[Federal Register Volume 59, Number 62 (Thursday, March 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7714]
[[Page Unknown]]
[Federal Register: March 31, 1994]
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DEPARTMENT OF COMMERCE
[A-301-602]
Certain Fresh Cut Flowers From Colombia; Final Results of
Antidumping Duty Administrative Review, and Notice of Revocation of
Order (in Part)
AGENCY: International Trade Administration/Import Administration,
Commerce.
ACTION: Notice of final results of antidumping duty administrative
review, and notice of revocation of the antidumping duty order in part.
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SUMMARY: On December 14, 1993, the Department of Commerce published the
preliminary results of its administrative review of the antidumping
duty order or certain fresh cut flowers from Colombia. The review
covers 186 producers and/or exporters of this merchandise to the United
States and the period March 1, 1990 through February 28, 1991.
We gave interested parties an opportunity to comment on the
preliminary results. Based on our analysis of the comments received and
the correction of certain clerical errors, we have made certain changes
for the final results. The review indicates the existence of dumping
margins for certain firms during the review period.
We are also revoking the antidumping duty order for the following
exporters/growers: Flores Colombianas Group (Agrosuba, Flores
Colombianas, Jardines De Los Andes, Productos El Cartucho) and Flores
Condor De Colombia Ltda.
EFFECTIVE DATE: May 31, 1994.
FOR FURTHER INFORMATION CONTACT: J. David Dirstine or Richard
Rimlinger, Office of Antidumping Compliance, International Trade
Administration, U.S. Department of Commerce, Washington, DC 20230;
telephone (202) 482-4733.
SUPPLEMENTARY INFORMATION:
Background
On March 18, 1987, the Department of Commerce (the Department)
published in the Federal Register (52 FR 8492) the antidumping duty
order on certain fresh cut flowers from Colombia. The Floral Trade
Council, the petitioner, and certain respondents requested in
accordance with 19 CFR 353.22 that we conduct an administrative review
of the period March 1, 1990 through February 28, 1991. We published a
notice of initiation of administrative review for this period on June
18, 1991 (56 FR 27944). On December 14, 1993, we published the
preliminary results of the administrative review (58 FR 65329).
We determined in the preliminary results of review to revoke the
antidumping duty order for the following exporters/growers: Flores
Colombianas Group (Agrosuba, Flores Colombianas, Jardines De Los Andes,
Productos El Cartucho), and Flores Condor De Colombia Ltda. These firms
have submitted requests in accordance with 19 CFR 353.25(b) to revoke
the order with respect to their sales of flowers to the United States.
Their requests where accompanied by certifications that they have sold
flowers to the United States at not less than foreign market value
(FMV) for at least a three-year period, including the subject review
period, and will not do so in the future. Because we have determined
that these firms have sold the subject merchandise at not less than
foreign market value in this review, and have never sold the subject
merchandise at less than FMV, including the required three-year period,
we revoke the order with respect to these companies, in accordance with
19 CFR 353.25(a).
The Department has now completed the administrative review in
accordance with section 751 of the Tariff Act of 1930, as amended (the
Tariff Act).
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 (HTS). The HTS item numbers are provided for
convenience and customs purposes. The written description remains
dispositive.
Although we initiated reviews on 189 named firms, this review
actually covers only 186 firms. Two of the names listed in the
initiation notice were the same company (Inversiones Targa Ltda. and
Inversiones Targa S.A.). Also, we initiated a review for Agricola La
Corsaria Ltda., but have terminated it because the firm's request for
review was withdrawn and there was no other review request received for
this firm. We also terminated the reviews initiated for Cultivos Del
Caribe, Floramerica S.A., Flores Las Palmas Ltda., and Jardines De
Colombia Ltda., because these firms were revoked from the antidumping
order in earlier reviews.
Sampling
Eighty-three firms covered by the initiation notice were requested
only by the petitioner. Due to the large number of firms and
transactions that were already under review, we used the following
sampling methodology: First, the 83 firms were divided into three
strata: Respondents with exports of fewer than 50,000 kilograms;
respondents with exports of greater than 50,000 kilograms but fewer
than 500,000 kilograms; and respondents with greater than 500,000
kilograms. We then assigned ``points'' in a sample pool to each of the
83 firms in proportion to the firm's share of total exports to the
United States, with each point representing one-quarter of one
percentage point of total exports. For example, a company than
represented 5 percent of exports to the United States would receive 20
points and go ``into the hat'' 20 times. A company that comprised one
percent of total exports would receive four points and go ``into the
hat'' four times. In this way, a company with a greater volume of
exports had a much greater chance of being selected than the company
with a smaller volume of exports. We then chose 10 percent of the
points from each of the three strata to comprise the actual sample. The
companies selected to be analyzed have received their own rates. The
remaining 54 companies in the non-sampled pool were assigned the
weighted average sample margin (any firm chosen for the sample more
than once had its dumping rate counted as many times as the firm was
selected).
Initially, 31 firms were selected for the Department's sample.
However, after selecting our sample group, we determined that two
companies in the sample, Manjui Ltda., and Alstrodflores Ltda., had no
shipments of the subject merchandise during the period of review (POR).
We have eliminated these two firms from the sample pool. In addition,
the Department determined during verification that Inversiones Targa
Ltda., a company chosen for the sample pool, was a related entity of
the Bochica Group, which self-requested a review. Therefore, we have
collapsed the response of Inversiones Targa Ltda., as part of the
Bochica Group, and eliminated this company from the sample pool.
Twenty-eight firms were ultimately used in the Department's sample
pool. Due to the elimination of Manjui Ltda., Alstrodflores Ltda., and
Inversiones Targa Ltda., the sample no longer was self-weighting.
Therefore, to estimate the average dumping margin of the population of
54 remaining firms, we weight-averaged the sample means of the three
strata. The weight assigned to each sample mean was that stratum's
share of total exports.
Flores Estrella Ltda., and Flores Mountgar Ltda., both chosen as
part of the sample pool, submitted certifications to the Department
that they are no longer in business and, therefore, could not respond
to the Department's questionnaire. The Department determined that these
companies could not respond, and therefore applied as second-tier Best
Information Available (BIA) a rate of 7.56 percent to Flores Estrella,
the highest calculated rate in this review, and a rate of 43.02 percent
to Flores Mountgar, the highest rate ever received by that company in
any prior review (see our response to Comment 40, below). The BIA
margin for these two companies have been included in the contributing
weight in the sample pool margin.
During the course of this review, we learned that several
respondents were sufficiently related for the Department to collapse
these firms, or groups of firms, into one entity for purposes of
calculating a dumping rate. The firms we considered one entity are:
Agricola Las Cuadras and Flores De Hacaritama; Exportaciones Bochica/
Floral Ltda., Inversiones Targa, S.A., Flores Del Cauca, Agro Bosque,
S.A., and Productos El Zorro (Agro Bosque, S.A. and Productos El Zorro
were not in our initiation notice but have become a part of this
administrative review due to the collapsing of the Bochica Group);
Florex and Santa Helena; Queen's Flowers Ltda., Jardines De Chia Ltda.,
and Jardines De Fredonia Ltda.; and Rosa Sabanilla Ltda., Inversiones
La Serena and Agricola La Capilla (Agricola La Capilla was not in our
initiation notice but has become a part of this administrative review
due to the collapsing of the Rosas Sabanilla Group). See Mamoranda to
file dated March 11, 1994.
Best Information Available
The Department conducted verification of responses submitted by
Cultivos Miramonte, Exportaciones Bochica/Floral Ltda., Flores
Colombianas, Flores Condor, Flores de Suba, Flores del Campo, Las
Amalias/Pompones Ltda., Flores de Hunza, Flores la Sabana, Inversiones
Targa, Ltda., and the Santana Group. At verification we detemined that
there were several interrelationships between Las Amalias/Pompones
Ltda. and another flower exporter, as well as interrelationships with
other importers that were not disclosed to the Department in the
response (see Las Amalias Varification Report (October 19, 1993)).
Consequently, Las Amalias/Pompones Ltda., did not report the correct
U.S. price (USP) for the overwhelming majority of its sales. As a
result, we have used BIA to calculate the dumping margin for this firm.
Also, as previously indicated in the Sampling section of this notice,
we are applying second-tier BIA rates to sales made by Flores Estrella
Ltda. and Flores Mountgar Ltda. These firms are no longer in business
and failed to respond to the Department's questionnaire.
United States Price
Pursuant to section 777A of the Tariff Act, we determined that it
was appropriate to average U.S. prices on a monthly basis in order (1)
to use actual price information that is often available only on a
monthly basis, (2) to account for large sales volumes, and (3) to
account for perishable product pricing practices (see Final Results of
Antidumping Duty Administrative Review; Certain Fresh Cut Flowers from
Colombia, 56 FR 50554 (October 7, 1991)).
In calculating USP, we used purchase price (PP) when sales were
made to unrelated purchasers in the United States prior to the date of
importation, or exporter's sales price (ESP) when sales were made to
unrelated purchasers in the United States after the date of
importation, both pursuant to section 772 of the Tariff Act.
We calculated purchase price based on the packed price to the first
unrelated purchaser in the United States. The terms of PP sales were
either f.o.b. Bogota or c.i.f. Miami. We made deductions, where
appropriate, for foreign inland freight, air freight, brokerage and
handling, U.S. customs duties, and return credits.
ESP, for sales made on consignment or through a related affiliate,
was calculated based on the packed price to the first unrelated
customer in the United States. We made adjustments, where appropriate,
for foreign inland freight, brokerage and handling, air freight, box
charges, credit expense, returned merchandise credits, royalties, U.S.
duty, and either commissions paid to unrelated U.S. consignees or
indirect U.S. selling expenses of related consignees.
Foreign Market Value
Section 733(a)(1)(A) of the Tariff Act requires the Department of
compare sales in the United States with viable home market sales of
such or similar merchandise sold in the home market or a third country
market in the ordinary course of trade. Although some companies
reported home market sales of subject flowers, we found that these
sales consisted either of mostly cull quality sales, or were sales to
resellers for export to the United States. Furthermore, although some
companies reported viable third country markets, consistent with the
reasoning in the Final Results of Antidumping Duty Review; Certain
Fresh Cut Flowers from Colombia, 55 FR 20491 (May 17, 1990), we have
concluded that home market and third country sales are not an
appropriate basis for foreign market value (FMV). See our response to
Comment 4, below.
Accordingly, in calculating FMV, we used constructed value as
defined in section 773(e) of the Tariff Act for all companies. The
constructed value represents the average per-flower cost for each type
of flower, based on the costs incurred to produce that type of flower
over the review period.
The Department used the materials, fabrication, and general
expenses reported by respondents. The per-unit average constructed
value was based on the quantity of export quality flowers actually sold
by the grower/exporter in all markets. The non-export quality flowers
(culls) that are produced in conjunction with export quality flowers
are considered by-products. Therefore, revenue from the sales of culls
was used as an offset against the cost of producing the export quality
flowers.
For cases in which actual general expenses exceeded the statutory
minimum of 10 percent of the cost of materials and fabrication, we used
the actual general expenses to calculate constructed value. For cases
in which actual general expenses were less than the statutory minimum
of 10 percent of the cost of materials and fabrication, we used the
statutory minimum of 10 percent. When imputed credit was included in
constructed value, the actual interest expense was reduced to prevent
double counting.
When respondents indicated that the actual profit for merchandise
of the same general class or kind could not be calculated or was less
than eight percent of the sum of the cost of production and general
expenses, the Department used the eight percent statutory minimum for
profit. We added U.S. packing to constructed value. Adjustments to
constructed value were made for credit and indirect selling expenses.
Briefs and rebuttal briefs were submitted by the FTC and
Asocolflores. A hearing was held on February 1, 1994.
General Issues Raised by the Floral Trade Council
Comment 1: The Floral Trade Council (FTC) argues that floral
bouquests should be covered by this order. According to the FTC,
respondents are attempting to create a loophole in the order by selling
covered flowers to a third party, who then packages them with other
flowers for shipment and sales as ``bouquets'' in the United States.
Respondents have considered such sales as home market sales, and not as
sales for export to the United States. Other respondents made the
bouquets themselves for sale to the United States, but did not report
these sales.
The FTC argues that flowers sold in bouquets are within the scope
of the original petition and the antidumping duty order. Citing text
from the original petition, the FTC claims that the order made no
distinction between flowers sold by the stem or in bouquets and it
notes that the only physical difference between flowers sold in
bouquets and those sold individually is how they are packaged. The FTC
denies that the bouquet making industry is a separate, downstream
industry, and claims that while bouquet makers add value to the
flowers, bouquets can be disaggregated from non-covered flowers to
calculate the U.S. price applicable to the flowers covered by the
order. The FTC also notes that in its injury determination, the
International Trade Commission (ITC) did not distinguish between a
flower sold by the stem, bunch, or bouquet. Finally, the FTC asks that
the Department reject the questionnaire responses of those respondents
that failed to report bouquet sales, and instead resort to an adverse
rate of BIA.
Asocolflores responds that bouquets are not within the scope of the
original order. It notes that the original petition mentioned bouquets
only as a use for fresh cut flowers, and claims that the ITC never
addressed the issue in its injury determination. Furthermore, the FTC
never requested a scope determination, nor did it analyze the relevant
factors specified in the Department's scope regulation except in the
most cursory fashion.
Asocolflores argues that the FTC's request that the Department use
a BIA rate for those companies that did not report bouquet sales should
be denied. No company failed to provide information that was asked of
it by the Department. Because the Department did not ask firms to
report bouquet sales, the Department should not penalize firms for not
reporting them. Asocolflores also argues that the Department has
previously ruled that sales of certain mixed bouquets are not covered
by the order. See Certain Fresh Cut Flowers From Colombia, 55 FR 20,499
(May 17, 1990). Asocolflores asserts that bouquets were excluded
because they are a high value-added product.
Asocolflores argues that the ITC's arguments for determining that
each flow type is a separate like product produced by a separate
industry apply to mixed bouquets as well, and that, if anything, mixed
bouquets are more ``unlike'' the individual like products than the
individual like products with respect to each other. Asocoflores also
argues that the FTC's examples to prove its case do not apply to this
case, and that its analysis of the Diversified Products criteria--
physical differences, channels of trade, ultimate consumers, and end
uses--is cursory and not backed by evidence. Asocolflores argues that
bouquets are essentially dissimilar to fresh-cut flowers in each of the
aforementioned criteria.
Asocolflores maintains that bouquets are a separate downstream
industry, and notes that U.S. bouquet makers were considered separate
from U.S. flower producers by the ITC. Asocolflores further argues that
separate kinds of flowers, such as roses and carnations, are considered
separate products, that bouquets are even less alike and have less
substitutability than flowers sold by the stem, and that bouquets do
not compete against domestically produced carnations, pompons, or mums
sold individually. Furthermore, companies in the Untied States that
make bouquets are not the same ones producing fresh-cut flowers,
further indicating that bouquets are a downstream industry.
Asocolflores notes that there have been no investigations into whether
bouquets have been dumped, and claims that domestic bouquet makers have
no wish to see bouquets included within the scope of the order.
Asocolflores concludes that mixed bouquets are a distinct article
of commerce that do not fall under the scope of the order, and that
this is borne out by the ITC's like product and industry analysis, the
statutory distinction between industries producing raw and processed
agricultural products, and by analysis under the Diversified Products
criteria in the Department's scope regulation.
Las Amalias (Lasa) argues that bouquets were not in the scope of
either the original order or the original petition, and that the
original order made no mention of bouquets whatsoever. Furthermore, the
only time the Department addressed this issue, it determined that home
market sales of subject flowers to bouquet makers were to be reported
as home market sales. finally, because the Department did not request
information on bouquets, it should not penalize companies that did not
report bouquets by applying a BIA rate.
Department's Position: We agree with petitioner that sales of
subject flowers incorporated in mixed bouquets are covered by the
order. We base this determination on an analysis of the petition, the
final determination of sales at less than fair value, the antidumping
duty order, prior administrative reviews, and the ITC injury
determination. Because we find that the information on the record is
dispositive, it was not necessary to analyze the Diversified Products
criteria in 19 CFR 353.29(i)(2). Therefore, although petitioner and
respondents commented on the Diversified Products criteria, we have not
addressed those issues here.
The petition covered certain fresh cut flowers whether imported by
the stem, by the bunch, or by the bouquet, and quoted the relevant
TSUSA description: ``Cut flowers, fresh; bouquets, wreaths, sprays, or
similar articles * * *'' (FTC Antidumping Duty Petition, at 11 (May 21,
1986).)
In the Final Determination of Sales at Less Than Fair Value, the
department stated:
The products covered by this investigation are fresh cut
miniature (spray) carnations, currently provided for in item 192.17
of the Tariff Schedules of the United States (TSUSA), and standard
carnations, gerbera, alstroemeria, standard chrysanthemums, pompon
chrysanthemums, and gypsophila currently provided for in item 192.21
of the TSUSA. (52 FR 6843).
The same language is contained in the antidumping duty order (52 FR
8492) except that gerbera, alstroemeria, and gypsophila were excluded
because of the ITC's negative injury determination.
Although the ITC did not speak directly to the issue of whether
mixed bouquets incorporating covered flowers constitute a separate like
product, or whether there is a separate and distinct ``bouquet
industry,'' a careful reading of the ITC's Determination of the
Commission in Investigations Nos. 731-TA-327 Through 331 (Final),
Publication 1956 (March 1987), shows that if the ITC had addressed
these issues squarely, it would have decided both in the negative. We
can reasonably infer from the report and the statistics relied upon in
that report, taken as a whole, that the ITC did not consider any
potential distinction between individual flower stems and those grouped
together in bunches or bouquets significant enough even to mention,
much less to conduct a separate analysis of them.
For example, in Table 8 of that report (page A-39 and A-40), the
ITC looked at U.S. producers' shipments of fresh cut flowers and noted
that ``[q]uantities in bunches of [subject merchandise] are converted
to stems [for purposes of comparison].'' On page A-41, the ITC states
that in response to its questionnaires ``U.S. growers reported their
domestic shipments of flowers grown in their establishments. Quantities
reported were in stems or bunches,'' and on page A-43 the report
states, regarding U.S. producers' exports, ``[d]ata are available
describing exports of all fresh cut flowers and bouquets.''
Although the ITC did not state that the above data included
anything but subject merchandise, we conclude that the ITC considered
all of the data relevant to its analysis. Where the ITC analyzed data
involving basket categories including nonsubject merchandise, it made a
specific reference to this. See e.g., footnote 4 of Table 1, where the
ITC specifically pointed out that certain data relevant to its analysis
included nonsubject merchandise. (Id. at A-24.)
In another section, the ITC stated:
The major retail outlets for fresh cut flowers are florists,
garden centers and nurseries, and mass merchandisers such as
supermarkets. A 1985 study showed florists with 63 percent of the
value of floral sales, mass merchandisers with 18 percent, garden
centers and nurseries with 12 percent, and other outlets with 7
percent. Mass merchandisers have increased their share of the
market, which was 6 percent in 1980, primarily at the expense of
independent florists. Encouraged by increasing consumer demand,
these outlets buy in bulk directly from growers, bypassing the
wholesalers that service smaller florists. Imports have bolstered
this trend by providing a year-round, low-cost source of supply.
Supermarkets accounted for the largest portion of 1985 sales by mass
merchandisers, with 8.6 percent of the market, followed by discount
stores with 6.2 percent and department stores with 3.5 percent. In
their questionnaire responses, importers verified that mass
merchandisers have become increasingly important as purveyors of
imported flowers. (Id. at A-19).
This analysis should be viewed in conjunction with the following
statement by Asocolflores:
Most imported bouquets are sold through supermarkets directly to
consumers in the form in which they are imported. Most individual
fresh cut flowers are sold through wholesalers and retailers, and do
not reach the consumer in the form in which they are imported.
Instead, the retailer generally fashions them into arrangements,
and, in some instances bouquets (but generally not mass market
bouquets). (Asocolflores Rebuttal Brief at 23 (January 25, 1994).)
While nothing in either of these passages suggests that
supermarkets buy and sell bouquets exclusively, or that florists buy
and sell individual stems exclusively, uncontroverted evidence on the
record submitted by Asocolflores indicates that bouquets are generally
sold through supermarkets. In addition, from the passages cited above,
it is clear that the ITC analyzed domestic sales data that included
individual stems, bunches, and bouquets, and that the ITC considered
all mass merchandisers, including supermarkets, to be part of the
distribution chain of the subject merchandise. Therefore, we deduce
that the ITC did in fact consider flowers incorporated in bouquets in
its injury analysis.
Asocolflores argues that the ITC's determination that separate
flowers constitute separate like products indicates that bouquets would
be even more ``unlike'' the like products of which they are made. We
find this argument strained and unsupported by any record evidence.
Nothing in the ITC's report indicates that covered flowers sold in
groups constitute a separate like product. On the contrary, as
explained above, the only logical conclusion to be drawn from the
report is that the ITC was indifferent to whether flowers were sold
individually or in groups.
Both the FTC and Asocolfores argue that the Department, with
respect to the Department's determinations in prior reviews, has
already decided the bouquet issue in their respective favors. The first
time we referred to bouquets was in Certain Fresh Cut Flowers From
Colombia; Final Results of Antidumping Duty Administrative Review, 55
FR 20499 (May 17, 1990), comment 49. The second time we dealt with the
issue was in Certain Fresh Cut Flowers From Colombia; Final Results of
Antidumping Duty Administrative Review and Revocation in Part of the
Antidumping Duty Order, 56 FR 50555 (October 7, 1991), comment 3.
Although we did not affirmatively state in these prior determinations
that covered flowers in mixed bouquets are covered by the order, our
commentary and analysis clearly indicate that the Department has always
considered covered flowers incorporated in mixed bouquets to be subject
to the order.
In the 1990 review, we treated Pompones' sales of subject flowers
to an unrelated bouquet maker as home market sales. Nowhere in the
position did we state that subject flowers incorporated into mixed
bouquets are not covered by the order. We merely determined that
because the unrelated reseller combined Pompones' flowers with
purchases of other flowers from other producers, and because the value
of Pompones' product in relation to the product imported into the
United States was relatively small, there was no need to consider
Pompones' to be the seller of the U.S. product. See Certain Fresh Cut
Flowers From Colombia; Final Results of Antidumping Duty Administrative
Review, 55 FR 20499 (May 17, 1990). We determined that these sales
could be considered home market sales. This in no way implies that
subject flowers (such as those Pompones sold to the reseller)
eventually sold in the United States by the reseller, in no matter what
form (stem, bunch, solid bouquets, or mixed bouquets), were not covered
by the order; nor does it imply that the unrelated reseller had
``substantially transformed'' Pompones' flowers into a product not
covered by the order (bouquets). On the contrary, any covered flowers
purchased by the unrelated reseller from Pompones or any other flower
grower that were included in the bouquets sold in the United States
were subject to the order and antidumping duties.
Our ruling with respect to Pompones is consistent with a principle
we have applied in other cases: The relative costs of items
incorporated in a combination article are not dispositive as to whether
an item is covered by the scope of an order. See, e.g., Funai Electric
Co., Ltd., v. United States, 713 F. Supp. 420, 422 (1989) (``the
technique of combining a putatively dumped article with a more costly
related article could become a significant method of eva[sion]''), as
cited in the FTC case brief at 5.
In the 1991 review, the issue was how SunPetals (a related U.S.
selling agent of the Floramerica Group) allocated costs among the
components of its bouquets. See Certain Fresh Cut Flowers From
Colombia; Final Results of Antidumping Duty Administrative Review and
Revocation in Part of the Antidumping Duty Order, 56 FR 50555 (October
7, 1991). There was no question that the Floramerica Group reported
covered flowers in such bouquets as U.S. sales or that the Department
considered covered flowers in such bouquets to be U.S. sales. SunPetals
derived a U.S. price (USP) for the subject flowers in the bouquets by
subtracting the cost of the other components. The petitioner's
complaint was that no profit was allocated to those other components,
thereby making USP higher than if profit had been allocated. We chose
not to recalculate USP for subject flowers in bouquets because the
amount of such an additional deduction was so small that it would have
had less than a de minimis impact on the firm's margin. Far from
implying any kind of blanket exclusion for bouquets, this position
demonstrates that subject flowers incorporated in mixed bouquets are
covered by the order. If they were not, there would have been no need
to calculate a USP for such flowers or to consider the issue of the
potential effect of deducting additional profit from that USP.
These prior determinations support our conclusion that bouquets are
included in the scope of this order.
Respondents make much of the packaging, composition, and value
added of mixed bouquets. As we have discussed, and as the following
analysis makes clear, these issues are irrelevant to this scope
determination.
At the outset, we note that no party to this proceeding has ever
argued that bunches or bouquets made of several stems of a single
(covered) flower type (hereafter, ``bunches'' and ``solid bouquets'')
are not covered by the order. On the contrary, Asocolflores has
admitted that such flowers incorporated in solid bouquets are in the
scope of the order. See Memorandum to File dated March 14, 1994. At
verification we found that bunches and solid bouquets were sold and
duly reported by respondents as sales of covered merchandise. See,
e.g., Bochica/Floral Public Verification Report at 5, (October 8,
1993). As we saw at various verifications, typically bunches and solid
bouquets contain several bound stems wrapped or stapled in cellophane
sleeves and packed in a box with similar bunches or bouquets. See,
e.g., Bochica/Floral Public Verification Report, at 8 and 13 (October
8, 1993); Flores del Campo Public Verification Report, at 7 (October
17, 1993); Las Amalias Public Verification Report, at 9 (October 19,
1993); Flores de Suba Public Verification Report, at 10 (November 1,
1993). Thus, the packaging and presentation of subject flowers in
bunches and solid bouquets do not transform them into merchandise
outside the scope of the order. See also Final Determination of Sales
at Less Than Fair Value; Red Raspberries from Canada, 50 FR 19768,
19771 (May 10, 1985) (differences in packaging do not transform a
product into different classes or kinds of merchandise). In fact, we
require respondents to disaggregate sales of bunches and solid bouquets
and to quantify the number of individual stems contained in them.
Likewise, Customs disaggregates bouquets and collects duties on
individual flower stems.
Mixed-flower bouquets are in most cases prepared very similarly to
solid bouquets and bunches. A group of flower stems is bound and
wrapped, usually in cellophane sleeves, and packed in a box. See, e.g.,
Issues Hearing Transcript in the Matter of Certain Fresh Cut Flowers
from Colombia, at 11-12, (February 1, 1994). Flores Condor's bouquets
are made up of approximately six stems of carnations and one stem each
of minicarnations, statice, gypsophila and alstroemeria. See Condor
Public Verification Report, at 3 (December 14, 1993). Flores de la
Sabana's bouquets were ``partial bouquets'' that consisted of only two
pompon chrysanthemums and two carnations. See Flores de la Sabana
Public Verification Report, at 10 (October 25, 1993). Flores de Suba's
bouquets were comprised of carnations, pompons, gypsophila, and
statice. See Flores de Suba Public Verification Report, at 3 (November
1, 1993).
The mixed bouquets produced by Flores de la Sabana consist of all
covered flowers. This points up the absurdity of the position that
mixed bouquets per se are not covered. According to this position, if
two different covered flowers come in separately, they would be subject
to the order, but if the two covered flowers are combined into a
bouquet, they would not be subject to the order. As petitioner points
out, when products subject to an antidumping duty order are combined or
aggregated with other products, they are still covered by the order.
See, e.g., Final Result of Administrative Review; Drycleaning Machinery
from West Germany, 50 FR 32154, 21156 (1985); and Preliminary
Determination of Sales at Less Than Fair Value; Cellular Mobile
Telephones and Subassemblies from Japan, 50 FR 24554, 24555 (1985).
As noted above, the ITC separated each flower type into different
like products. However, the Department has always treated the subject
merchandise (covered flowers) as one class or kind of merchandise. We
cannot logically conclude that the inclusion of different flower types
belonging to the same class or kind of merchandise hinges on whether
those flowers are imported individually or grouped together in bunches
or bouquets.
Finally, we agree with respondents that the use of BIA would be
inappropriate for companies that did not provide sales data for mixed
bouquets. Although some companies reported bouquet sales, we did not
request these data in this review. Nevertheless, we are proceeding with
our final results because we have determined that an analysis of
bouquet data would have a negligible impact on respondents' margins in
this review. Based on a weight-averaged analysis of the companies that
we verified, we find that both flowers sold to converters and those
sold directly to the United States in mixed bouquets constituted only
1.66 percent of those respondents' total sales to the United States
during the period of review. See Memorandum to the file dated March 7,
1994. Because the firms picked for verification represent a cross-
section of all respondents, we conclude that these data would not vary
significantly for respondents that were not verified. We also note that
because Customs requires deposits on all subject flowers regardless of
how they are imported (including those imported in mixed bouquets), our
calculated duty rates will be also assessed on flowers incorporated in
mixed bouquets. However, in subsequent reviews, beginning with the
1991/1992 review, we will request and analyze respondents' sales data
for subject flowers incorporated into mixed bouquets.
Comment 2: The FTC asks that the interest rate used to calculate
credit costs not be adjusted for currency devaluation, as was done in
the preliminary results. The FTC contends that where there was actual
borrowing to finance sales, the actual rates paid should be used, and
that when a U.S. importer incurred the borrowing costs and no actual
loans can be identified, a U.S. rate should be imputed. The FTC claims
that prepayment of interest is frequent in Colombia, and where it is
required, interest would have been paid in pre-devaluation pesos. The
FTC asks that, because this practice is frequent, peso-denominated
loans should be assumed to have had the interest paid in advance except
where the record shows otherwise. The FTC argues that unless specific
loans are related to financing accounts receivables, the Department
should not relate gains from devaluation to those loans. Finally, the
FTC argues that because the Department applies the exchange rate on a
monthly basis, there is no need to ``devaluate a peso interest rate''.
The FTC asks that the Department use either the related importers'
U.S. interest rate on actual borrowing or, when no borrowing is
claimed, the average rate paid by other similar importers. The FTC also
asks that the Department use the Colombian producers' interest rate on
short-term borrowing, unadjusted for devaluation.
Asocolflores responds that the argument concerning prepaid interest
is not relevant here because the respondents reported their actual
effective peso borrowing rates, which were verified by the Department.
Asocolflores also maintains that credit expenses are not actual but
imputed expenses and thus impossible to relate to specific loans, and
that these expenses are a calculation of opportunity costs. Finally,
Asocolflores notes that imputed credit is calculated in terms of
dollars, and thus does not obviate the need to account for devaluation.
Asocolflores contends that it is entirely possible to have very low or
even negative imputed credit expenses when the dollar appreciates
against the peso at a rate approaching or exceeding the peso-
denominated borrowing rate.
Department's Position: We agree with respondents. The respondents
were instructed to report information concerning their actual short-
term borrowing rate, whether that rate was in dollars or pesos. The
credit expense is an imputed expense, not an actual expense, and is
calculated and reported in U.S. dollars. Credit expense is the
hypothetical cost to the flower producer for not receiving immediate
payment for the U.S. sale. In reporting the interest rate, if a flower
grower, or its related U.S. importer, had U.S. dollar borrowings, this
rate was reported and used in the credit calculation. However, where
there were no U.S. dollar borrowings, we used the actual peso borrowing
rate, adjusted to reflect the fact that the credit expense was incurred
in dollars and not pesos. We adjusted the peso by the rate of
depreciation of the peso to the dollar during the POR in order to
reflect the cost of borrowing in pesos to finance sales made in
dollars. However, where no short-term borrowings were reported, we used
the U.S. prime rate during the POR.
An unadjusted peso borrowing rate does not have any correlation to
the cost of borrowing dollars or financing dollar expenses. It would
make no commercial sense for a flower producer in Colombia to borrow at
a 20 to 35 percent interest rate in Colombia when it could borrow in
the United States at a much lower dollar interest rate, unless the
dollar appreciates enough against the peso to offset the difference in
interest rates. Thus, if the Department is to presume that a flower
producer would borrow in pesos to finance U.S. dollar sales, we must
use the real cost of borrowing, which includes the devaluation of the
peso with respect to the dollar. It is the Department's practice to
make monetary corrections in such circumstances. See, e.g., Final
Results of Administrative Review: Gray Portland Cement and Clinker From
Mexico, 58 FR 25806 (April 28, 1993).
Comment 3: The FTC asks the Department to use the transaction
values in the U.S. Custom Service's informational bulletins for
consignment entries when calculating the assessment rate, the estimated
duty deposit rate, and any percentage duty rate applied to consignment
sales. The FTC argues that if the calculated U.S. price is used instead
of the relevant values in the Customs bulletins, then there is a danger
that antidumping duties will be undercollected.
Asocolflores responds that the above argument is irrelevant because
the Department has previously assessed duties as a specific amount per
stem or bunch as opposed to on an ad valorem basis and, from the
preliminary results, appears to be set to do this in this review. While
the Department calculates the cash deposit rate on an ad valorem basis,
Asocolflores notes this rate is only an estimate used for deposit
purposes and not actual duty assessments. Asocolflores argues that
Customs obtains its pricing data by surveying importers and that the
margins are as likely to be overstated as understated. Finally,
Asocolflores contends that the FTC is asking the Department to
unlawfully delegate its responsibility to Customs.
Department's Position: With respect to assessment rates for
consignment sales, we will divide the total margin amount by either the
U.S. Customs bulletin values or customs entered values derived from
these bulletins to calculate an ad valorem antidumping assessment rate,
or by total quantity and assess antidumping duties on a per unit basis.
This would be consistent with the Department's practice of calculating
assessment rates on the basis on which they are collected--entered
value. See, e.g., Antifriction Bearings (Other Than Tapered Roller
Bearings) and Parts From France et al., 57 FR 28362 (June 24, 1992).
This methodology eliminates the potential undercollection of
antidumping duties in instances when USP is greater than entered value
and assessment rates are based on USP. However, we will continue to
calculate estimated cash deposit rates on the basis of USP.
Comment 4: Petitioner argues that, while the questionnaire requires
reporting of home market sales if the home market ``export quality''
sales of a particular flower type by volume are greater than five
percent of sales of the same flower type to the United States and five
percent of sales of the same flower type to other countries, the
Department directed respondents to base margin calculations on CV for
all flower types sold regardless of whether the home market is viable
for any flower. Therefore, according to the FTC, respondents have
concluded that it is no longer necessary to report home market or third
country sales. Furthermore, petitioner claims that although the
Department did not consider the European market comparable to the U.S.
market in prior reviews, it must reconsider its position in this review
prior to rejecting home market or third-country prices as an adequate
base for foreign market value. Finally, the petitioner states that the
Department should require a complete reporting of all home market sales
and third country sales of export quality merchandise in future
administrative reviews.
Respondents counter that no flower company had a viable home market
and that the Department rejected the use of third-country sales as the
basis of foreign market value not because of viability, but rather
because of the extraordinary circumstances of the industry.
Department's Position: We determine that none of the companies had
viable home markets. Questionnaire responses on the record indicate
that with the exception of one company, Las Amalias, nearly all home
market sales are sales of culls. In the case of Las Amalias, the
company sells export quality flowers to converters with the knowledge
that these converters make mixed bouquets for export to the United
States, which means that they are essentially U.S. sales. See our
response to Comment 1, above. In those infrequent cases where export
quality flowers are sold domestically, the buyers, essentially private
street vendors, go to the farms on the chance that there are flowers
available due to excess production. The availability of such flowers is
unpredictable, and neither the growers nor the buyers can plan on these
sales. The growers incur no sales expenses on these unpredictable sales
and generally the buyers end up purchasing culls. See Cultivos
Miramonte Verification Report (September 15, 1993), and Inversiones
Targas Verification Report (September 20, 1993). Therefore, we continue
to consider such sales to be not in the ordinary course of trade.
Furthermore, consistent with the final results of the second and
third reviews, we determine that there continue to be fundamental
differences between the U.S. and European markets (the major third
country market for most companies) that support using CV as FMV instead
of third country sales. See Final Results of Antidumping Duty
Administrative Review: Certain Fresh Cut Flowers from Colombia, 55 FR
20491 (May 17, 1990), and Final Results of Antidumping Duty
Administrative Review: Certain Fresh Cut Flowers from Colombia, 56 FR
50554 (October 7, 1991). In addition, the CIT upheld the use of CV in
these circumstances. See Floral Trade Council v. United States, 775 F.
Supp. 1492, 1497 (1991), appeal docketed, No. 94-1019 (Fed. Cir.).
There is no evidence on the record that the differences between the
United States market and the European market have been eliminated. As
described in detail in earlier reviews, the United States market
continues to be one of peaks during traditional gift-giving holidays
and valleys during the off-season while the European market is
relatively stable throughout the year. Because of this price and volume
volatility of the United States market as compared with the stability
of the European market and other factors detailed in our determinations
from previous reviews, we continue to consider third-country prices as
inappropriate bases for FMV. However, if the FTC provides additional
information supporting its contention that third country markets are an
appropriate basis for FMV, we will consider such information in future
reviews.
Comment 5: The FTC notes that in the preliminary results, the
Department did not indicate whether it increased gross U.S. sales price
by the amount of ``other revenue'' received on those sales. The FTC
contends that in response to being asked to ``[p]rovide any rebates of
antidumping or other duties in a separate column'' (ITA Quest. at G.I.-
3), certain respondents have increased the U.S. price by the amount of
antidumping duties included in the U.S. invoice price. The FTC argues
that it is to the respondents' advantage to do so, as it allegedly
reduces or eliminates the overall size of any dumping margin. The FTC
asks that this be remedied by adjusting the U.S. price downward in all
cases where the record evidence establishes that U.S. importers are not
paying antidumping duties but are being reimbursed by the Colombian
growers or exporters, in accordance with 19 CFR 353.26(a).
Asocolflores responds that importers have added a surcharge to the
basic price of the flowers in order to account for the possibility of
an additional antidumping duty liability. This surcharge is paid for by
the first unrelated U.S. purchaser, and has nothing to do with actual
duty assessments. Its only immediate effect has been to raise U.S.
prices, and is in no way a ``reimbursement'' of assessed duties by the
producer.
Department's Position: If an importer is being reimbursed by the
seller for the payment of antidumping duties, it would be appropriate
for the Customs Service to assess these duties again. However, because
the item in question is a charge, not a rebate, no doubling of
antidumping duties is mandated. Therefore, we have not adjusted USP
downward as the FTC suggests, since the additional amount is part of
the price the U.S. importer pays. If, upon liquidation, the appropriate
certificate regarding reimbursement is not provided, Customs will make
the necessary change in its assessment of the duties.
Comment 6: The FTC contends that allowing respondents to report
amortized preproduction costs subjects the margin calculation to
manipulation. The FTC claims that ``[i]f a respondent expensed
preproduction costs in the third review but amortized preproduction
costs during the fourth review, preproduction costs would be
understated.'' The FTC requests that the Department determine whether
these costs have been properly reported over time.
Asocolflores responds that the respondents which amortized their
preproduction costs did so in order to more accurately match costs with
sales, and notes that the Department approved this methodology in the
third review. Asocolflores claims that, if anything, expensing
preproduction costs in one review and amortizing them in the next will
result in double-counting of costs, which would be to the petitioner's
advantage. Asocolflores also notes that the Department regularly does
confirm that costs have been properly reported through verification.
Department's Position: We agree with Asocolflores. It is generally
accepted accounting procedure in Colombia to allow firms to amortize or
expense preproduction expenses. Therefore, we have accepted either
methodology if that methodology was used by the firm in its normal cost
accounting procedures. Furthermore, even if a firm chose to expense
preproduction costs in an earlier period, this would not detract from
the reasonableness of amortizing such costs in the current review.
Finally, there are no respondents that expensed preproduction costs in
the previous review who have now amortized such costs in this review.
Comment 7: The FTC claims that certain respondents have reported
export documentation fees, export register charges, export license
fees, and phytosanitary fees as indirect selling expenses. The FTC
argues that because these are shipment specific expenses attributable
to specific sales, they should be included in freight charges, not
indirect selling expenses.
Asocolflores responds that, in Colombia, export registers must be
purchased and thus are charged at the purchase of the register, not
when exports are made. This charge is made even if the register is not
used, but if it is, a number of shipments can be reported on a single
register. Therefore, the export register fee cannot be tied to specific
exports and are thus indirect selling expenses.
Department's Position: Based on the evidence in the responses and
our verification reports, we conclude that the expenses in question--
export documentation fees, export register charges, export license
fees, and phytosanitary fees--are selling expenses because they are
incurred prior to movement of the merchandise and are not incident to
transportation of the flowers. See Flores del Campo Verification Report
at 8 (October 15, 1993) and Flores de Suba Verification Report at 2
(November 1, 1993). In addition, these expenses cannot be linked to
particular sales. Therefore, we have treated these expenses as indirect
selling expenses.
Comment 8: The FTC asks that the Department disregard respondents'
claims that all of their short-term interest income is related to
flower production. The FTC argues that the Department should determine
whether a respondent has other businesses, and whether they have linked
their interest income to accounts receivable on flower sales. The FTC
claims that after such determinations have been made, only that
interest income which is demonstrated to be related to flower
production should be allowed as a direct offset to interest expenses in
constructed value.
Asocolflores responds by claiming that all respondents demonstrated
that interest income was related to flower production. Asocolflores
notes that the example cited by the FTC, Santana Flowers Group, is
engaged exclusively in flower production, and as a result, all interest
income must be related to such production.
Department's Position: Only short-term interest income related to
flower operations is allowed as an offset to interest expenses. We
allow this adjustment to arrive at an effective short-term interest
expense. For firms where we have determined that reported short-term
interest income is not related to production of subject merchandise, we
have disallowed that income. This is standard Department practice that
has been followed in many cases. See e.g., Gray Portland Cement and
Clinker from Mexico; Final Results of Antidumping Duty Administrative
Review, 58 FR 25805, Comment 2 (April 28, 1993).
Comment 9: The FTC asks that the Department impute the highest
reported royalty payment as the BIA for those respondents that either
failed to report royalties or claim to have paid no royalties without
explanation. The FTC argues that it is to the respondents' advantage
not to report royalties on U.S. sales, and for that reason the burden
should be on them to furnish evidence that they paid no royalties, or
else a specific amount of royalties.
Asocolflores responds that companies did report royalty expenses,
and in case where no royalties were paid, there is nothing to report.
Asocolflores claims that the Department verified via sampling that the
respondents answered truthfully, and contends that there is no further
burden of proof on respondents with respect to this issue.
Department's Position: We agree with Asocolflores. There is no
record evidence that Colombian flower producers were obliged to make
royalty payments, and our verifications indicated no discrepancies in
the reporting of royalties. In the absence of evidence suggesting that
certain Colombian flower growers made unreported royalty payments, we
cannot assume that such payments were made.
Comment 10: The FTC contends that when calculating U.S. selling
expenses incurred in Colombia, some respondents allocated movement,
selling, and production costs on the basis of the number of boxes
shipped rather than sold (the FTC cites Cultivos Miramonte, Flores
Colombianas Group, and Soagro Group as particular examples). The FTC
notes that this approach was rejected by the Department during the
original investigation. The FTC argues that the Department should
recalculate the expenses, or use the highest reported freight and
packing expenses as BIA.
The FTC also contends that because respondents seem to rely on
boxes rather than reusable plastic containers to transport their
flowers, and that because those boxes are necessary for the flowers to
be transported, constructed value should include boxes in packing
expenses as part of cultivation materials.
Asocoflores responds that the practice of allocating costs by boxes
shipped is done to determine how to allocate the expense among
customers. Whether the allocation is done by boxes shipped or boxes
sold, the total freight costs will be the same. Because inland freight
is incurred whether a box is sold or not, it is reasonable to allocate
by boxes shipped.
Asocolflores claims that the case the FTC cites to support its
argument regarding whether boxes and packing costs be included in
cultivation expenses (see Washington Red Raspberry Commission v. United
States, 657 F. Supp. 537, 542 (1987)) does not apply to fresh cut
flowers. In the above-cited case, the product would be destroyed if not
packaged in special containers. Flowers do not need to be shipped in
the boxes, and because the boxes are nonessential, they should be
considered a packing expense, not a production cost.
Department's Position: We agree with petitioner that movement,
selling, and production costs should be allocated on the basis of boxes
sold rather than boxes shipped. Because companies recoup their costs
through sales, costs should be allocated on the basis of sales. See
Certain Fresh Cut Flowers From Colombia; Final Results of Antidumping
Duty Administrative Review, 55 FR 20491 (May 17, 1990). However, we
checked the questionnaire responses of the companies cited by the FTC
and found that they did in fact allocate the costs in question over
sales. The FTC may be confusing the companies' quantification of these
costs with the allocation of them. The companies properly quantified
their costs on the basis of boxes shipped, because expenses are
incurred on boxes shipped. However, in determining the per unit cost,
the expenses must be allocated over boxes sold, for the reasons stated
above.
We disagree with petitioner's view that the cost of boxes used to
ship flowers should be reported as cultivation materials. Boxes are
used for transportation purposes only and are not part of the product.
Therefore, they are correctly reported as packing costs.
Revocation for Condor and Colombianas
Comment 11: The FTC argues that the Department should not revoke
the antidumping duty order with respect to imports from Flores Condor
and Flores Colombianas. The FTC contends first that the two companies
have not met the Department's regulatory requirement that a producer be
found to have sold covered merchandise at not less than FMV for a
period of at least three years. The FTC notes that data is not yet
available for the period February 28, 1991, the end of the current POR,
to December 14, 1993, the date of the preliminary determination to
revoke, and argues that without these data, it cannot be determined
whether or not these producers have met this requirement. The FTC
further argues that the Department's findings in the second
administrative review (1988-1989) should be disregarded until the FTC's
legal challenge of the review has been resolved. The FTC requests that
the Department not rely on a certification to immediate reinstatement
in the order if dumping is found after revocation.
Asocolflores responds that both Condor and Colombianas have met the
tests for revocation, and that the FTC's claims that the data is
``stale'' are not relevant. Because the revocation is made effective at
the end of the third consecutive POR, it is not necessary to examine
sales after that review. Though the Department used to require such
data, that was before a change in the test for eligibility for
revocation. Further, Asocolflores notes that it has not been Department
policy to await the results of appeals to grant revocation. Finally,
Asocolflores characterizes the FTC's argument that the Department
should not rely on certification as described above as a complaint with
the Department's regulations, and not a concern regarding the
eligibility of Condor or Colombianas for revocation.
Department's Position: We agree with Asocolflores that both firms
have met the requirements for revocation. Under 19 CFR 353.25(a)(1)(i),
the Department is required to find sales at not less than foreign
market value for a period of at least three consecutive years. Our
determination in this review that both companies had zero margins,
combined with similar findings in the two prior reviews, satisfies this
requirement. Although the regulations in effect prior to 1989 required
a review for the period between the end of the consecutive-year base
period and the tentative determination to revoke (19 CFR 353.54(f)
(1988)), the current regulations have eliminated this requirement. In
addition, it is not the Department's policy to delay granting
revocation because of pending court appeals.
Comment 12: The FTC asserts that Flores Condor cannot establish
that it sold covered flowers at fair value during the 1990-1991 period,
because it failed to report all sales of flowers contained in bouquets
during this period. The FTC suggests that Condor may be attempting to
avoid the duty by re-packaging its flowers as bouquets. The FTC also
claims that Condor has not demonstrated that it will not engage in
dumping once the order is revoked.
Asocolflores responds that because the Department did not require
Condor to report bouquet sales, Condor's response cannot be considered
deficient. Furthermore, by pricing and production practices, Condor has
demonstrated that it will not engage in dumping subject flowers in the
future.
Department's Position: Although Flores Condor did not report United
States sales of flowers sold in bouquets (because we did not
specifically request this information), the value of such flowers
incorporated into bouquets sold in the United States amounts to an
insignificant portion of Condor's total United States sales. See
Memorandum to the file dated March 7, 1994. Also, Condor has never made
sales at less than fair value in the past. Considering these facts, and
the lack of evidence supporting the allegation that Flores Condor may
be attempting to avoid the duty by re-packaging, we have determined
that Flores Condor sold subject flowers at not less than foreign market
value during the current POR. Furthermore, we have determined that
Flores Condor has demonstrated through its past pricing practices that
it is not likely to sell subject flowers at less than fair value in the
future. Therefore, we are revoking the antidumping duty order with
respect to Flores Condor.
Comment 13: The FTC argues that the Department should recalculate
Condor's preproduction costs. It claims that because Condor allocated
its costs to all export quality flowers produced and not to flowers
sold, the unit cost per flower sold is understated to the extent that
all flowers were not sold. The FTC is also concerned that because
Condor's cost accounting system expenses preproduction costs according
to a projected, rather than actual figure, Condor's reported costs may
be understated. The FTC also notes that Condor may not have properly
allocated preproduction costs to the POR.
Asocolflores responds that although Condor allocates costs on the
basis of flowers produced for internal reasons, it calculated
constructed value by dividing total costs by flowers sold, and is
therefore consistent with the Department's requirements.
Department's Position: We agree with respondent. We verified Flores
Condor's preproduction cost calculation and found that the company
allocated total preproduction costs by flowers sold, in accordance with
the Department's requirements as stated in the questionnaire. Because
firms cover their costs only through sales, we require allocations
according to sales rather than production.
Comment 14: The FTC is concerned that Colombianas will serve as a
conduit for flowers grown by other producers to evade the antidumping
order. The FTC claims that this is already happening, and that
Colombianas sells more flowers to the United States that it purchased
from other producers than flowers that it produced itself. The FTC also
claims that Colombianas has reported its flower purchases as direct
material costs, and notes that those purchase prices may be below the
suppliers' costs of production.
Asocolflores responds that the FTC is wrong in believing that
Colombianas is acting or will act as a conduit for flowers from other
firms. Asocolflores maintains that sometimes producers have a shortage
of certain flowers and must purchase a small amount of them from other
producers. Colombianas did have to buy carnations in 1990, but sales of
carnations to the United States constituted an insignificant percentage
of total sales to the United States. Respondent further states that it
did not export more purchased flowers than produced flowers. Finally,
such purchases were correctly reported as direct material costs. There
is no evidence that Colombianas purchased flowers at below the
supplier's cost of production, and in fact, the average value of
purchased pompons is greater than Colombianas' own per unit cultivation
costs.
Department's Position: We disagree with the FTC's claim that
Colombianas is evading the antidumping order. First, although
Colombianas does purchase a majority of its export quality carnations
and minicarnations, the group is primarily a producer and seller of
pompons and mums. See Colombianas' Questionnaire Response, at 25 (March
24, 1992). Colombianas' sales of carnations and minicarnations
constitute an insignificant percentage of its total sales to the United
States of within-scope flowers. See Flores Colombianas' Verification
Report, at 3 (October 25, 1993). Also, Colombianas has consistently
stated that its flower suppliers have no foreknowledge that these
purchased flowers are destined for any specific export market. Second,
the Department has not received any evidence that Colombianas has
purchased flowers at below suppliers' cost of production. In fact,
after surveying the average prices of flowers purchased from selected
Colombianas suppliers, we found these average prices to be above the
suppliers' respective constructed values for those flowers. Finally, if
we receive information that Colombianas is serving as a conduit for
other Colombian flower growers, we will take appropriate action, which
could include reinstatement in the order and referral to the U.S.
Customs fraud division.
Comment 15: The FTC argues that the data Colombianas supplied in
response to the questionnaire is inaccurate and incomplete and that,
without further clarification, Colombianas cannot be shown to have
ceased selling covered flowers in the United States at less than FMV.
As in the case of Flores Condor, the FTC asserts that Colombianas has
provided inadequate data because it failed to include sales of flowers
packaged in bouquets. The FTC asserts that Colombianas has included
sales of pompon cuttings in its reporting of sales of non-export
quality flowers or culls, and argues that cuttings should be reported
separately from culls. The FTC also notes that Colombianas' materials
are expensed based on a weighted-average per unit cost, and asks that
the Department not accept ``average'' costs unless they are adjusted by
a variance to actual costs.
The FTC claims that Colombianas has departed from its usual
accounting methodology in calculating its cost of production by
amortizing preproduction expenses over the ``productive portions of the
plants' lifecycles.'' The FTC asks that, if Colombianas amortized its
preproduction in the third administrative review, the Department not
permit Colombianas to expense all preproduction costs without
accounting for the amortized costs from the previous review. The FTC
further ask that the Department carefully review the questionnaire
responses to determine if all costs have been captured, and also
confirm that they have been properly allocated to sales of the subject
merchandise.
Asocolflores responds that it has argued earlier that bouquet sales
do not need to be reported, and that no reporting them should not be
the basis for applying a BIA rate. Also, Colombianas has demonstrated
through its business practices that it will not engage in dumping in
the future.
Asocolflores asserts that Colombianas has reported using cull
revenue to offset cultivation costs in the four previous years and that
no objection was raised at the time. Because all expenses associated
with producing cuttings are included in its constructed value,
Asocolflores maintains that it is appropriate to offset the cost of
production by revenue generated from sales of those cuttings.
Asocolflores states that because materials are expensed on the
basis of the actual weighted-average per unit costs, it is unnecessary
to adjust average unit cost by their variance to actual costs, because
there is no variance.
Asocolflores claims that the methodology used by Colombianas to
calculate preproduction expenses is the same as that used in prior
reviews, and that the Department has verified this methodology.
Asocolflores also states that only one of the group's members amortizes
preproduction costs while the rest of the group's members expense their
preproduction costs.
Finally, Asocolflores states that the FTC's concerns that all costs
have not been properly allocated are mistaken and that the FTC has
misread the questionnaire responses. The Department has conducted
verification of Colombianas' cost and found that all were correctly
reported.
Department's Position: See our response to Comment 1, above, with
regard to our handling of the issue of bouquets in this review.
We agree with Colombianas' reporting of cuttings revenue as part of
cull revenue. Expenses related to cuttings production are included in
Colombianas' constructed value; hence, an offset for revenue generated
from the sales of these cuttings if appropriate.
We agree with Colombianas' expensing material costs based on a
weighted-average actual per unit cost because these costs are
calculated on an actual cost basis, which requires no variance
adjustment. See Flores Colombianas' Verification Report at 7 (October
25, 1993).
We agree with respondent with regard to Colombianas' amortization
of its preproduction costs for this review. The FTC misinterprets the
statement from our verification report concerning the amortization of
preproduction costs to mean all Colombianas group members. This
statement refers to Flores Colombianas Ltda. and Agrosuba Ltda.
Jardines de los Andes, another member of the Colombianas group, does
amortize its preproduction costs. The Department's verification report
states that ``no preproduction costs are separately reported in the
group's response because all costs are expensed in the month that the
activity takes place.'' See Flores Colombianas' Verification Report, at
7 (October 25, 1993). We verified the group's preproduction expense
methodology and found no discrepancies. Furthermore, Flores Colombianas
Group's preproduction cost reporting methodology in this administrative
review was clearly consistent with that reported in previous
administrative reviews.
Finally, during our verification, we carefully reviewed
Colombianas' source documents and accounting records, and we are
satisfied that Colombianas captured all costs.
Other Company-Specific Comments
Comment 16: The FTC argues that Flores De Suba (Suba) has
understated its U.S. sales in response to the questionnaire. First, the
FTC claims that Suba has not reported flowers sold to the United States
as components of bouquets. Second, the FTC asserts that Suba has sold
its flowers to other Colombian exporters that have lower cash deposit
rates. The FTC claims that Suba lists these flowers as third country
sales, though it knows that the likely ultimate destination of these
flowers would be the United States. Asocolflores responds that, as
argued above, the criticism regarding bouquets is invalid. Asocolflores
claims that there is no evidence that Suba knew or had reason to know
that flowers sold to other producers would be sold in the United
States. Furthermore, Suba does not have a ``practice'' of selling to
other exporters, but only does so occasionally.
Department's Position: See our response to Comment 1 with regard to
our handling of the issue of bouquets in this review.
Second, Suba has always acknowledged that it has had sales of some
export quality flowers to other Colombian flower exporters. However,
Suba knows only that these flowers are destined for export, not
specifically for the United States market. See Flores de Suba
Questionnaire Response, at 1 (May 1, 1992). There is no evidence that
the company has understated its U.S. sales in response to the
Department's questionnaire.
Comment 17: The FTC asserts that Suba has included proceeds from
the sales of excess wood and plastic as cull revenue. The FTC requests
that the Department confirm that Suba has offset costs attributable to
packing, and not total costs, in its constructed value calculation.
Asocolflores responds that the wood and plastic in question was for
use in constructing greenhouses, and that this has been certified by
the Department. Because greenhouses are used in the production of
flowers, Asocolflores maintains that the Department correctly
considered wood and plastic expenses to be an offset to total costs.
Department's Position: Suba stated in its response to the
Department's questionnaires that its sales of excess wood and plastic
were included in its cull revenue. Because we verified that these
materials are used in general construction of greenhouses, we agree
with respondent that these costs should be taken as an offset to total
costs.
Comment 18: The FTC notes that Santana Flowers Group (Santana)
sells some of its flowers under several separate brand names. The FTC
requests that the Department inform Customs of all brand names under
which Santana flowers are sold to ensure that antidumping duties are
properly collected.
Asocolflores responds that brand names have nothing to do with the
way in which flowers enter the United States. Customs' forms ask for
the producer of merchandise, and Santana has reported itself as the
producer.
Department's Position: We agree with Asocolflores that the use of
brand names does not affect the assessment of antidumping duties on
covered entries. Customs relies on information relating to the identity
of the producer or exporter of this merchandise when liquidating
entries according to our instructions.
Comment 19: The FTC claims that Santana has failed to support its
calculation of the number of days between shipment and payment for the
purpose of computing credit expenses on export sales prices. The FTC
asks that the Department use the highest reported number of days
between shipment and payment as BIA.
Asocolflores responds that Santana reported the appropriate number
of days, but when asked by the Department at verification, Santana
could not find the worksheet that it used to determine that number.
Santana decided not to recalculate its credit expenses. Asocolflores
maintains that Santana should not be penalized for this because the
decision to report the higher number of days is to its disadvantage as
it increases the amount of credit expenses applicable to U.S. sales.
Department's Position: We verified that the number of days between
shipment and payment was less than that reported by Santana for its
U.S. sales. The scenario described by Asocolflores is accurate. Santana
chose not to recalculate its credit expenses, which would have
increased USP and therefore been more favorable to Santana. As a
result, we used Santana's overstated credit expense, which lowers USP
and raises Santana's dumping margin, as originally reported in its
response. See Santana Flowers Group Verification Report at 10 (October
13, 1993).
Comment 20: The FTC asserts that some of the data supplied by
Santana is inaccurate. First, the FTC claims that Santana did not
report flowers sold in bouquets. Second, because Santana has not
reported royalty costs by flower type, the Department should use the
highest reported royalty expense for each flower type as BIA. Finally,
the FTC argues that the costs for destruction, spraying, and
incineration, which were not reported by Santana, constitute a regular
selling expense for the producer. The FTC requests that the Department
confirm that Santana has reduced its U.S. price accordingly.
Asocolflores argues that the idea that different flower types will
have different levels of royalties is mere speculation and not backed
by evidence. Asocolflores notes that the royalties reported by Santana
were verified by the Department, and the costs for destruction,
spraying, and incineration were in fact reported in Table 1, Column AA
of Santana's response.
Department's Position: See our response to Comment 1, above, with
regard to our handling of the issue of bouquets in this review. Also,
Santana did in fact properly report costs for destruction, spraying,
and incineration in its response. We determined that Santana's royalty
reporting methodology is acceptable.
Comment 21: The FTC asserts that some of the data supplied by
Cultivos Miramonte (Miramonte) is inaccurate. First, the FTC claims
that Miramonte may have routed subject flowers through a related firm,
and asks that the Department confirm whether or not such routing took
place. Second, Miramonte claimed bank fees for the conversion of U.S.
dollars to Colombian pesos as indirect selling expenses. The FTC argues
that because such payments directly correspond to a sale of subject
merchandise, thee fees should be treated as direct selling expenses.
Third, Miramonte has treated its Colombia Flower Council fees as
``other expenses,'' and the FTC asks that the Department ensure that
these fees are treated as U.S. selling expenses. Finally, the FTC is
concerned that Miramonte may have included the sales of cuttings in the
cull revenue as an offset to constructed value, and asks that the
Department ensure that this is not the case.
Asocolflores responds that Miramonte sold only cuttings to a
related firm, and that because Miramonte has a zero cash deposit rate,
there was no need to avoid payment of deposit rates. Second, because
Miramonte receives payment in lump sums, conversion fees cannot be tied
to any specific sales, and thus are correctly reported as indirect
selling expenses. Third, Miramonte's Colombia Flower Council fees were
reported in Table 1, Column AA. Last, Asocolflores characterizes the
FTC's assertion that Miramonte may have included the sale of cuttings
in the cull revenue as speculation, and maintains that the Department
has verified otherwise.
Department's Position: We agree with Asocolflores regarding the
FTC's allegation that Miramonte sold covered flowers to the United
States through a related firm. We found no evidence at verification to
contradict Miramonte's claim that only cuttings were sold to its
related firm. Second, because bank fees are paid in lump sums and do
not necessarily correspond to the sales made in a particular month, we
have treated them as indirect selling expenses. Third, although these
fees are reported under ``other expenses,'' this item is combined with
U.S. selling expenses and both items are subtracted from U.S. price and
subject to offset. Finally, we disagree with petitioner that Miramonte
included in its cull revenue the sale of cuttings. We found no evidence
at verification to support petition's claim.
Comment 22: The FTC requests that the Department reject Flores
Cajibio's (Cajibio) allocation methodology for general and
administrative expenses. The FTC claims that Cajibio reported these as
indirect sales expenses by surveying the time that administrative
personnel spent on export sales for one week. The FTC notes that the
month in which the week occurred could affect the amount of time
attributable to sales activities. The FTC also wonders how Cajibio
could assume that its administrative staff spent only 20 percent of its
time on activities related to U.S. export sales when the U.S. market
accounts for a large percentage of Cajibio's sales for all flowers. The
FTC argues that the Department should assume that all general and
administrative expenses were U.S. selling expenses as BIA.
Asocolflores responds that because there are a number of
administrative and management personnel who are not involved with
selling, it is not unreasonable for a firm to have only 20 percent of
administrative personnel engaged in this activity.
Department's Position: We agree with the FTC that Cajibio failed to
established that its allocation methodology for quantifying indirect
selling expenses was representative of how these costs related to sales
activities during the entire POR. Because Cajibio indicates in its
response that all administrative personnel spent time in communications
for U.S. sales, we have classified all general and administrative
expenses incurred in Colombia and attributable to U.S. sales as
indirect selling expenses.
Comment 23: The FTC asserts that Cajibio deducted air freight
expenses from its ``production expense,'' claiming their air freight is
paid for by the importer in the United States. The FTC claims that it
is not clear that air freight has been included in Cajibio's response,
whether paid for by Cajibio or the importer. The FTC argues that the
Department should use the highest reported air freight expenses as BIA.
Asocolflores responds that these data were reported in Table 1,
Column AF, and that it was correctly excluded from production expenses.
Department's Position: We agree with Asocolflores that Cajibio
accounted for air freight expenses under ``other charges'' of Table 1
of its May 7, 1992, response.
Comment 24: The FTC asserts that Cajibio claims to post all
expenses to the record as they occur, and not to amortize them over the
useful life of the product, yet in its supplemental response Cajibio
indicated that it depreciated all its assets based on the useful life
of each product taking into account the purchase value of the asset.
The FTC argues that as it is unclear how Cajibio accounted for its
assets with a useful life of over one year, the Department should use
the highest reported depreciation costs as BIA.
Asocolflores responds that amortization is performed on expenses
and that depreciation is performed on assets; therefore, there is no
contradiction here.
Department's Position: We have determined that there is no
inconsistency in Cajibio's decision not to amortize certain expenses
and to depreciate its assets, because amortization of expenses applies
to intangible assets and deferred charges, and depreciation applies to
fixed assets. Therefore, Cajibio's treatment of amortization expenses
has nothing to do with depreciation.
Comment 25: The FTC claims that Cajibio has not explained how it
distinguished costs directly attributable to open field grown yucca
plants from those attributable to plants grown in greenhouses.
Furthermore, according to the FTC, Cajibio claims not to keep records
of the amounts of fertilizer used, and conducted a two-week study to
make a determination of fertilizer consumption. The FTC asserts that
this study did not account for the stage of production or the growing
seasons, and argues that because the study is not representative, the
Department should instead use relative area under cultivation to
reallocate those costs.
Asocolflores responds that most producers are able to identify
those materials used only in the production of one type of product,
that Cajibio used its best efforts to determine the allocation of
fertilizer, and that, therefore, the FTC's allegations are unfounded.
Department's Position: The evidence on record from Cajibio's
responses indicates that the firm, for the most part, kept product-
specific cost records. However, with respect to certain costs such as
fertilizer expenses, Cajibio had to use its best estimates based on
work surveys to quantify the expense in questions. Based on our
analysis of the factual information in Cajibio's responses, including
the amount of land devoted to open field yucca production and the
number of flower beds devoted to production of various types of
flowers, we find Cajibio's estimates to be reasonable.
Comment 26: The FTC argues that the Department should recalculate
Cajibio's packing and box expenses for the POR, as Cajibio's figures
may be inaccurate. First, Cajibio reported that it had a ``negative
cost of packing'' in some months because it used the boxes before the
POR but accounted for the expense during the POR. The FTC argues that
if this is so, the cost of packing should be zero or equal to the
amount of expenses incurred during the POR. Second, Cajibio should not
be allowed to reduce box expenses by the amount of box charges
collected by its related consignee because the consignee also sells
Ecuadorian flowers. Third, Cajibio should not be allowed to make an
expense adjustment for boxes that were later sold to Ecuador, and thus
``do not belong to Flores Cajibio.'' Finally, the FTC claims that
Cajibio calculates its packing labor costs by multiplying an average
labor cost by two to account for the fact that they have two packers,
and argues that Cajibio should simply use the actual salaries of the
two workers.
Asocolflores responds that the apparent anomaly of negative packing
expenses in certain months is a result of the use of actual monthly
expenses. Second, Cajibio did not reduce box expenses, it included the
charges in Table 1, Column I of its May 7, 1992, response. Third, boxes
shipped to Ecuador are not a part of the cost incurred on shipping
flowers to the United States, so the costs of these boxes were not
included. Finally, Asocolflores argues that the FTC's assumption that
Cajibio employed the same two workers in packing for the entire review
period is not the case, and because all labor costs not included in
packing are included in direct production costs, there is no
distortion.
Department's Position: Cajibio did report negative packing totals
for certain months in Table 4C of its May 7, 1992, response. However,
in this same response, Cajibio recalculated packing expenses by using a
weighted-average per unit packing charge based on total packing charges
during the POR and these final figures were used for comparison
purposes.
We find that Cajibio properly accounted for its box charges and was
correct in reporting only expenses that were incurred on U.S. sales.
Finally, we agree with Asocolflores that using an average per worker
salary to calculate packing labor is reasonable because the workers
assigned to packing are rotated.
Comment 27: The FTC asks that the Department reallocate reported
air freight costs for Flores Aguila Ltd. (Aguila) because Aguila
allocated the costs according to the number of boxes shipped, not the
number of boxes sold, as should have been done.
Asocolflores responds that as long as total air freight costs are
reported, how they are allocated does not matter. See Comment 10,
above.
Department's Position: We disagree with the FTC. As Flores Aguila
explained in its response, air freight charges are incurred on flowers
shipped. Therefore, Flores Aguila allocated its air freight charges
among flower types based on relative quantities shipped in order to
derive the total air freight expenses for each flower type. See Flores
Aguila section C Questionnaire Response, at 6 (April 23, 1992), and
Flores Aguila Supplemental section C Response (October 3, 1993). Flores
Aguila then reported these air freight costs in its U.S. sales
worksheets. These were divided by flowers sold and deducted from U.S.
price. Thus, we accepted Flores Aguila's methodology.
Comment 28: The FTC argues that the Department should not accept
some of the data Aguila supplied in response to the questionnaire.
First, the cost data allocated on the basis of cultivation area should
be rejected, given several inconsistencies, and re-allocated according
to relative cultivation area. Second, because Aguila appears to have
failed to report certain costs, the highest reported cost of materials
should be used as BIA. Finally, because Aguila failed to specify the
type of packing materials used for sales and failed to explain its
allocation methodology for these costs, the Department should either
require that Aguila supply this information or resort to the highest
reported packing costs as BIA.
Asocolflores responds that it is impossible for a firm to account
separately for the thousands of purchases of materials made during the
POR and that some summarization is necessary. Asocolflores also claims
that documentation of this information is usually provided at
verification and not in a questionnaire response.
Department's Position: The FTC's allegations are speculative in
nature and do not establish inconsistency in Aguila's response. For
example, the FTC notes a discrepancy between the ratio of area in
hectares under cultivation for each flower type and the ratio of the
number of flower beds planted for each flower type. These ratios are
only slightly different. More significantly, there is no reason that
the area under cultivation for each flower type as measured in hectares
should be exactly the same as the area when measured according to the
number of flower beds because the size of the flower beds may vary by
flower type.
With respect to Aguila's cost of materials, the information
submitted conforms to the format of the questionnaire that the
Department issued to all respondents in this review. Although Aguila
does summarize all costs found within each category of expense found in
the questionnaire format, there is no evidence on the record that
Aguila failed to report all costs.
Finally, with respect to packing materials, our questionnaire did
not require a detailed listing of all packing materials used by Aguila.
Instead, Aguila was instructed to report the total of all costs of
packing or otherwise preparing the merchandise for shipment to the
United States customer. Because Aguila followed the format of the
questionnaire with respect to packing costs, we find no reason to
reject the firm's packing costs.
Comment 29: The FTC asserts that Daflor has failed to describe its
material or labor costs, failed to provide worksheets illustrating the
allocation methodologies used to report these costs, and failed to
support the indirect selling expenses reported. The FTC argues that
absent further clarification, the Department should use the highest
reported costs and indirect selling expenses as BIA.
Asocolflores responds that not all companies distinguish among all
costs incurred, and that total itemization is not required by the
Department. Furthermore, Asocolflores maintains that most Colombian
producers have relatively low indirect selling expenses because sales
are usually handled for them by their importer.
Department's Position: Daflor's initial questionnaire response was
deficient in that it did not identify the components of its material
and labor costs, did not explain its allocation methodology, and did
not identify the components of its indirect selling expenses. However,
in the supplemental response of October 4, 1993, Daflor corrected these
deficiencies. Therefore, we have not resorted to BIA with respect to
Daflor.
In addition, because Daflor has related and unrelated importers in
the United States that take care of all of its sales-related
activities, it is reasonable for Daflor's indirect selling expenses
incurred in Colombia to be relatively small.
Comment 30: The FTC argues that the Department should reject some
of the data supplied by the Soagro Group (Soagro). First, Soagro
purchases cuttings from another related company, but has not
established that the prices used are at arm's-length or greater than
arm's-length pursuant to 19 U.S.C. 1677b(e)(2) & (3). In this case, the
Department should use the highest reported material costs as BIA.
Second, Soagro imports some mother plants from Holland, yet does not
report any royalty expenses. The FTC argues that the Department should
impute an amount for royalty expenses as BIA. Finally, Soagro's crop
adjustment methodology may be resulting in the improper elimination of
preproduction costs during the POR. The FTC asks that the Department
expense all preproduction costs in the POR or use BIA.
Asocolflores responds that the first two points are speculation on
the part of the FTC, and that there is no evidence to support them. As
for preproduction costs, Asocolflores explains that the value of the
increase in cultivated area is in effect amortized and distributed to
the next year, but it is also included in the material, labor, and
indirect costs reported in the next year's responses. While this is
different from the methodology of other companies, Asocolflores
observes that it was used by Soagro in the previous review.
Department's Position: We agree with Asocolflores. Because Soagro
purchases cuttings from only a related party, it was not possible to
conduct an arm's-length test based on purchases made by Soagro.
However, we compared the price of Soagro's related party purchases of
cuttings to other flower companies' unrelated purchases of cuttings. We
found that Soagro's prices were on average equal or higher. Although
Soagro purchases mother plants from Holland and does not report any
royalty expenses, there is no evidence that Soagro incurs royalty
expenses. As for the preproduction costs, the value of the increase in
cultivated area is in effect amortized and distributed to the POR and
to following years. We have accepted this methodology in previous
reviews as reasonable.
Comment 31: The FTC claims that Flores Del Campo Ltda. (Campo) has
included in its total U.S. shipments value the quantity and value of
flowers that are ultimately shipped to Canada through Miami. The FTC
argues that this may distort the margin percentage and that Canadian
sales should be excluded.
Asocolflores responds that because Customs cannot distinguish
between those flowers coming into Miami that are destined for Canada
and those destined for the United States, it assesses a cash deposit
and, ultimately, a duty on them all. Asocolflores argues that the
Department should take this into account by including the volume and
value of Canadian sales when calculating Campo's per unit assessment
rate. If this is not done, Asocolflores asserts that the correct amount
of duties will not be collected.
Department's Position: With respect to consignment sales made by
Flores del Campo to its U.S. agent, certain flowers were entered into
the United States but ultimately sold in Canada. Because there were no
U.S. sales prices for these sales, we calculated Flores del Campo's
antidumping margin based only on entries of subject flowers from Flores
del Campo that were entered and sold in the United States. Flores del
Campo's deposit rate is based only on U.S. sales because at the time of
entry, we do not know which, if any, flowers will be sold in Canada.
That is, the cash deposit rate is equal to the total dumping duties due
on sales in the United States divided by only the sales value of
flowers sold in the United States. However, because Flores del Campo's
antidumping duty assessment rate will be applied to entries of flowers
sold in both Canada and the United States, and because we know which
flowers were sold in Canada during the POR, we have factored into the
assessment rate Canadian sales totals to prevent over-collection of
antidumping duties. That is, the assessment rate is equal to the total
dumping duties due on U.S. sales divided by all flowers entered into
the United States, including those ultimately sold in Canada.
Comment 32: The FTC claims that Campo reported a total cull revenue
for the POR that was different from that reported in its financial
statements for 1990 and 1991. The FTC argues that the Department should
reject Campo's offset to cost of production for cull revenue because of
this discrepancy.
Asocolflores states that the Department has verified that the
amount reported by Campo is correct.
Department's Position: We agree with Asocolflores. Although we find
that there is a difference between the amount of cull revenue reported
in the financial statements and the amount reported in Campo's
response, during verification we inspected Campo's cull revenue records
and found Campo's response to be accurate. See Flores Del Campo
Verification Report (October 17, 1993).
Comment 33: The FTC argues that the Department should not accept
data from The Bochica Group unless it has been specifically verified.
According to the FTC, the Department found Bochica/Floral's response to
have many errors, and while those may have been corrected, the FTC
questions the accuracy of the rest of the data.
Bochica/Floral responds that the FTC has exaggerated the extent of
the errors found in the response. Many of the errors cited were not
errors at all, and those that were errors were very small, often
amounting to a variance of less than one percent. Bochica/Floral notes
that the Department's verification report makes it clear that
Department officials regarded the response to be accurate.
Department's Position: We agree with Bochica/Floral. We thoroughly
verified the company's response and found its data to be accurate. See
Bochica/Floral Verification Report (October 8, 1993). The discrepancies
found at verification were corrected on site and in subsequent
submissions made by Bochica/Floral. Because the verification process
involves spot-checking data submitted in the response, and because we
found the verified data to be essentially accurate, we have no reason
to question the accuracy of the rest of the data submitted.
Comment 34: The FTC asserts that Bochica/Floral did not report all
applicable royalty expenses. The FTC asks that the Department reject
Bochica/Floral's figures and instead use the highest reported royalty
expenses as BIA.
Department's Position: We disagree. At verification, we determined
that Bochica/Floral accurately reported royalty expenses.
Comment 35: The FTC contends that Bochica/Floral may not have
included expenses related to its Meristem Laboratory in its response.
It is also unclear to the FTC whether all expenses for cuttings have
been properly included. In addition, Bochica/Floral claimed to have no
R&D expenses during the POR, but that any research ``skills'' involved
were included in ``production.'' The FTC requests that the Department
confirm that the above expenses were included in Bochica's response.
Bochica/Floral responds that Meristem did not produce cuttings in
commercial quantities until after the POR, and that expenses associated
with start-up operations during the POR were included in the direct
material costs.
Department's Position: We verified that the Meristem laboratory did
not produce cuttings in commercial quantities until after the POR and
that the expenses associated with the start-up operations are included
in the direct material costs. See Memorandum to File dated March 14,
1994.
Comment 36: The FTC requests that the Department reject Floralex's
claim that interest income should be used to reduce interest expenses,
as Floralex has not demonstrated that the short-term interest income is
related to flower production.
Floralex responds that it is in the business of producing flowers,
and that it is thus reasonable to assume that short-term interest
income is related to flower production. Moreover, the Department never
asked for more details about this income, nor did it bother to verify
the response, and it would be unfair to penalize Floralex for failing
to provide information it was not asked to supply.
Department's Position: Floralex reported its interest income as
revenue directly related to flower production. There is no evidence on
the record, nor has petitioner provided any, contradicting Floralex's
reported interest income. Therefore, we have accepted Floralex's claim
as stated in its response and have adjusted the company's short-term
interest expenses by its interest income.
Comment 37: Petitioner requests that the Department resolve a
number of inconsistencies in Flores Marandua's (Marandua) questionnaire
response. Petitioner maintains that Marandua has not reported freight
expense from the farm to the airport in its U.S. sales listing, nor has
it reported direct or indirect selling expenses, though it sells
through a related importer. Petitioner further states that Marandua has
not reported all of its cultivation costs, and that it has not itemized
material, labor or indirect costs. Petitioner also argues that Marandua
has not explained why it accounts for a negative ``last period
amortization cost'' for every month during the review period.
Department's Position: Marandua did not incur an inland freight
(from farm to airport) expense because an independent cargo agent
commissioned by the air carrier picked up Marandua's flowers and
delivered them to the airport at no cost to Marandua. Marandua's U.S.
selling expenses are incurred by its related importer in Miami, and
these expenses are captured by the commission expense reported by
Marandua. Marandua's reported material, labor, and indirect costs were
acceptable. Finally, what the petitioner refers to as ``negative''
amortization cost are not negative costs at all, but additions to cost
that generally pertain to overhead.
Comment 38: The FTC asserts that the Department's analysis
memorandum was incorrect in that it indicated that an adjusted peso
borrowing rate was used to calculate credit expenses for Flores Arco
Iris (Arco Iris). The FTC further states that the actual rate used by
the Department was the U.S. prime rate during the POR.
Department's Position: We agree. Because Arco Iris had no dollar or
peso short-term borrowings during the POR, we used the U.S. prime rate
to calculate credit expenses for the firm.
Comment 39: The FTC claims that the Department should reject Flores
Tomaine's and Becerra Castellanos's questionnaire responses as
materially deficient because neither company clearly stated in their
responses that they sold subject flowers to the Flores Colombians Group
during the POR. The FTC claims that the Department should therefore
apply a BIA rate to these companies.
Department's Position: We disagree. Becerra Castellanos reported
these sales as third country sales, which is not inconsistent with
Colombianas' claim that its suppliers do not have foreknowledge as to
which export market their flowers are sent. Although Flores Tomaine did
not report these sales in its response, we do not explicitly require a
detailed reporting to third country sales. Because Tomaine did not have
foreknowledge that this merchandise was destined for sale to the United
States, and foreign market value is based upon CV, not home market or
third country sales, the issue of Tomaine's reporting these sales is
moot. In addition, the average prices of Flores Tomaine's and Becerra
Castellanos's carnation sales to Colombianas were above their CV. For
these reasons we conclude that BIA is not appropriate in this case.
General Issues Raised by Respondents
Comment 40: Asocolflores protests the Department's assignment of
72.35 percent as the BIA rates for Flores Mountgar (Mountgar) and
Flores Estrella (Estrella). Asocolflores claims that neither firm was
able to respond to the Department's questionnaire for the POR (1990-
1991). Mountgar had been liquidated, and Estrella was on the verge of
liquidation at the time they received the Department's questionnaire.
Though not actually out of business, Estrella had no means to reply to
the request as it had no money to obtain legal or accounting help.
Asocolflores argues that, in accordance with the Court of Appeals
for the Federal Circuit's decision on Allied-Signal Aerospace v. United
States, 996 F.2d. 1185, 1193 (Fed. Cir. 1993), the Department should
not have used first-tier BIA, i.e., the highest rate found for any
company in any prior review or the current review, because neither
company was able to respond. Instead, the Department should have used
the second tier, i.e., either the highest rate ever applied to the
company in question or the highest rate applied to any company in the
current review.
Asocolflores argues that using the 72.35 BIA rate for the two
companies as components of the sample group rate unfairly penalizes the
other companies in the sample. Asocolflores asserts that the 72.35 rate
was not even calculated by the Department, but was a figure cited by
the petitioner in the original petition, which included flower types
not included in the antidumping duty order. Because neither company was
able to respond, and because the 72.35 rate was not a figure calculated
by the Department, Asocolflores maintains that it should be discarded.
Asocolflores suggests assigning the BIA rate for both companies on the
basis of the highest rate calculated for a company in the current
review, in this case, 7.56 percent.
The FTC responds that the BIA rate used in the preliminary results
was appropriate. The FTC asserts that 19 U.S.C. 1677e(b) specifically
provides for use of the petition's rate as BIA, that the Department's
standard practice is to apply a first-tier BIA rate to companies that
do not respond to the questionnaire, and that this choice of BIA is
consistent with its choice in the original investigation. The FTC
claims that Mountgar and Estrella have failed to support their claims
of bankruptcy, and that, in fact, both companies still exist according
to readily available information from public sources. The FTC contents
that both companies apparently continued to ship subject flowers during
the 1992-1993 POR. Not only did both companies not respond to the
Department's questionnaire, the FTC observes that neither reported
experiencing difficulty until after the Department chose them for
inclusion in the sample group. Finally, the FTC rejects the argument
that Allied Signal v. United States applies in this case, as that case
was one of a respondent that was unable to provide a complete response
but offered what information it could provide, whereas neither Mountgar
nor Estrella made an attempt to provide any information.
The FTC suggests that the Department use the 72.35 percent BIA
rate, or, if it must apply the second tier, that it use the highest
rate ever applicable to the firm from either the investigation or any
prior review, and not the highest rate applicable to another firm in
the current review. Because Mountgar was assigned a rate of 43.02
percent during the third review, the FTC asserts that this rate should
be applied if the Department relies on second-tier BIA.
Department's Position: We have reconsidered the use of first-tier
BIA for Mountgar and Estrella. In the preliminary results of review, we
solicited comments on our proposal concerning the appropriate BIA rate
to apply to companies that exported during the POR but that later went
out of business. Based on our proposal and the comments received, we
sent questionnaires to Asocolflores and the Colombian Government Trade
Bureau regarding the status of the two companies. Asocolflores
responded with a sworn declaration from its international manager.
With respect to Mountgar, Asocolflores stated that it was unable to
contact any former representatives of the company, that the company did
not resume operations after October 1990, that the company's plants
(i.e., flowers) were left unattended or destroyed, that the land owned
by the company and the greenhouses on that land were sold to a group of
investors unrelated to the former owners of Mountgar, and that the new
owners planted only roses (not subject to the order) in the greenhouses
formerly owned by Mountgar. Asocolflores also confirmed with the
Colombian Customs Agency, DIAN, that Mountgar registered no exports of
flowers to the United States or any other country after 1990. See
``Declaration of Maria Isabel Patino'' submitted in a letter to the
Department from counsel for respondent dated March 3, 1994.
The information provided by Asocolflores comports with that
provided by the assistant general manager of Mountgar at an earlier
stage of this administrative review. See ``Declaration of Luis Hernan
Garcia'' submitted in a letter to the Department from counsel to
respondent dated May 7, 1992.
With respect to Estrella, Asocolflores stated that the company went
out of business when its two former owners left Colombia and that
Estrella is currently undergoing certain legal procedures that must be
followed before a company can be officially dissolved. On January 12,
1994, Asocolflores received a communication from the Colombian Circuit
Court confirming that Estrella's assets are being liquidated in a
proceeding called a ``concordato.'' Asocolflores explained that, under
Colombian law, a concordato is an official liquidation procedure, not a
reorganization proceeding, by which a court oversees the final
distribution of the company's assets to its creditors. Because
Asocolflores is a creditor of Estrella, it received the official court
notice. Asocolflores stated that, as a creditor of Estrella, it
understands that there are virtually no assets to distribute and that
Estrella rented, rather than owned, the land on which it produced
flowers. Finally, Asocolflores reported that Colombian Customs (DIAN)
confirmed that Estrella did not register any exports of flowers to the
United States or any other market after 1992. See ``Declaration of
Maria Isabel Patino,'' supra.
This information comports with that provided by Estrella's then
general manager at an earlier stage of this administrative review. See
``Declaration of Augusto Hoyos'' submitted in a letter to the
Department from counsel to respondent dated May 8, 1992. This
declaration indicated that Estrella would file a request for a
``concordato'' on May 12, 1992. In addition, the declaration stated
that Estrella's related importer, Airport Floral, was liquidated in
July 1991, that since 1990 Airport Floral stopped making payments to
Estrella, or made only partial payments, and that as a result Estrella
had to lay off 40 employees.
In choosing an appropriate BIA for these two companies, we focused
on the following factors and how they applied to the two companies at
the time they received our questionnaires (in this case, March 4,
1992): The extent to which the companies continued to operate,
including current production and export levels, the number of persons
employed by the firms, the disposition of the companies' assets, the
relationship of the companies to other exporters continuing in
business, the current legal status of the bankruptcy, liquidation, or
reorganization proceedings, and the potential for reorganization
(including the likelihood that the companies would resume production
and exports).
The record evidence indicates that Flores Mountgar ceased
production and exports well before the end of the POR, that it was in
liquidation proceedings at the time it received the Department's
questionnaire, and that the company's assets were sold to unrelated
parties who subsequently produced merchandise not subject to the order.
According to Asocolflores, under Colombian law, all of the resources of
a company involved in liquidation proceedings must be devoted to
satisfying creditors. Based on this information, we conclude that
Flores Mountgar was incapable of responding to our questionnaire.
With respect to Flores Estrella, the record evidence indicates
that, at the time the company received the Department's questionnaire,
it had not yet entered into liquidation proceedings and that the
company's assets had not yet been disposed of. In fact, a Colombian
court did not issue official notification that the company's assets
were to be liquidated until January 4, 1994--almost two years after the
company received our questionnaire. Although the former general manager
of Estrella reported in May 1992 that the company had to lay off 40
employees, he gave no indication of the number of employees remaining,
nor did he suggest that the remaining employees were monopolized by the
bankruptcy proceedings. Moreover, Colombian Customs indicated that
Flores Estrella ceased exporting only as of the end of 1992, which is
nine months after the company received our questionnaire. This
indicates that Estrella most likely continued to operate at the time it
received the Department's questionnaire.
Based on this information, we cannot conclude that Flores Estrella
was incapable of responding to the questionnaire. Nonetheless, we
recognize that the company was subject to financial and personnel
constraints at that time. In his declaration, then general manager of
Estrella indicated that Estrella requested its U.S. importer to provide
to the Department information regarding U.S. sales. He stated, ``If the
Department so agrees, Flores Estrella would be willing to make an
effort and provide partial information regarding constructed value and
U.S. price according to what I stated above.'' See ``Declaration of
Augusto Hoyos,'' supra.
The record demonstrates that the Department did not respond to this
suggestion and that the Department did not request any additional
information regarding Flores Estrella until February 24, 1994. By this
time, liquidation proceedings with respect to Estrella had already
begun. Thus, in February 1994, Flores Estrella was in circumstances
similar to those of Flores Mountgar in March 1992, and similar to those
of the respondent that was the subject of the CAFC's decision in Allied
Signal, supra, (cooperative BIA to be applied to respondent incapable
of providing complete response but which provided partial response
consistent with company's limited resources).
For these reasons, we have determined that second-tier BIA rates
are appropriate for both companies. Second-tier BIA rates comprise the
higher of (1) the highest rate ever applied to that company from any
prior review or the LTFV investigation, or (2) the highest rate
calculated for any other company in the current review. See Final
Results of Antidumping Duty Administrative Review; Antifriction
Bearings (Other Than Tapered Roller Bearings) and Parts From France, et
al., 57 FR 28379 (June 24, 1992). We are applying a BIA rate of 7.56
percent, the highest rate calculated in this review, to Flores
Estrella. We are applying a BIA rate of 43.02 percent to Flores
Mountgar, the highest rate that this company has received in any
previous review. In reaching this decision, we were not persuaded by
petitioner's claim that Estrella and Mountgar continue to exist as
flower producers and exporters. Petitioner's information is
circumstantial and conjectural. With respect to petitioner's claim that
these firms ``apparently'' continued to ship flowers subject to the
order during the 1992-93 POR, the absence of a statement of no
shipments during either POR is not evidence of sales during the POR.
Comment 41: Asocolflores argues that because Mountgar and Estrella
are no longer in business, they should be excluded from the sample
group for purposes of calculating the sample group rate. Asocolflores
notes that because they are out of business, neither company will be
penalized by the rates, but that all of the other ``innocent''
companies in the sample will be penalized. Asocolflores requests that
the Department exclude the two companies from the sample. If that is
impossible, Asocolflores asks that the Department assign BIA rates at
7.56 percent.
Asocolflores enumerates reasons why Mountgar and Estrella should be
excluded from the sample. First, the sample is required to be
``representative of the transactions under investigation'' (19 U.S.C.
1677f-1(b)), and a BIA rate cannot be considered to be representative.
Second, the use of the BIA rates would violate the Department's
practice of not basing sample, average, or ``all other''-type rates on
BIA information, especially when there are reasons for non-cooperation.
The FTC responds that Mountgar and Estrella should be incorporated
in the sample. The FTC claims that because both companies did not
respond to the questionnaire, it is impossible to know whether 72.35
percent is representative. Furthermore, the FTC asserts that it is not
uncommon for there to be a certain percentage of companies on the verge
of going out of business in any industry, especially when there are
many firms in that industry. Finally, the FTC also contends that there
is precedent and judicial endorsement of the use of BIA rates in
samples.
Department's Position: The inclusion of BIA rates in a sample group
rate cannot per se be prohibited. If it were, we would have to keep
picking companies for a sample until we had only companies that would
submit complete, verifiable responses. This would be administratively
unfeasible because, at the time we chose the sample, we would not know
which companies were willing and able to produce complete responses.
More importantly, to choose in such a selective fashion would
constitute a corruption of the integrity of the original random sample.
Such corruption would violate 19 U.S.C. 1677f-1(b), which, as
respondents point out, requires that a sample be representative.
We disagree with Asocolflores that, because Estrella and Mountgar
are out of business, they should be excluded from the sample group. The
sample group represents the universe of all growers and resellers that
exported to the United States during the POR. Because Estrella and
Mountgar exported during the POR, they are part of that universe.
Regardless of what happened after the POR, nothing can change the fact
that they are, and always will be, part of that universe. In selecting
the sample, we cannot tamper with the population that the sample
represents, nor can we tamper with the randomness of the sample
selected. If we were to pick and choose firms selected at random for
the sample based on qualitative factors, that sample would no longer be
representative.
The selection of BIA and the selection of a sample are entirely
unrelated issues. Respondents have objected to our selection of BIA for
Estrella and Mountgar, and we dealt with their concerns in our response
to Comment 40. Once we determine that appropriate BIA for the two
firms, we cannot accept the proposition that the chosen BIA is suitable
for one purpose but not another. Having reasonably determined the
appropriate BIA for Estrella and Mountgar, having inescapably concluded
that Estrella and Mountgar are part of the sample universe, and having
randomly selected Estrella and Mountgar for the sample group, we
conclude that the BIA rates for the two firms must be included in the
sample group.
We disagree with respondents that the Department has a practice of
not basing sample rates on BIA. In many cases, we have included BIA in
our sample rate calculations. See e.g., Sweaters Wholly or in Chief
Weight of Man-Made Fibers from Hong Kong, Preliminary Results of
Administrative Review of Antidumping Duty Order, 58 FR 63913 (December
3, 1993). With respect to all other rates, while the Department did
have a practice of not including BIA in the all others rates
established in administrative reviews, the all others rate is not
generally established in the LTFV investigation and remains in effect
throughout the life of the proceeding. The all others rate from the
LTFV investigation may include BIA rates.
Comment 42: Asocolflores contends that the Department lacks the
legal authority to sample among companies. Asocolflores claims that the
statute by which the Department claims such authority, section 777A of
the Tariff Act, 19 U.S.C. 1677f-1, limits sampling to instances
involving either ``a significant volume of sales'' or ``a significant
number of adjustments to prices,'' and that it does not extend to
reviews involving a significant number of companies. Asocolflores
further claims that the sampling of companies is not representative of
the transactions being reviewed, and therefore violates the statute and
the intent of Congress.
Asocolflores also contends that sampling without notice and
applying adverse BIA rates to innocent companies violates the due
process clause of the Fifth Amendment to the United States
Constitution. Asocolflores maintains that every importer has a
constitutional right to antidumping duty assessments/cash deposits at
rates and in amounts that reflect their individual levels of dumping.
Asocolflores does not ask that the Department cease sampling by
companies, but rather that it notify companies that sampling will be
conducted and to offer individual analysis to companies that request
it.
The FTC agrees that the Department should not sample companies in
administrative reviews.
Department's Position: We disagree with Asocolflores and the FTC.
Section 777A of the Tariff Act specifically authorizes the Department
to use generally recognized sampling techniques in administrative
reviews. Consistent with the final results of the second review we
determine that the use of sampling techniques did not in any way
preclude Colombian exporters from seeking and obtaining company-
specific rates. See Final Results of Antidumping Duty Administrative
Review: Certain Fresh Cut Flowers from Colombia, 55 FR 20496 (May 17,
1990). Furthermore, an exporter had the choice of (1) requesting a view
and paying duties that reflect the exporter's actual margin of dumping
during the review period, or (2) not requesting a review and risking
duty assessment at a rate calculated on the basis of sample results.
Because this choice rested entirely with the exporter, the risk
associated with sampling was completely avoidable. See also Sweaters
from Hong Kong, supra.
Comment 43: Asocolflores claims that the methodology that the
Department used to calculate the sample group rate was flawed. First,
Asocolflores maintains that the calculation should be weighted by
value, as is done in calculations of antidumping margins for individual
companies. The Department, in calculating the sample group rate, made
the calculation using volume data. Because the Department is
calculating a rate of difference between FMV and U.S. price,
Asocolflores argues that using volume data is inappropriate.
Furthermore, because flowers are not sold by weight, but by stems or
bunches, different flowers sell for different amounts by volume.
Asocolflores also objects to the ``points'' methodology the
Department used to assign weights. First, Asocolflores believes that
the use of points created bias because it used rounded rather than
actual figures. Second, because the points were picked at random before
each company's weights were assigned, Asocolflores views the results as
a random average rate, not a true weighted-average. Finally,
Asocolflores criticizes the Department's excessive reliance on INCOMEX
data, which is incomplete and erroneous, with such errors as
approximation and double counting of companies.
Asocolflores maintains that the Department should calculate an
average sample group margin by weight--averaging the margin found for
each of the sample group companies by shipment value.
The FTC responds that the Department should not weight margins in
the sample by sales value. In the FTC's opinion, a value-based sample
would understate the actual amount of dumping because the more a
company dumps, the less its value of sales will be. Consequently, the
FTC argues that the higher the dumping margin for a company, the less
weight it will be assigned in a value-based sample.
The FTC argues that because the Department has not released
information on how it assigned ``points'' in the sample, it is
difficult to determine whether the Department's methodology is
appropriate. The FTC agrees that the Department may have been wrong to
rely on INCOMEX data, and asks why the Department did not use data from
the Colombian National Department of Statistics, the U.S. Customs
Service, or the Department of Commerce, Bureau of the Census.
The FTC requests that the Department abandon its use of three
strata in choosing companies for the sample and return to using two
strata. The FTC contends that Asocolflores's objection on the grounds
that ``companies with less than 6 percent of the total exports could be
selected to the first stratum, which has over 70 percent of total
exports'' is invalid because where an industry is comprised of many
small firms, a small company may well be representative for use in the
sample. The FTC also asks that the Department not accept objections
from interested parties to firms chosen for the sample after the sample
is chosen. Rather, the FTC maintains that objections should be
entertained only before the sample is chosen.
Department's Position: We agree with the FTC that sampling should
be done on the basis of volume because values can be distorted if they
represent dumped prices.
Asocolflores is incorrect in stating that the Department picked
points at random before each company's weights were assigned. As we
explained in the Sampling section, points were assigned in proportion
to each firm's share of total exports to the United States. Only then
did the number of points relevant to the selected firm go ``into the
hat.'' As for Asocolflores's contention that using rounded numbers
produces a bias, each point represents a quarter of a percentage point
of total exports to the United States. Therefore, if any bias was
created, it was insignificant. Finally, with respect to the INCOMEX
data, it is not unreasonable to rely on data provided by an official
Colombian government agency, and these data were the only information
available at the time we chose the sample.
Comment 44: Asocolflores contends that the ``all others'' cash
deposit rate of 3.10 percent from the LTFV investigation should not
apply in this review. Previously, the rate for all other companies,
i.e., companies that previously shipped but had not been reviewed and
companies that did not ship prior to the date of the Department has
been updating the ``all other'' rate in each review. Asocolflores also
claims that entries from unreviewed ``all other'' companies should be
liquidated at the cash deposit rate paid at the time of entry.
The FTC responds that the 3.10 rate is the proper ``all other''
rate because it was the rate established in the original investigation.
The FTC agrees that the rate cannot be changed from one review to
another, but also agrees with the Department's decision to return to
the original rate. Because the ``all other'' rate cannot be changed, it
is logical to apply to unknown firms, for cash deposit purposes, the
initially established rate, not the rate from the previous review.
Department's Position: In Floral Trade Council v. United States
(822 F. Supp. 771), the Court of International Trade stated that 19 CFR
353.22(e) ``prevents abandonment of LTFV `all other' rates for `old
shippers' which have never been investigated or reviewed.'' In the LTFV
investigation of this case, the Department determined the ``all other''
rate to be 4.40 percent, but this was later modified to 3.10 percent in
accordance with the remand ordered by the Court of International Trade
in Asociacion Colombiana de Exportadores de Flores v. United States,
717 F. Supp. 834 (June 29, 1989), Remand Aff'd, August 8, 1989.
The 3.10 percent all others rate will take effect prospectively
only with the date of publication of this notice in the Federal
Register. Any entries from unreviewed companies through the date of
publication of this notice will be liquidated at the cash deposit rate
in effect at the time of entry.
Comment 45: Asocolflores argues that the Department's practice of
comparing annual constructed values to monthly average U.S. prices to
determine whether dumping has occurred unfairly penalizes foreign
producers. Flower prices are driven by demand, which is highly
seasonal. This can result in price fluctuations of up to 250 percent
between peak and off-peak months. Furthermore, flowers are perishable
and cannot be stored or diverted. This being the case, producers have
to look to make their profits during seasonal peaks, because there will
be months where flower prices will be below production costs.
Asocolflores maintains that this is standard business practice for
the industry and contends that the Department has recognized this in
its ``50 percent rule.'' When home market sales prices of agricultural
products are used to determine FMV, the Department has allowed up to 50
percent below cost sales. In the past, the Department has applied this
rule over the entire POR, and not on a monthly basis.
Asocolflores dismisses the Department's reason for using the
monthly average U.S. prices, which is to avoid having dumping masked by
allowing high prices in peak months to offset low prices in other
months. This logic ignores the realities of the flower market, and
ignores the rationale behind the 50 percent rule. Asocolflores suggests
that the Department compare annual constructed value to annual average
U.S. prices to determine whether dumping has occurred, or, at a
minimum, implement its 50-percent rule if it is concerned about masked
dumping.
The FTC responds that the use of average monthly prices is
consistent with Department precedent and has been affirmed in the
courts. The FTC notes that the Department has reviewed this issue in
the original investigation and in all subsequent reviews, and has found
that the use of average monthly prices best strikes a balance between
the perishability and seasonality issues on the one hand and the
concerns of masked dumping on the other. The Court of International
Trade has upheld the Department's decision in this matter in all
challenges.
According to the FTC, the Department's goal was to use as short a
period as possible for averaging, and yet to account for perishability
and seasonality. Though perishability could be accounted for by prices
averaged on a weekly basis, monthly averaged prices would account for
seasonality. Monthly averaged prices also had the advantage that actual
price information for flower sales is generally only available on a
monthly basis.
The FTC contends that Asocolflores is merely repeating arguments
that have been rejected in previous reviews, and has introduced no new
data or arguments that would justify a change in Department policy on
the matter. In light of this, the FTC urges the Department to continue
to use the methodology adopted in the original investigation and
subsequent reviews.
Department's Position: We agree with petitioner. We believe that
monthly averaged U.S. prices adequately account for the characteristics
of the flower industry, without overcompensating. Respondents'
assertion that our use of monthly averaged U.S. prices conflicts with
our use of a modified cost test (as applied to agricultural products)
misconstrues the statute and theory underlying the exclusion of below-
cost sales from foreign market value. The statute makes allowances for
below-cost sales only when the Department is relying upon home market
and third country sales. These standards are intended to guide the
Department in determining when to consider home market and third
country sales and when to disregard them. Once a decision is made to
use CV, such sales are irrelevant to a determination of foreign market
value. Nothing in the statute, the legislative history, or the
Department's practice (including Final Determination of Sales of Not
Less Than Fair Value: Fresh Winter Vegetables From Mexico, 45 FR 20512
(March 24, 1980)) supports the broad notion of annual averaged U.S.
prices. Annual averaging would allow exporters to dump for entire
months when demand is sluggish, so long as they recoup their losses
during months of high demand. The Department is not required to measure
whether profits are made upon an annual basis, especially not in an
administrative review, when margins are normally determined on a sale-
by-sale basis (not annually).
Contrary to respondents' assertions, the Department's approach is
broad enough to eliminate, to a reasonable degree, a finding of
technical dumping, without overcompensating for the characteristics of
the flower industry. The Department's use of monthly averaging ensures
that an entire range of distress and non-distress sales prices are
covered, and is consistent with its established practice in this case,
which has been upheld by the Court of International Trade. See Floral
Trade Council v. United States, 704 F. Supp. 237 (CIT 1988), and Accord
Asociacion Colombiana de Exportadores de Flores v. United States, 704
F. Supp. 1114 (CIT 1989).
Company-Specific Comments
Comment 46: Asocolflores asserts that the Department should not
have collapsed the Florex Group and Santa Helena into a single entity
for the purpose of calculating a single weighted-average percent margin
because the two entities are separate and operate independently.
Asocolflores argues that the Florex Group and Santa Helena does not
meet any of the Department's four criteria for collapsing two entities.
Department's Position: We disagree with Asocolflores. In
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
From France, et al., 57 FR 28393 (June 24, 1992), the Department stated
that ``where the type and degree of relationship is so significant that
we find a strong possibility of price manipulation,'' it is the
Department's practice to collapse related parties. For purposes of our
analysis we have used the methodology most recently applied in Carbon
Steel from Japan (1993) and recently upheld in another case by the
Court of International Trade in Nihon Cement Co., Ltd., et al. v.
United States and The Ad Hoc Committee of Southern California Producers
of Gray Portland Cement, et al., Slip Op. 93-80 (CIT 1993):
* * * the Department considered the following questions in a
decision whether to collapse related parties: (1) Do the related
manufacturers have interlocking boards of directors; (2) do they
have similar production processes, facilities or equipment so as to
facilitate shifting of production between facilities; (3) do they
operate as separate and distinct entities; (4) do they share
marketing and sales information or offices; and (5) are they
involved in the pricing or production decision of the other entity?
In Carbon Steel from Japan, the Department also stated that it
``need not show all of these factors exist in order to collapse
sufficiently related to create the possibility of price manipulation.''
See Final Determinations of Sales at Less than Fair Value: Certain Hot-
Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel
Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products
from Japan, 58 FR 37154, 37158-37159 (July 9, 1993).
We have determined that Santa Helena and the Florex Group meet
three out of the five criteria relating to the above collapsing test.
For further details, please see the Department's Collapsing Related
Parties Memo to the file dated March 11, 1994.
In addition, we have collapsed the Santa Helena and Florex Group
data by combining the constructed value information for the same flower
types and combining the sales information for the same flower types
sold through the same importer.
Comment 47: Asocolflores argues that the Department should have
used Santa Helena's devalued peso borrowing rate to calculate imputed
credit. Asocolflores notes that although the Department claims that
these data were not included in Santa Helena's response, the data was
in fact included in Table 1.4 of the company's original March 31, 1992
response.
Although it did not respond specifically to this company-specific
issue, the FTC has argued that the Department should not adjust peso
interest rates for peso devaluation against the dollar. See FTC Public
Brief at 17-19.
Department's Position: We agree with respondent and have used the
Group's actual peso borrowing rate, adjusted for devaluation, to impute
the credit expense for the collapsed Santa Helena/Florex Group. See our
response to Comment 2, above.
Comment 48: Asocolflores claims that the Funza Group incorrectly
reported the peso devaluation rate over the POR, and asks that the
Department use the rate that it verified.
The FTC responds that the Department is under no obligation to
correct data supplied by respondents. The FTC also notes that it has
argued against the practice of adjusting interest rates for
devaluation.
Department's Position: We agree with respondent that the peso
devaluation rate for the POR used in the preliminary results was
incorrect. We have corrected the Funza Group's credit expense
calculation in these final results accordingly. See our response to
Comment 2, above.
Comment 49: Las Amalias SA (Lasa) argues that it is not related to
Ha Fleurette (LFC), CFX, or Agrowconsult, and that the Department
should not collapse Lasa with these companies.
Lasa claims that it is not related to La Fleurette under the
definition provided by the Tariff Act of 1930, section 771(13). Lasa
claims that La Fleurette was not the agent or principal of Lasa, that
neither entity owned the other's stock, and that no person or persons
owned 20 percent or more of either company. The only links between the
two are that La Fleurette leased space and purchased subject flowers
from Lasa at arm's-length, that Lasa provided certain administrative
services and kept the books for La Fleurette for an arm's-length fee,
and that there is one common shareholder who owned 7.5 percent of Lasa
and 17.5 percent of La Fleurette during the POR.
Lasa claims that it is not related to CFX under the above
definition. Lasa made sales directly to CFX, and these transactions
constitute the only relationship Lasa has with CFX.
Finally, Lasa contends that it is not related to Agrowconsult. The
only links between the two are that Lasa paid the owner of Agrowconsult
a one-time consultant fee, that the two share office space that each
entity pays for in accordance with their respective use of the space,
and that the two used the same independent contractor for accounting
services.
The FTC responds that, based on the data provided by Lasa itself,
Lasa is clearly related to all of the companies with which it has been
collapsed. The FTC makes particular note that Lasa handled La
Fleurette's bookkeeping and export documentation, and managed its
checking account. Because La Fleurette is related to CFX and
Agrowconsult, the FTC contends that as Lasa is related to La Fleurette,
it is also related to these companies.
Department's Position: We agree with the FTC that, based on the
information provided by Las Amalias (Lasa), Lasa is related to all of
the companies and should therefore be collapsed into one entity. We
applied the standards outlined above in our response to Comment 46.
We have determined that Las Amalias/Pompones meets four out of the
five criteria relating to the collapsing test outlined in our response
to Comment 46. For a complete analysis of Lasa's interrelationships
with LFC and CFX and with Agrowconsult, see the Department's Memorandum
to File dated March 11, 1994.
Comment 50: Lasa maintains that the Department's use of BIA instead
of the data supplied in its response is improper. Lasa argues that even
if it were related to LaFleurette, CFX, or Agrowconsult, none of these
companies sold subject flowers to the United States. Therefore, any
relationship between Lasa and these companies does not affect the data
Lasa supplied to the Department in its response, and the Department
should use that data.
The FTC responds that Lasa did not report its relationships to La
Fleurette (LFC), CFX, or Agrowconsult, and that it did not report
flowers sold in bouquets made by La Fleurette. Therefore, the
Department should reject Lasa's questionnaire response and use an
adverse rate of BIA.
Department's Position: We agree with petitioner. Because the
Department has determined that Lasa is related to LFC and CFX, and to
Agrowconsult, and that subject flowers sold in mixed bouquets are
within the scope of the antidumping order (see our response to Comment
1), the overwhelming majority of Lasa's sales are ESP transactions, not
purchase price transactions. Because Lasa reported its sales to related
parties in the United States as purchase price sales, when it should
have reported the sales of its U.S. related parties to their customers
(i.e., the first unrelated parties in the United States), we find the
use of BIA to be justified. However, because Lasa substantially
cooperated with our requests for information, including verification,
but failed to provide the information in the form required, we are
applying a second-tier BIA rate to Lasa. In Lasa's case, this is the
highest calculated rate in this review, 7.56 percent.
Comment 51: Lasa contends that the information it supplied in the
questionnaire shows that it is entitled to a zero margin in the review.
Lasa argues that because this will be the third consecutive review with
zero margins, it is entitled to revocation under the regulations.
The FTC responds that because Lasa failed to report either its
relationships with other companies or its sales to the United States in
the form of bouquets, it did not have a zero margin. Therefore, Lasa is
not entitled to revocation.
Department's Position: We agree with petitioner. Lasa is not
entitled to revocation under the Department's regulations because it
has not received three consecutive years of zero margins, as required
by the regulations. 19 CFR 353.25(a)(1)(i).
Comment 52: The Agrodex Group Farms, Floralex, Ltda., and Flores La
Union-Gomez Arango & Cia. S. en C. all claim that the Department has
not made full disclosure of its preliminary calculation methodology,
and that as a result it is impossible to provide detailed comments. The
above firms ask that the Department make a full disclosure and provide
the opportunity to make comments.
The FTC responds that it reserves the right to respond to a
supplemental case brief if accepted by the Department.
Department's Position: Agrodex received disclosure materials in
time to submit its case brief. While it is true that the firm was
unable to pose questions to the case analyst, who was away on official
business until January 24, 1994, we note that the company could have
directed any questions to the analyst's supervisors, but chose not to
do so. We also note that, although the case analyst returned to the
office on January 24, 1994, counsel to Agrodex did not contact the
analyst with questions about the disclosure materials until January 31,
1994. See Memorandum to file dated February 1, 1994. According to this
memorandum, the analyst was able to answer the relatively minor
questions posed by counsel to Agrodex.
At the hearing held on February 1, 1994, respondents indicated that
their interests were prejudiced by the late disclosure and that they
might want to submit further comments. However, the nature of the
additional comments was not specified. Although we did not give a
formal reply as to whether we would accept additional comments, we
received no communication regarding plans to submit comments until just
prior to a submission made on behalf of Agrodex on March 2, 1994. This
submission was made well beyond the time period other parties had to
submit their case briefs and well beyond any reasonable time extension
that could be afforded under these circumstances. See Memorandum to
File dated March 4, 1994 and attached letter. Therefore, we rejected
the comments as untimely.
Comment 53: Velez De Monchaux e Hijos y Cia. S. en C. claims that
the Department used the wrong data in its calculations for that
company. Velez De Monchaux maintains that the data did not include the
corrections submitted on a computer diskette on May 14, 1992, and asks
that the Department use the corrected submission for these final
results.
Department's Position: We agree with respondent that the Department
used the wrong disk for its calculation. We have used the corrected
data that was substituted on a computer diskette on May 14, 1992, for
its final results.
Final Results of Review
As a result of our review of the comments received, we determine
that there are margins in the amounts listed below for the period March
1, 1990 through February 28, 1991.
The following firms requested and received individual reviews:
------------------------------------------------------------------------
Margin
Producer/exporter (percent)
------------------------------------------------------------------------
Agricola Cardenal S.A........................................ 0.14
Agricola De La Fountana Ltda................................. 1.56
Agricola El Jardin........................................... 0.00
Agricola Las Cuadras Ltda.................................... 0.30
Flores De Hacaritama
Agricola Los Arboles S.A..................................... 2.08
Agrodex Group................................................ 0.00
Agricola El Retiro Ltda.
Agricola Los Gaques Ltda.
Agrodex Ltda.
Degaflores Ltda.
FlorLinda Ltda.
Flores Camino Real Ltda.
Flores Colon Ltda.
Flores De La Maria Ltda.
Flores De Las Mercedes Ltda.
Flores De Los Amigos Ltda.
Flores De Los Arrayanes Ltda.
Flores De Pueblo Viejo Ltda.
Flores Del Gallinero Ltda.
Flores Del Potrero Ltda.
Flores Dos Hectareas Ltda.
Flores El Lobo Ltda.
Flores El Puente Ltda.
Flores El Trentino Ltda.
Flores Juanambu Ltda.
Flores La Conejera Ltda.
Inverflores Ltda.
Inverpalmas
Inversiones Santa Rosa Arw Ltda.
Agropecuria Cuernavaca Ltda.................................. 2.70
Amalias Group................................................ 7.56
Las Amalias Ltda.
Pompones Ltda.
Bochica Group................................................ 1.35
Agro Bosque, S.A.
Exportaciones Bochica S.A.
Floral Ltda.
Flores Del Cauca
Inversiones Targa Ltda.
Productos El Zorro
Becerra Castellanos y Cia. Ltda.............................. 1.49
Claveles Colombianas Group................................... 1.45
Claveles Colombianos Ltda.
Fantasia Flowers Ltda.
Splendid Flowers Ltda.
Sun Flowers Ltda.
Cultivos Tahami Ltda......................................... 2.52
Dianticola Colombiana Ltda................................... 1.73
Florandia Herrera Camacho y Cia.............................. 0.00
Flores Aurora Ltda........................................... 0.16
Flores Colombianas Group..................................... 0.00
Agrosuba.
Flores Colombianas Ltda.
Jardines De Los Andes S.A.
Productos El Cartucho
Flores Condor De Colombia Ltda............................... 0.00
Flores De La Vega Ltda....................................... 3.42
Flores De Serrezuela Ltda.................................... 0.45
Flores Del Rio S.A........................................... 0.16
Flores Depina Ltda........................................... 0.00
Flores El Zorro Ltda......................................... 1.19
Flores La Union Gomez Arango................................. 0.00
Flores La Valvanera Ltda..................................... 0.26
Flores Las Caicas............................................ 1.09
Flores Sagaro................................................ 0.04
Flores Tiba S.A.............................................. 0.48
Flores Tibati Ltda........................................... 0.00
Flores Urimaco............................................... 2.26
Florex Group................................................. 0.22
Agricola Guacari
Flores Altamira S.A.
Flores De Exportacion S.A.
Santa Helena S.A.
Floricola La Guitana S.A..................................... 0.00
Funza Group.................................................. 0.09
Flores Alborada.
Flores De Funza S.A.
Flores Del Bosque Ltda.
Grupo Andes.................................................. 1.47
Agricola Arenales Ltda.
Cultivos Buenavista Ltda.
Flores De Los Andes Ltda.
Flores Horizante Ltda.
Inversiones Penas Blancas Ltda.
Guacatay Group............................................... 0.13
Agricola Guacatay S.A.
Jardines Bacata Ltda.
Happy Candy Group............................................ 0.46
Flores Tropicales Ltda.
Happy Candy Ltda.
Mercedes Ltda.
Rosas Colombianas Ltda.
Hosa Group................................................... 2.18
Horticultura De La Sabana S.A.
Innovacion Andina S.A.
Minispray S.A.
Industrial Agricola Ltda..................................... 0.00
Ingro Ltda................................................... 7.31
Inversiones Cubivan.......................................... 1.28
Linda Colombiana Ltda........................................ 0.19
Papagayo Group............................................... 1.19
Agricola Papagayo Ltda.
Inversiones Calyposo S.A.
Queen's Flowers De Colombia.................................. 0.03
Queen's Flowers De Colombia Ltda.
Jardines De Chia Ltda.
Jardines De Fredonia Ltda.
Rosas Sabanilla Group........................................ 0.49
Rosas Sabanilla Ltda.
Inversiones La Serena
Agricola La Capilla
Santa Rosa Group............................................. 1.96
Flores Santa Rosa Ltda.
Floricola La Ramada Ltda.
Tuchany S.A.................................................. 0.00
Uniflor Ltda................................................. 2.52
Velez De Monchaux e Hijos Y Cia. S. en C..................... 2.08
------------------------------------------------------------------------
The following firms were among those requested by the petitioner
and were selected for our sample:
------------------------------------------------------------------------
Margin
Producer/exporter (percent)
------------------------------------------------------------------------
First Stratum:
Flores Arco Iris Ltda...................................... 3.59
Second Stratum:
Agricola De Los Alisos Ltda................................ 5.36
Agromonte Ltda............................................. 4.40
Claveles De Los Alpes Ltda................................. 0.70
Daflor Ltda................................................ 0.00
Floralex Ltda.............................................. 0.00
Flores Aquila Ltda......................................... 0.00
Flores Arco Iris Ltda...................................... 3.59
Flores De Cajibio Ltda..................................... 0.30
Flores De Hunza Ltda....................................... 6.04
Flores De La Sabana S.A.................................... 3.87
Flores De Suba Ltda........................................ 1.86
Flores Del Campo Ktda...................................... 3.05
Flores El Arsenal Ltda..................................... 0.76
Flores Estrella, Ltda...................................... 7.56
Flores Marandua Ltda....................................... 0.00
Flores Mountgar, Ltda...................................... 43.02
Flores Tomine.............................................. 1.13
Inversiones Targa S.A. (Bochica Group)..................... 1.35
Jardines Del Muna.......................................... 7.56
Los Geranios Ltda.......................................... 2.28
Soagro Group............................................... 1.45
Agricola El Mortino Ltda.
Flores Aquaclara Ltd.
Flores Del Monte Ltda.
Flores La Estancia Ltda.
Jaramillo Y Daza Ltdg.
Third Stratum:
Cultivos Miramonte S.A..................................... 0.48
Santana Group.............................................. 0.02
Hacienda Curibital Ltda.
Inversiones Istra Ltda.
Santana Flowers Ltda.
------------------------------------------------------------------------
The following firms were among those requested only by the
petitioner but were not selected in the sample. They will receive the
sample group rate of 3.13 percent.
Producer/Exporter
Abaco Tulipanex de Colombia
Agricola Benilda Ltda.
Agricola Bojaca Ltda.
Agricola El Cactus S.A.
Agricola El Redil Ltda.
Agricola Malqui Ltda.
Agro Koralia Ltda.
Agroindustrial Del Riofrio Ltda.
Cienfuegos Ltda.
Conflores Ltda.
Crop S.A.
Cultivos Medellin Ltda.
Del Tropico Ltda.
Flora Bellisima Ltda.
Flores Alfaya Ltda.
Flores Cigarral Ltda.
Flores De La Montana.
Flores De La Pradera Ltda.
Flores De Nemecon Ltda.
Flores De Suesca Ltda.
Flores Del Lago Ltda.
Flores El Rosal Ltda.
Flores Estrella Ltda.
Flores Gicro Ltda.
Flores Guaicata Ltda.
Flores Hana Ichi De Colombia Ltda.
Flores Juncalito Ltda.
Flores La Cabanuela.
Flores La Conchita De German-Ribon y Cia.
Flores La Frangancia S.A.
Flores Monserrate Ltda.
Flores Mountgar Ltda.
Flores Petaluma Ltda.
Flores Santa Fe Ltda.
Flores Tairona Ltda.
Flores Tocarinda Ltda.
Flores Tokai Hisa
Groex S.A.
Inpar Ltda.
Interflora Ltda.
Inversiones Miraflores Ltda.
Inversiones Oro Verde S.A.
Inversiones Santa Rita Ltda.
Iturrama S.A.
Jardines Carolina
M.G. Consultores Ltda.
Monteverde Ltda.
Plantaciones Delta Ltda.
Plantas Ornamentales De Colombia
Rosas De Exportacion Ltda. (Rosex)
Rosas Y Flores Ltda.
Shasta Flowers Y Cia Ltda.
Sunset Farms
Toto Flowers Ltda.
The Department will instruct the Customs Service to assess
antidumping duties on all appropriate entries. Individual differences
between United States price and foreign market value may vary from the
percentage as stated above. 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:
(1) The cash deposit rate for the reviewed companies will be the rates
as listed above; (2) for previously reviewed or investigated companies
not listed above, the cash deposit rate will continue to be the
company-specific rate published for the most recent period; (3) if the
exporter is not a firm covered in this review, a prior review, or the
original less-than-fair-value investigation, but the manufacturer is,
the cash deposit rate will be the rate established for the most recent
period for the manufacturer of the merchandise; and (4) the cash
deposit rate for all other manufacturers or exporters will be the ``all
other'' rate of 3.10 percent. This is the rate established during the
LTFV investigation.
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 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This 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, revocation in part, and notice are in
accordance with section 751(a)(1) of the Tariff Act (19 U.S.C.
1675(a)(1)) and 19 CFR 353.22, 353.25.
Dated: March 25, 1994.
Joseph Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-7714 Filed 3-30-94; 8:45 am]
BILLING CODE 3510-DS-P-M