 1998). 
Because Floraterra's increased costs are analogous to the costs of 
defending against an antidumping case, Asocolflores contends that such 
costs must be deducted.
    The FTC rebuts that although the seizure of assets may have been 
unusual, it is not unusual in the industry to have unexpected needs for 
additional funds. Furthermore, the FTC argues that Floraterra has not 
shown that the allegedly extraordinary expenses were treated as such in 
its financial statements or other accounting records. In light of the 
fact that Floraterra did not separate such costs in its financial 
statements, the FTC contends that there is no basis to construct a 
calculation that would separate the financing costs Floraterra would 
have incurred from those it claims to be extraordinary.
    Department's Position: We disagree with Asocolflores's contention 
that the amounts incurred as described above are extraordinary expenses 
and, as a result, must be excluded from the company's reported costs. 
As the FTC noted, Floraterra did not treat these expenses as 
``extraordinary'' items in its own financial statements. Furthermore, 
it is the Department's practice to include all interest expenses 
incurred during the POR as part of operating capital. As such, the 
additional interest expenses incurred by the company are properly 
included as a part of the cost of the subject merchandise.

Final Results of Review

    As a result of our review, we determine the following percentage 
weighted-average margins to exist for the period March 1, 1996 through 
February 28, 1997:

Selected Respondents

    The following 10 groups of firms (composed of 86 companies) were 
selected as respondents and received individual rates, as indicated 
below.

------------------------------------------------------------------------
                                                               Percent  
------------------------------------------------------------------------
Agrodex Group..............................................         0.88
    Agricola de las Mercedes S.A.                                       
    Agricola el Retiro Ltda.                                            
    Agrodex Ltda.                                                       
    Degaflores Ltda.                                                    
    Flores Camino Real Ltda.                                            
    Flores Cuatro Esquinas Ltda.                                        
    Flores de la Comuna Ltda.                                           
    Flores de Los Amigos Ltda.                                          
    Flores de los Arrayanes Ltda.                                       
    Flores de Mayo Ltda.                                                

[[Page 31733]]

                                                                        
    Flores del Gallinero Ltda.                                          
    Flores del Potrero Ltda.                                            
    Flores dos Hectareas Ltda.                                          
    Flores de Pueblo Viejo Ltda.                                        
    Flores el Trentino Ltda.                                            
    Flores la Conejera Ltda.                                            
    Flores Manare Ltda.                                                 
    Florlinda Ltda.                                                     
    Horticola el Triunfo Ltda.                                          
    Horticola Montecarlo Ltda.                                          
Caicedo Group..............................................         3.66
    Agrobosque S.A.                                                     
    Andalucia S.A.                                                      
    Aranjuez S.A.                                                       
    Consorcio Agroindustrial Colombiano S.A. (CAICO)                    
    Exportaciones Bochica S.A.                                          
    Floral Ltda.                                                        
    Flores del Cauca S.A.                                               
    Productos el Rosal S.A.                                             
    Productos el Zorro S.A.                                             
Claveles Colombianos Group.................................         0.86
    Claveles Colombianos Ltda.                                          
    Elegant Flowers Ltda.                                               
    Fantasia Flowers Ltda.                                              
    Splendid Flowers Ltda.                                              
    Sun Flowers Ltda.                                                   
Cultivos Miramonte Group...................................         0.61
    C.I. Colombiana de Bouquets S.A.                                    
    Cultivos Miramonte S.A.                                             
    Flores Mocari S.A.                                                  
Floraterra Group...........................................         6.10
    Floraterra S.A.                                                     
    Flores Casablanca S.A.                                              
    Flores Novaterra Ltda.                                              
    Flores San Mateo S.A.                                               
    Siete Flores S.A.                                                   
Florex Group...............................................         1.17
    Agricola Guacari S.A.                                               
    Agricola el Castillo                                                
    Flores San Joaquin                                                  
    Flores Altamira S.A.                                                
    Flores de Exportacion S.A.                                          
    Flores Primavera S.A.                                               
Guacatay Group.............................................         2.49
    Agricola Cunday S.A.                                                
    Agricola Guacatay S.A.                                              
    Agricola Ventura                                                    
    Jardines Bacata Ltda.                                               
    Multiflora Comercializadora Internacional S.A.                      
Queens Flowers Group.......................................         0.11
    Agroindustrial del Rio Frio                                         
    Cultivos General Ltda.                                              
    Flora Nova                                                          
    Flora Atlas Ltda.                                                   
    Flores Calima S.A.                                                  
    Flores Canelon Ltda.                                                
    Flores de Bojaca                                                    
    Flores del Cacique                                                  
    Flores del Hato                                                     
    Flores el Aljibe Ltda.                                              
    Flores el Cipres                                                    
    Flores El Pino Ltda.                                                
    Flores el Tandil                                                    
    Flores la Mana                                                      
    Flores las Acacias Ltda.                                            
    Flores la Valvanera Ltda.                                           
    Flores Jayvana                                                      
    Flores Ubate Ltda.                                                  
    Jardines de Chia Ltda.                                              
    Jardines Fredonia Ltda.                                             
    M.G. Consultores Ltda.                                              
    Mountain Roses                                                      
    Queens Flowers de Colombia Ltda.                                    
    Quality Flowers S.A.                                                
    Florval S.A. (Floval)                                               
    Jardines del Rosal                                                  
Tinzuque Group.............................................         1.23
    Tinzuque Ltda.                                                      
    Catu S.A.                                                           
Tuchany Group..............................................         9.06
    Tuchany S.A.                                                        
    Flores Sibate                                                       
    Flores Tikaya                                                       
    Flores Munya                                                        
    Flores Xue S.A.                                                     
------------------------------------------------------------------------

Non-Selected Respondents

    The following 338 companies were not selected as respondents and 
will receive a rate of 2.52 percent:

Abaco Tulipanex de Colombia
Achalay
Aga Group
    Agricola la Celestina
    Agricola la Maria
    Agricola Benilda Ltda.
Agrex de Oriente
Agricola Acevedo Ltda.
Agricola Altiplano
Agricola Arenales Ltda.
Agricola Bonanza Ltda.
Agricola Circasia Ltda.
Agricola de Occident
Agricola del Monte
Agricola el Cactus S.A.
Agricola el Redil
Agricola Guali S.A.
Agricola la Corsaria Ltda.
Agricola la Siberia
Agricola Las Cuadras Group
    Agricola las Cuadras Ltda.
    Flores de Hacaritama
Agricola Megaflor Ltda.
Agricola Yuldama
Agrocaribu Ltda.
Agro de Narino
Agroindustrial Don Eusebio Ltda. Group
    Agroindustrial Don Eusebio Ltda.
    Celia Flowers
    Passion Flowers
    Primo Flowers
    Temptation Flowers
Agroindustrial Madonna S.A.
Agroindustrias de Narino Ltda.
Agromonte Ltda.
Agropecuria Cuernavaca Ltda.
Agropecuaria la Marcela
Agropecuaria Mauricio
Agrorosas
Agrotabio Kent
Aguacarga
Alcala
Alstroflores Ltda.
Amoret
Ancas Ltda.
Andalucia
Andes Group
    Cultivos Buenavista Ltda.
    Flores de los Andes Ltda.
    Flores Horizonte Ltda.
    Inversiones Penas Blancas Ltda.
A.Q.
Arboles Azules Ltda.
Aspen Gardens Ltda.
Astro Ltda.
Becerra Castellanos y Cia.
Bojaca Group
    Agricola Bojaca
    Universal Flowers
    Flores y Plantas Tropicales
    Flores del Neusa Nove Ltda.
    Tropiflora
Cantarrana Group
    Cantarrana Ltda.
    Agricola los Venados Ltda.
Carcol Ltda.
Cienfuegos Group
    Cienfuegos Ltda.
    Flores la Conchita
Cigarral Group
    Flores Cigarral
    Flores Tayrona
Classic
Claveles de los Alpes Ltda.
Clavelez
Coexflor
Colibri Flowers Ltda.
Color Explosion
Combiflor
Consorcio Agroindustrial
Cota
Crest D'or
Crop S.A.
Cultiflores Ltda.
Cultivos Guameru
Cultivos Medellin Ltda.
Cultivos Tahami Ltda.
Cypress Valley
Daflor Ltda.
Degaflor
De La Pava Guevara E. Hijos Ltda.
Del Monte
Del Tropico Ltda.
Dianticola Colombiana Ltda.
Disagro
Diveragricola
Dynasty Roses Ltda.
El Antelio S.A.
Elite Flowers (The Elite Flower/Rosen Tantau)
El Milaro
El Tambo
El Timbul Ltda.
Envy Farms Group
    Envy Farms
    Flores Marandua Ltda.
Euroflora
Exoticas
Exotic Flowers
Exotico
Expoflora Ltda.
Exportadora
Falcon Farms de Colombia S.A. (formerly Flores de Cajibio Ltda.)
Farm Fresh Flowers Group
    Agricola de la Fontana
    Flores de Hunza
    Flores Tibati
    Inversiones Cubivan
Ferson Trading
Flamingo Flowers
Flor Colombiana S.A.
Flora Bellisima
Flora Intercontinental
Floralex Ltda.

[[Page 31734]]

    Floralex Ltda.
    Flores el Puente Ltda.
    Agricola Los Gaques Ltda.
Florandia Herrera Camacho & Cia.
Floreales Group
    Floreales Ltda.
    Kimbaya
Florenal (Flores el Arenal) Ltda.
Flores Abaco S.A.
Flores Acuarela S.A.
Flores Agromonte
Flores Aguila
Flores Colon Ltda.
Flores de la Sabana S.A.
Flores de Serrezuela S.A.
Flores de Suesca S.A.
Flores del Rio Group
    Agricola Cardenal S.A.
    Flores del Rio S.A.
    Indigo S.A.
Flores El Molino S.A.
Flores El Zorro Ltda.
Flores la Cabanuela
Flores la Fragrancia
Flores la Gioconda
Flores la Lucerna
Flores la Macarena
Flores la Pampa
Flores la Union/Gomez Arango & Cia. Group
    Santana
Flores las Caicas
Flores las Mesitas
Flores los Sauces
Flores Monserrate Ltda.
Flores Montecarlo
Flores Monteverde
Flores Palimana
Flores Ramo Ltda.
Flores S.A.
Flores Sagaro
Flores Saint Valentine
Flores Sairam Ltda.
Flores San Andres
Flores San Carlos
Flores San Juan S.A.
Flores Santa Fe Ltda.
Flores Santana
Flores Sausalito
Flores Selectas
Flores Silvestres
Flores Sindamanoi
Flores Suasuque
Flores Tenerife Ltda.
Flores Tiba S.A.
Flores Tocarinda
Flores Tomine Ltda.
Flores Tropicales (Happy Candy) Group
    Flores Tropicales Ltda.
    Happy Candy Ltda.
    Mercedes Ltda.
    Rosas Colombianos Ltda.
Flores Urimaco
Flores Violette
Florexpo
Floricola
Floricola la Gaitana S.A.
Florimex Colombia Ltda.
Florisol
Florpacifico
Flor y Color
Flowers of the World/Rosa
Four Seasons
Fracolsa
Fresh Flowers
F. Salazar
Funza Group
    Flores Alborada
    Flores de Funza S.A.
    Flores del Bosque Ltda.
Garden and Flowers Ltda.
German Ocampo
Granja
Green Flowers
Grupo el Jardin
    Agricola el Jardin Ltda.
    La Marotte S.A.
    Orquideas Acatayma Ltda.
Gypso Flowers
Hacienda la Embarrada
Hacienda Matute
Hana/Hisa Group
    Flores Hana Ichi de Colombia Ltda.
    Flores Tokai Hisa
Hernando Monroy
Horticultra Montecarlo
Horticultura de la Sasan
Horticultura El Molino
Hosa Group
    Horticultura de la Sabana S.A.
    HOSA Ltda.
    Innovacion Andina S.A.
    Minispray S.A.
    Prohosa Ltda.
Illusion Flowers
Industria Santa Clara
Industrial Agricola
Industrial Terwengel Ltda.
Ingro Ltda.
Inverpalmas
Inversiones Almer Ltda.
Inversiones Bucarelia
Inversiones Cota
Inversiones el Bambu Ltda.
Inversiones Flores del Alto
Inversiones Maya, Ltda.
Inversiones Morcote
Inversiones Morrosquillo
Inversiones Playa
Inversiones & Producciones Tecnica
Inversiones Santa Rita Ltda.
Inversiones Silma
Inversiones Sima
Inversiones Supala S.A.
Inversiones Valley Flowers Ltda.
Iturrama S.A.
Jardin de Carolina
Jardines Choconta
Jardines Darpu
Jardines Natalia Ltda.
Jardines Tocarema
Jardines de America
Jardines de Timana
J.M. Torres
Karla Flowers
Kingdom S.A.
La Colina
La Embairada
La Flores Ltda.
La Floresta
La Plazoleta Ltda.
Las Amalias Group
    Las Amalias S.A.
    Pompones Ltda.
    La Fleurette de Colombia Ltda.
    Ramiflora Ltda.
Las Flores
Laura Flowers
L.H.
Linda Colombiana Ltda.
Loma Linda
Loreana Flowers
Los Geranios Ltda.
Luisa Flowers
Luisiana Farms
M. Alejandra
Manjui Ltda.
Mauricio Uribe
Maxima Farms Group
    Agricola los Arboles S.A.
    Colombian D.C. Flowers
    Polo Flowers
    Rainbow Flowers
    Maxima Farms Inc.
Merastec
Monteverde Ltda.
Morcoto
Nasino
Natuflora Ltda./San Martin Bloque B
Olga Rincon
Oro Verde Group
    Inversiones Miraflores S.A.
    Inversiones Oro Verde S.A.
Otono (Agroindustrial Otono)
Papagayo Group
    Agricola Papagayo Ltda.
    Inversiones Calypso S.A.
Petalos de Colombia Ltda.
Pinar Guameru
Piracania
Pisochago Ltda.
Plantaciones Delta Ltda.
Plantas S.A.
Prismaflor
Propagar Plantas S.A.
Reme Salamanca
Rosa Bella
Rosaflor
Rosales de Colombia Ltda.
Rosales de Suba Ltda.
Rosas Sabanilla Group
    Flores la Colmena Ltda.
    Rosas Sabanilla Ltda.
    Inversiones la Serena
    Agricola la Capilla
Rosas y Jardines
Rose
Rosex Ltda.
Roselandia
San Ernesto
San Valentine
Sansa Flowers
Santa Rosa Group
    Flores Santa Rosa Ltda.
    Floricola La Ramada Ltda.
Santana Flowers Group
    Santana Flowers Ltda.
    Hacienda Curibital Ltda.
    Inversiones Istra Ltda.
Sarena
Select Pro
Senda Brava Ltda.
Shasta Flowers y Compania Ltda.
Shila
Siempreviva
Soagro Group
    Agricola el Mortino Ltda.
    Flores Aguaclara Ltda.
    Flores del Monte Ltda.
    Flores la Estancia
    Jaramillo y Daza
Solor Flores Ltda.
Starlight
Superflora Ltda.
Susca
Sweet Farms
    Flores Santa Rosa Ltda.
    Floricola la Ramada Ltda.
Tag Ltda.

[[Page 31735]]

The Beall Company
The Rose
Tomino
Toto Flowers Group
    Flores de Suesca S.A.
    Toto Flowers
Tropical Garden
Uniflor Ltda.
Velez de Monchaux Group
    Velez De Monchaux e Hijos y Cia S. en C.
    Agroteusa
Victoria Flowers
Villa Cultivos Ltda.
Villa Diana
Vuelven Ltda.
Zipa Flowers

    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. We have 
calculated an importer-specific per-stem duty assessment rate based on 
the ratio of the total amount of AD duties calculated for the examined 
sales made during the POR to the total quantity of subject merchandise 
entered during the POR. This rate will be assessed uniformly on all 
entries of that particular importer made during the POR. The Department 
will issue appraisement instructions on each exporter directly to the 
Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of these final results of administrative review for 
all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption, as provided by section 751(a)(1) of the 
Act, on or after the publication date of these final results of review: 
(1) The cash deposit rate for the individually examined companies will 
be the most recent rates as listed above, except that for firms whose 
weighted-average margins are less than 0.5 percent and therefore de 
minimis, the Department shall require a zero deposit of estimated 
antidumping duties; (2) the cash deposit rate for non-selected 
companies will be the weighted-average of the cash deposit rates for 
the individually examined companies; (3) 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; (4) if the exporter is not a firm covered in this review, a 
prior review, or the original LTFV investigation, but the producer is, 
the cash deposit rate will be the rate established for the most recent 
period for the producer of the merchandise; and (5) the cash deposit 
rate for all other producers or exporters will be the ``all other'' 
rate of 3.10 percent. This is the rate established during the Less-
Than-Fair-Value (LTFV) investigation, as amended in litigation.
    These deposit requirements shall remain in effect until publication 
of the final results of the next administrative review.
    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR 351.402 (f)(2) to file a certificate 
regarding the reimbursement of AD 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 AD duties occurred and the subsequent assessment of 
doubled AD duties.
    This notice also serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 353.34(d). Failure to 
comply is a violation of the APO.
    This administrative review is issued and published in accordance 
with section 751(a)(1) of the Act.

    Dated: June 2, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-15349 Filed 6-9-98; 8:45 am]
BILLING CODE 3510-DS-P
```