[Federal Register Volume 66, Number 110 (Thursday, June 7, 2001)]
[Notices]
[Pages 30695-30699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-14380]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-851]


Preliminary Results of New Shipper Review: Certain Preserved 
Mushrooms From the People's Republic of China

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

SUMMARY: In response to a timely request from Green Fresh Foods 
(Zhangzhou) Co., Ltd., on October 2, 2000, the Department of Commerce 
published a notice of initiation of a new shipper review of the 
antidumping duty order on certain preserved mushrooms from the People's 
Republic of China with respect to the above-mentioned exporter. The 
period of review is February 1, 2000, through July 31, 2000. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews, 65 FR 58735 (October 2, 2000).
    As a result of this review, the Department of Commerce has 
preliminarily determined that a dumping margin exists for exports of 
the subject merchandise for the covered period.
    We invite interested parties to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with their arguments (1) a statement of the issues and (2) a 
brief summary of the arguments.

EFFECTIVE DATE: June 7, 2001.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Rebecca 
Trainor, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-4136 or (202) 482-4007, 
respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), 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. In addition, unless otherwise 
indicated, all citations to the Department of Commerce's (the 
Department's) regulations are to 19 CFR part 351 (2000).

Background

    On February 19, 1999, the Department published in the Federal 
Register (64 FR 8308) an antidumping duty order on certain preserved 
mushrooms from the People's Republic of China (PRC). On August 31, 
2000, the Department received a timely request from Green Fresh Foods 
(Zhangzhou) Co. (Green Fresh), in accordance with section 751(a)(2)(B) 
of the Act and 19 CFR 351.214(c), for a new shipper review of this 
antidumping duty order.
    On September 22, 2000, the Department initiated a new shipper 
review of the antidumping duty order on certain preserved mushrooms 
from the PRC (see Certain Preserved Mushrooms from the People's 
Republic of China: Initiation of New Shipper

[[Page 30696]]

Antidumping Duty Review, 65 FR 58735 (October 2, 2000)). On September 
28, 2000, the Department issued the antidumping questionnaire to Green 
Fresh. We received responses to the antidumping questionnaire on 
October 19, 2000, and December 11, 2000.
    On December 18, 2000, the Department provided the parties an 
opportunity to submit publicly available information for consideration 
in these preliminary results.
    The Department issued a supplemental questionnaire to Green Fresh 
on January 9, 2001, and received a response on February 9, 2001.
    We conducted verification of Green Fresh and its affiliated 
producer, Zhang Zhou Longhai Lubao Food Co., Ltd. (Lubao) on March 14 
and 15, 2001. We issued a verification report on April 17, 2001.

Scope of the Order

    The products covered by the order are certain preserved mushrooms 
whether imported whole, sliced, diced, or as stems and pieces. The 
preserved mushrooms covered under the order are the species Agaricus 
bisporus and Agaricus bitorquis. ``Preserved mushrooms'' refer to 
mushrooms that have been prepared or preserved by cleaning, blanching, 
and sometimes slicing or cutting. These mushrooms are then packed and 
heated in containers including but not limited to cans or glass jars in 
a suitable liquid medium, including but not limited to water, brine, 
butter, or butter sauce. Preserved mushrooms may be imported whole, 
sliced, diced, or as stems and pieces. Included within the scope of the 
order are ``brined'' mushrooms, which are presalted and packed in a 
heavy salt solution to provisionally preserve them for further 
processing.
    Excluded from the scope of the order are the following: (1) All 
other species of mushroom, including straw mushrooms; (2) all fresh and 
chilled mushrooms, including ``refrigerated'' or ``quick blanched 
mushrooms'; (3) dried mushrooms; (4) frozen mushrooms; and (5) 
``marinated,'' ``acidified,'' or ``pickled'' mushrooms, which are 
prepared or preserved by means of vinegar or acetic acid, but may 
contain oil or other additives.\1\
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    \1\ On June 19, 2000, the Department affirmed that 
``marinated,'' ``acidified,'' or ``pickled'' mushrooms containing 
less than 0.5 percent acetic acid are within the scope of the 
antidumping duty order. See ``Recommendation Memorandum-Final Ruling 
of Request by Tak Fat, et al. for Exclusion of Certain Marinated, 
Acidified Mushrooms from the Scope of the Antidumping Duty Order on 
Certain Preserved Mushrooms from the People's Republic of China.''
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    The merchandise subject to the order is classifiable under 
subheadings 2003.10.0027, 2003.10.0031, 2003.10.0037, 2003.10.0043, 
2003.10.0047, 2003.10.0053, and 0711.90.4000 of the Harmonized Tariff 
Schedule of the United States (HTSUS). Although the HTSUS subheadings 
are provided for convenience and customs purposes, our written 
description of the scope of the order is dispositive.

Separate Rates

    In proceedings involving non-market economy (NME) countries, the 
Department begins with a rebuttable presumption that all companies 
within the country are subject to government control and thus should be 
assessed a single antidumping duty deposit rate. In this case, Green 
Fresh has requested a separate company-specific rate. Green Fresh is 
owned by a holding company, Zhangzhou Longhai Lubao Can Foods Co., Ltd. 
(Longhai), and a U.S. citizen. Longhai is owned by three individuals in 
the PRC.
    The Department's separate rate test to determine whether a company 
engages in export activities independent of government control is not 
concerned, in general, with macroeconomic/border-type controls, e.g., 
export licenses, quotas, and minimum export prices, particularly if 
these controls are imposed to prevent dumping. The test focuses, 
rather, on government controls over export-related investment, pricing, 
and production decisions at the individual firm level. See e.g., 
Certain Cut-to-Length Carbon Steel Plate from Ukraine: Final 
Determination of Sales at Less than Fair Value, 62 FR 61754, 61757 
(November 19, 1997); Tapered Roller Bearings and Parts Thereof, 
Finished and Unfinished, from the People's Republic of China: Final 
Results of Antidumping Duty Administrative Review, 62 FR 61276, 61279 
(November 17, 1997); and Honey from the People's Republic of China: 
Preliminary Determination of Sales at Less than Fair Value, 60 FR 
14725, 14726 (March 20, 1995).
    To establish whether a firm is sufficiently independent from 
government control in its export activities to be entitled to a 
separate rate, the Department analyzes each exporting entity under a 
test arising out of the Final Determination of Sales at Less Than Fair 
Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 
6, 1991) and amplified in the Final Determination of Sales at Less Than 
Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 
22585 (May 2, 1994) (Silicon Carbide). Under the separate rates 
criteria, the Department assigns separate rates in NME cases only if 
respondents can demonstrate the absence of both de jure and de facto 
governmental control over export activities.

1. Absence of De Jure Control

    In prior PRC cases, the Department has analyzed laws provided by 
respondents to demonstrate absence of de jure control, such as the 
``Foreign Trade Law of the People's Republic of China'' and the 
``Company Law of the People's Republic of China'' (see Memo to the File 
dated May 23, 2001, placed on the record of this review), and found 
that such PRC laws establish an absence of de jure control. See, e.g., 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Partial-Extension Steel Drawer Slides with Rollers from the People's 
Republic of China, 60 FR 54472 (October 24, 1995); see also Final 
Determination of Sales at Less Than Fair Value: Furfuryl Alcohol form 
the People's Republic of China, 60 FR 22544 (May 8, 1995) (Furfuryl 
Alcohol). We have no new information in this proceeding which would 
cause us to conclude that these laws do not apply to Green Fresh.
    Accordingly, we preliminarily determine that, within the PRC 
preserved mushroom industry, the aforementioned laws of the PRC 
demonstrate an absence of de jure government control over export 
pricing and marketing decisions of Green Fresh.

2. Absence of De Facto Control

    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See 
Silicon Carbide, 59 FR at 22587 and Furfuryl Alcohol, 60 FR at 22545. 
Therefore, the Department has determined that an analysis of de facto 
control is critical in determining whether respondents are, in fact, 
subject to a degree of governmental control which would preclude the 
Department from assigning separate rates.
    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) whether the export prices are set by, or 
subject to, the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of its management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of

[[Page 30697]]

losses. See Silicon Carbide, 59 FR at 22587 and Furfuryl Alcohol, 60 FR 
at 22545.
    Green Fresh asserted the following: (1) It establishes its own 
export prices; (2) it negotiates contracts without guidance from any 
governmental entities or organizations; (3) it makes its own personnel 
decisions; and (4) it retains the proceeds of its export sales, uses 
profits according to its business needs, and has the authority to sell 
its assets and obtain loans. Furthermore, our analysis of Green Fresh's 
questionnaire responses reveals no information indicating government 
control. This information supports a preliminary finding that there is 
an absence of de facto governmental control of Green Fresh's export 
functions. Consequently, we preliminarily determine that Green Fresh 
has met the criteria for the application of a separate rate.

Fair Value Comparisons

    To determine whether the sale of the subject merchandise by Green 
Fresh to the United States was made at less than normal value, we 
compared the export price to the normal value, as described in the 
``Export Price'' and ``Normal Value'' sections of this notice, below.

Export Price

    We used export price methodology in accordance with section 772(a) 
of the Act, because the subject merchandise was sold directly to 
unaffiliated customers in the United States prior to importation and 
constructed export price methodology was not otherwise indicated.
    We calculated export price based on a packed, free on board Xiamen, 
PRC, price to the first unaffiliated purchaser in the United States. 
Where appropriate, we made a deduction from the starting price (gross 
unit price) for foreign inland freight and foreign brokerage and 
handling in the PRC, in accordance with section 772(c) of the Act. 
Because foreign inland freight and foreign brokerage and handling fees 
were provided by NME entities or paid for in a NME currency, we based 
those charges on surrogate rates from India (see ``Surrogate Country'' 
section below). To value foreign inland trucking charges and foreign 
brokerage and handling expenses and/or port loading charges, we used 
November 1999 Indian freight companies' and freight forwarders' price 
quotes, respectively, obtained by the Department in other antidumping 
duty proceedings.

Normal Value

A. Non-Market Economy Status

    In every case conducted by the Department involving the PRC, the 
PRC has been treated as a NME country. Any determination that a foreign 
country is a NME country shall remain in effect until revoked by the 
Department (see section 771(18)(c) of the Act). None of the parties to 
this proceeding has contested such treatment. Accordingly, we 
calculated normal value in accordance with section 773(c) of the Act, 
which applies to NME countries.

B. Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value the 
NME producer's factors of production, to the extent possible, in one or 
more market economy countries that: (1) are at a level of economic 
development comparable to that of the NME, and (2) are significant 
producers of comparable merchandise. The Department has determined that 
India, Pakistan, Indonesia, Sri Lanka, and the Philippines are 
countries comparable to the PRC in terms of overall economic 
development and are significant producers of the subject merchandise 
(see Memorandum dated December 4, 2000). According to the available 
information on the record, we have determined that India meets the 
statutory requirements for an appropriate surrogate country for the 
PRC. Accordingly, we have calculated normal value using Indian values 
for the PRC producer's factors of production. We have obtained and 
relied upon publicly available information wherever possible.

C. Factors of Production

    In accordance with section 773(c) of the Act, we calculated normal 
value based on factors of production reported by Lubao which produced 
preserved mushrooms for Green Fresh which in turn sold them to the 
United States during the POR. To calculate normal value, the reported 
unit factor quantities were multiplied by publicly available Indian 
values, except as noted below.
    The selection of the surrogate values applied in this determination 
was based on the quality, specificity, and contemporaneity of the data. 
Wherever possible and appropriate, we used non-producer-specific prices 
in accordance with the preamble to the Department's regulations, 
Antidumping Duties; Countervailing Duties; Final Rule, at 62 FR 27296, 
27366 (May 19, 1997). As appropriate, we adjusted input prices to 
reflect delivered values. Where the producer did not report the 
distance between the material supplier and the factory, as facts 
available, we used the distance to the nearest seaport because an 
import value was used as the surrogate value for the factor. For those 
values not contemporaneous with the POR and quoted in a foreign 
currency, we adjusted for inflation using wholesale price indices 
published in the International Monetary Fund's International Financial 
Statistics. A complete analysis of the surrogate values may be found in 
the Preliminary Determination Valuation Memorandum from the Team to the 
File (Preliminary Determination Valuation Memorandum), dated May 31, 
2001.
    We valued the major material inputs used in the production of the 
subject merchandise using the following sources. For fresh mushrooms, 
we used the simple average of the fresh mushrooms prices quoted in the 
Indian publication The Economic Times during the POR. We revised the 
average calculated by Green Fresh to include the daily high price. We 
valued cans and lids using the per-piece value derived from the notes 
to the Indian producer Agro Dutch Industries, Ltd.'s 1999-2000 
financial statement. Because the surrogate value is for a complete can 
set (can and lid), we applied the value only to the can consumption 
factor to avoid double-counting.
    For agricultural inputs, such as spawn, cow manure, and straw, we 
derived unit values from Agro Dutch's 1999-2000 financial statement and 
notes.
    We valued salt and citric acid based on the 1998-1999 financial 
statement of the Indian producer Weikfield Agro Products Ltd. We valued 
labels and glue based on the weighted-average unit values derived from 
the Monthly Trade Statistics of Foreign Trade of India, Volume II--
Imports. We did not value water separately because, consistent with our 
methodology in the 1998-2000 reviews, we believe that the costs for 
water are included as factory overhead in the Indian financial 
statements used to calculate factory overhead, selling, general and 
administrative (SG&A) expenses, and profit.
    We valued gypsum based on the unit value derived from relevant data 
in Weikfield's and Saptarishi Agro's 1998-1999 financial statements. We 
based the surrogate values for calcareous (calcium carbonate or chalk) 
and carbamide (urea) on the average unit prices for the material quoted 
in the Indian publication Chemical Weekly from February through July 
2000. Because the average domestic price includes Indian excise tax, we 
adjusted the average value by subtracting the 18% excise tax, based on 
the methodology applied to

[[Page 30698]]

values from the same source in the 1999-2000 investigation of Synthetic 
Indigo from the PRC. We valued calcium phosphate using U.S. prices 
quoted in the U.S. publication Chemical Marketing Reporter for 
``Calcium Phosphate, dibasic, feed grade, 18.5% P. bulk'' in October 
and December 1999.
    We valued packing materials, including cardboard boxes, packing 
tape, and packing paper, using the weighted-average unit values derived 
from the Indian Import Statistics, August and December 1998.
    We valued labor based on a regression-based wage rate in accordance 
with 19 CFR 351.408(c)(3).
    To value electricity, we used the average rupees/kilowatt hour rate 
derived from the 1998-1999 financial statements of four Indian 
preserved-mushroom producers. We based the value of coal on the 
weighted average of rates obtained from two sources: (1) the rupees/
metric ton rate of ``Coal (for steam raising)'' published in the 1998-
1999 annual report for the Indian company Polychem, Ltd.; and (2) the 
1998 weighted-average unit value for Indian imports of Bituminous coal, 
not agglomerated from the Commodity Trade Statistics published by the 
United Nations Statistics Division.
    We based our calculation of factory overhead (including water), 
SG&A expenses, and profit using ratios derived from financial 
statements of three Indian producers of the subject merchandise whose 
production and sales activity is comprised mostly of preserved 
mushrooms and other food products and who were profitable during the 
POR.
    To value truck freight rates, we used the average of November 1999 
Indian freight companies' price quotes discussed in the ``Export 
Price'' section above.
    The United States Court of Appeals for the Federal Circuit's 
(CAFC's) decision in Sigma Corp. v. United States, 117 F. 3d 1401 (CAFC 
1997) requires that we revise our calculation of source-to-factory 
surrogate freight for those material inputs that are based on CIF 
import values in the surrogate country. Therefore, we have added to CIF 
surrogate values from India a surrogate freight cost using the shorter 
of the reported distances from (1) the closest PRC port to the factory 
or (2) the domestic supplier to the factory, on an import-specific 
basis.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
weighted-average dumping margin for the January 31, 2000, through July 
31, 2000, POR is as follows:

------------------------------------------------------------------------
                                                                Margin
               Manufacturer/Producer/Exporter                  percent
------------------------------------------------------------------------
Green Fresh Foods Zhangzhou Co., Ltd.......................        31.10
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of publication. See 19 CFR 351.310(c). If 
requested, a hearing will be held 44 days after the publication of this 
notice, or the first workday thereafter.
    Issues raised in any hearing will be limited to those raised in the 
respective case briefs and rebuttal briefs. See 19 CFR 351.310(c). Case 
briefs from interested parties and rebuttal briefs, limited to the 
issues raised in the respective case briefs, may be submitted not later 
than 30 days and 37 days, respectively, from the date of publication of 
these preliminary results. See 19 CFR 351.309(c) and (d). Parties who 
submit case briefs or rebuttal briefs in this proceeding are requested 
to submit with each argument (1) a statement of the issue and (2) a 
brief summary of the argument. Parties are also encouraged to provide a 
summary of the arguments not to exceed five pages and a table of 
statutes, regulations, and cases cited.
    The Department will issue the final results of this new shipper 
review, including the results of its analysis of issues raised in any 
written briefs or at the hearing, if held, not later than 90 days after 
the date on which the preliminary results are issued.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, Room B-099, within 30 days of the 
date of publication of this notice. Requests should contain: (1) The 
party's name, address, and telephone number; (2) the number of 
participants; and (3) a list of issues to be discussed.
    In accordance with 19 CFR 351.301(c)(3)(ii), interested parties may 
submit additional publicly available information to value the factors 
of production for the final results of this review until 20 days after 
publication of these results, unless a written request for an extension 
is received and granted.

Assessment Rates

    Upon completion of this new shipper review, the Department shall 
determine, and the Customs Service shall assess, antidumping duties on 
all appropriate entries. The Department will issue appropriate 
appraisement instructions directly to the Customs Service upon 
completion of this review. The final results of this review shall be 
the basis for the assessment of antidumping duties on entries of 
merchandise covered by the final results of this review and for future 
deposits of estimated duties. Pursuant to 19 CFR 351.106(c)(2), we will 
instruct the Customs Service to liquidate without regard to antidumping 
duties all entries for any importer for whom the assessment rate is de 
minimis (i.e., less than 0.50 percent). For assessment purposes, we 
intend to calculate an entry-specific ad valorem duty assessment rate 
for Green Fresh, whose sale and entry under review occurred in 
different PORs, based on the ratio of the total amount of the dumping 
margins calculated for the examined sales to the total entered value of 
those same sales.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f)(2) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entry for this review period. Failure to comply with 
this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.

Cash Deposit Requirements

    The following cash deposit requirements will be effective for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this new shipper review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed 
company will be that established in the final results of this review, 
except if the rate is less than 0.50 percent, and therefore, de minimis 
within the meaning of 19 CFR 351.106(c)(1), in which case the cash 
deposit rate will be zero; (2) for previously reviewed or investigated 
companies not listed above that have separate rates, the cash deposit 
rate will continue to be the company-specific rate published for the 
most recent period; (3) the cash deposit rate for all other PRC 
manufacturers or exporters will continue to be 198.63 percent, the 
``PRC-Wide'' rate made effective by the LTFV investigation; and (4) for 
all non-PRC exporters, the cash deposit rate will continue to be 198.63 
percent, the ``PRC-Wide'' rate made effective by the

[[Page 30699]]

LTFV investigation. These requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    This new shipper review and notice are published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.214.

    Dated: May 31, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-14380 Filed 6-6-01; 8:45 am]
BILLING CODE 3510-DS-P