[Federal Register Volume 61, Number 70 (Wednesday, April 10, 1996)]
[Notices]
[Pages 15922-15925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8968]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration
[A-614-801]


Fresh Kiwifruit From New Zealand; Preliminary Results of 
Antidumping Duty Administrative Review

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

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

-----------------------------------------------------------------------

SUMMARY: In response to a request by the New Zealand Kiwifruit 
Marketing Board (NZKMB), the respondent in this case, the Department of 
Commerce (the Department) is conducting an administrative review of the 
antidumping duty order on fresh kiwifruit from New Zealand. The review 
covers one exporter of the subject merchandise to the United States for 
the period June 1, 1994, through May 31, 1995.
    We preliminarily determine that sales have been made below the 
normal value (NV). If these preliminary results are adopted in our 
final results of administrative review, we will instruct the U.S. 
Customs Service to assess antidumping duties equal to the difference 
between the United States price (USP) and the NV. Interested parties 
are invited to comment on these preliminary results. Parties who submit 
argument in this proceeding are requested to submit with the argument 
(1) a statement of the issue, and (2) a brief summary of the argument. 
(No longer than five pages, including footnotes.)

EFFECTIVE DATE: April 10, 1996.

FOR FURTHER INFORMATION CONTACT: Paul Stolz or Thomas F. Futtner, 
Office of Antidumping Compliance, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
4474 or 482-3814, respectively.

APPLICABLE STATUTE: Unless otherwise indicated, all citations to the 
Tariff Act of 1930, as amended (the Act) are references to the 
provisions effective January 1, 1995, the effective date of the 
amendments made to the Act by the Uruguay Rounds Agreements Act. In 
addition, unless otherwise indicated, all citations to the Department's 
regulations are to the current regulations, as amended by the interim 
regulations published in the Federal Register on May 11, 1995 (60 FR 
25130).

SUPPLEMENTARY INFORMATION:

Background

    On June 2, 1992, the Department published the antidumping duty 
order on fresh kiwifruit from New Zealand (57 FR 23203). On June 6, 
1995, the Department published a notice of ``Opportunity to Request 
Administrative Review'' of this antidumping duty order for the period 
June 1, 1994, through May 31, 1995 (60 FR 29821). We received a timely 
request for review by the respondent, NZKMB. On July 14, 1995, the 
Department initiated a review of NZKMB (60 FR 36260). The period of 
review (POR) is June 1, 1994 through May 31, 1995.

Scope of the Review

    The product covered by this review is fresh kiwifruit. Processed 
kiwifruit, including fruit jams, jellies, pastes, purees, mineral 
waters, or juices made from or containing kiwifruit, are not covered 
under the scope of this review. The subject merchandise is currently 
classifiable under subheading 0810.90.20.60 of the Harmonized Tariff 
Schedule (HTS). Although the HTS number is provided for convenience and 
customs purposes, our written description of the scope of this order is 
dispositive.

Constructed Export Price

    The Department treated certain sales by the respondent as 
constructed export prices (CEP) sales, as provided in section 772 (b) 
of the Tariff Act. Sales to the United States by NZKMB were made to the 
first unaffiliated party in the United States after importation, and 
hence warranted CEP methodology.
    We calculated CEP based on packed F.O.B. (ex-New Zealand 
coolstore), and packed F.O.B., freight-prepaid prices. We made 
deductions, where appropriate, for New Zealand inland freight 
(coolstore to port), loading charges in New Zealand, ocean freight, 
basic marine insurance, charter insurance, U.S. import duties, U.S. 
brokerage and handling, U.S. inland freight (decreased to account for 
prepaid freight where applicable), and price discounts (i.e., 
advertising allowances, special advertising allowances, market 
adjustment discounts, advertising rebates which actually constituted 
discounts, and discounts for quality problems). In accordance with 
sections 772(d) (1) and (2) of the Tariff Act, we made additional 
deductions, where appropriate, for agent commissions, broker 
commissions, credit, direct advertising, and indirect selling expenses. 
Indirect selling expenses included inventory carrying costs, repacking, 
U.S. primary and U.S. satellite coolstore charges, New Zealand and U.S. 
instore insurance, fire insurance, product liability and tamper 
insurance, earthquake insurance, indirect advertising, quality control 
expenses, miscellaneous selling-agent-related charges, other U.S.-
incurred indirect expenses, and other New Zealand-incurred indirect 
selling expenses associated with selling in the United States. 
Furthermore, pursuant to section 772(d)(3), the price was further 
reduced by an amount for profit to arrive at the CEP. Finally, we 
increased the U.S. price to account for post sale price adjustments not 
reflected in the gross price.

Normal Value

    In order to determine whether there were sufficient sales of 
kiwifruit in the home market to serve as a viable basis for calculating 
NV, we compared the volume of home market sales of kiwifruit by NZKMB 
to its volume of kiwifruit sales to the United States, in accordance 
with section 773(a)(1)(B) of the Act. The petitioner has claimed that 
the home market should not be considered viable. However, since

[[Page 15923]]
respondent's aggregate volume of home market sales of the foreign like 
product was greater than five percent of its aggregate volume of U.S. 
sales for the subject merchandise, we determined that the home market 
was viable for the respondent. Therefore, we have based NV on home 
market sales.
    In accordance with section 777A(d)(2), we calculated monthly 
weighted-average prices for NV and compared these to individual U.S. 
transactions.
    Third country sales were used as the basis of foreign market value 
in the most recently completed review as the home market was not viable 
in that proceeding. Because many of the NZKMB's third-country sales 
were found to have been made at prices below the cost of production and 
were therefore disregarded in that review, the Department initiated a 
COP investigation for the purposes of this administrative review. (See 
memorandum to file dated November 7, 1995.) Just as the Department 
found in the original investigation, and the first and second 
administrative reviews, we find that in comparing NV to COP, the 
reseller/exporter's acquisition prices are irrelevant because section 
773(b) of the Tariff Act requires that the Department look at the 
actual COP of the subject merchandise. Thus, we used the cost incurred 
by kiwifruit farmers, the actual producers of the subject merchandise, 
to calculate the COP benchmark.
    Due to the large number of growers from which the NZKMB purchased 
kiwifruit during the POR, the Department determined that sampling was 
both administratively necessary and methodologically appropriate to 
calculate a representative cost of producing the subject merchandise 
for purposes of this administrative review (see section 777A of the 
Tariff Act). We selected the sample of kiwifruit growers as follows: 
Farms were segregated by geographic regions into either the Bay of 
Plenty region or non-Bay of Plenty regions. In selecting the sample of 
20 growers, we determined that we would select 15 growers representing 
the Bay of Plenty region and five from the non-Bay of Plenty regions, 
in order to reflect the relative proportion of kiwi production from 
each of the two regions. Because the Department's purpose is to 
estimate the average unit cost per tray of exported kiwifruit, as a 
second step we have assigned selection probabilities to the growers on 
the basis of the volume of kiwifruit each grower submitted to the NZKMB 
for export. We sent COP questionnaires through the NZKMB to the 20 
kiwifruit growers selected, all of which responded to the Department's 
questionnaire. The 20 COP responses submitted, along with the sales and 
supplemental responses, were analyzed and relied upon, where 
appropriate, in reaching the preliminary results of the review.
    We calculated the cost of cultivation for each grower by summing 
all costs for the 1994-1995 kiwifruit season. These costs included the 
cost of materials, farm labor, farm overhead, and packing. We allocated 
the cost on a per-tray equivalent basis over the total number of tray 
equivalents submitted by each grower to the NZKMB. (A tray equivalent 
is a standard unit of measurement for kiwifruit. It is representative 
of the kiwifruit which can fit into a standard packing tray.) We then 
adjusted those costs to reflect fruit loss. We added the NZKMB's 
general and administrative expenses to the farm's average cost per 
tray.
    The orchard set-up costs for all growers were amortized over 20 
years as was done in prior reviews. Where growers purchased an 
established orchard, the acquisition price of the farm was treated as 
the set-up cost.
    For growers that allocated costs over the productive area, that is, 
canopy area, we made adjustments to include the headlands and sidelands 
in the productive area of the kiwifruit orchard for the purpose of 
allocating costs. We made adjustments to growers' cost for 
depreciation, interest, labor, repairs, management, vehicles, 
fertilizer, spraying, rates (property tax), electricity, shelter, 
water, general and administrative, pruning, and mowing on a farm-
specific basis where appropriate.
    We calculated a simple average COP from the sampled growers' 
individual COPs. The total COP was calculated on a New Zealand dollar 
per single-layer tray equivalent basis (NZ$/SLT).
    In accordance with section 773(b) of the Tariff Act, in determining 
whether to disregard home market sales made at prices below COP, we 
examined whether such sales were made within an extended period of time 
in substantial quantities, and whether such sales were made at prices 
which would permit recovery of all costs within a reasonable period of 
time.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given product were at prices less 
than the COP, we did not disregard any below-cost sales of that product 
because we determined that the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product were at prices less than the COP, we 
disregarded only the below-cost sales where such sales were found to be 
made within an extended period of time (in accordance with section 
773(b)(2)(B) of the Act) and at prices which would not permit recovery 
of all costs within a reasonable period of time (in accordance with 
section 773(b)(2)(D) of the Act). Where all sales of a specific product 
were at prices below the COP, we disregarded all sales of that product, 
and calculated NV based on CV, in accordance with section 773(b)(1) of 
the Act.
    The results of our cost test indicated that within an extended 
period of time (one year, in accordance with section 773(b)(2)(B) of 
the Act) for certain home market models/product codes, more than 20 
percent of the home market sales were sold at below the COP prices, 
which would not permit the recovery of all costs within a reasonable 
period of time. Thus, we excluded these below-cost sales and used the 
remaining above-cost sales as the basis of determining NV, in 
accordance with section 773(b)(1). For those home market models/product 
codes for which there were no above-cost sales, we compared EP and/or 
CEP to CV, in accordance with section 773(b)(1) of the Act.
    Pursuant to section 773(b)(2)(D) of the Act, we examined whether 
the prices of below cost sales would provide for recovery of costs 
within a reasonable period of time. As the prices of below cost sales 
were below the weighted average per unit cost of production for the 
POR, we conclude that no cost recovery took place.
    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of the respondent's cost of materials and fabrication 
as reported in the U.S. sales databases. In accordance with section 
773(e)(2)(A), we based SG&A and profit on the amounts incurred and 
realized by the respondent in connection with the production and sale 
of the foreign like product in the ordinary course of trade, for 
consumption in the foreign country. For selling expenses, we used the 
weighted-average home market selling expenses. Pursuant to section 
773(e)(3), we included U.S. packing as reported in the U.S. sales 
databases.
    We adjusted NV where appropriate, to reflect deductions for home 
market rebates, inland freight, delivery premiums, pre-sale warehouse 
expenses, credit expenses, and warranty expenses in the calculation of 
NV for comparison to CEP transactions. We also deducted home market 
packing expenses and added U.S. packing expenses.

[[Page 15924]]


Level of Trade and CEP Offset

    As set forth in section 773(a)(2)(B)(i) of the Act and in the 
Statement of Administrative Action (SAA) accompanying the Uruguay Round 
Agreements Act, at 829-831, to the extent practicable, the Department 
will calculate normal value based on sales at the same level of trade 
as the U.S. sale. When the Department is unable to find sale(s) in the 
comparison market at the same level of trade as the U.S. sale(s), the 
Department may compare sales in the U.S. and foreign markets at a 
different level of trade.
    In accordance with section 773(a)(7)(A) of the Act, if we compare a 
U.S. sale at one level of trade to normal value sales at a different 
level of trade, the Department will adjust the normal value to account 
for the difference in level of trade if two conditions are met. First, 
there must be differences between the actual selling functions 
performed by the seller at the level of trade of the U.S. sale and at 
the level of trade of the NV sale. Second, the differences must affect 
price comparability as evidenced by a pattern of consistent price 
differences between sales at the different levels of trade in the 
market in which normal value is determined. When constructed export 
price is applicable, section 773(a)(7)(B) of the Act establishes the 
procedures for making a constructed export price offset when: (1) 
Normal value is at a different level of trade, and (2) the data 
available do not provide an appropriate basis for a level of trade 
adjustment from the U.S. sale. Also, in accordance with section 
773(a)(7)(B), to qualify for a CEP offset, the level of trade in the 
home market must also constitute a more advanced stage of distribution 
than the level or trade of the CEP.
    In order to identify levels of trade, the Department must review 
information concerning selling functions of the manufacturer/exporter. 
We reviewed the questionnaire responses to establish whether there were 
sales at different levels of trade based on selling functions performed 
and services offered to each customer or customer class.
    We identified one level of trade in the home market with two types 
of sales within that level: (1) Direct sales by NZKMB to the customer, 
and (2) sales through a domestic agent. Both types of sales were made 
to resellers, retail stores and distributors. We examined the selling 
functions performed for both types of sales and found that NZKMB 
handled many of the same or similar selling functions for both types of 
sales including: quality control, packing quality control, maintenance 
of fruit while in coolstore, marketing and general promotion, and 
general price setting. For direct sales, NZKMB also handled order 
processing, invoicing, and price negotiation with the customer. For 
sales through the domestic agent, NZKMB paid the agent a commission for 
handling those responsibilities. Overall, we preliminarily determine 
that the selling functions between the two sales types are sufficiently 
similar to consider them as one level of trade in the home market. In 
addition, all sales, whether made to resellers, retail stores or 
distributors, included the same selling functions.
    For the U.S. market, all sales were reported as CEP sales. The 
level of trade of the U.S. sales is determined by the adjusted CEP 
rather than the starting price. We examined the selling functions 
performed by NZKMB for U.S. CEP sales and preliminarily determined that 
they are at a different level of trade from NZKMB's home market sales 
because NZKMB engaged in fewer selling functions for the adjusted CEP 
sales than for its home market sales. For instance, NZKMB did not 
engage in any general promotion, marketing activities, or price 
negotiations for U.S. sales.
    Because we compared CEP sales to home market sales at a different 
level of trade, we examined whether a level of trade adjustment may be 
appropriate. In this case, respondent only sold at one level of trade 
in the home market; therefore, there is no basis upon which respondent 
can demonstrate a consistent pattern of price differences between 
levels of trade. Further, we do not have information which would allow 
us to examine pricing patterns based on respondent's sales of other 
products and there are no other respondents or other record information 
on which such an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a level of trade adjustment but the level of trade in the HM is 
a more advanced stage of distribution than the LOT of the CEP sales, a 
CEP offset is appropriate. Respondents claimed a CEP offset. We applied 
the CEP offset to normal value or constructed value, as appropriate. 
The level of trade methodology employed by the Department in these 
preliminary results of review is based on the facts particular to this 
review. The Department will continue to examine its policy for making 
level of trade comparisons and adjustments for its final results of 
review.

Fair Value Comparisons

    To determine whether sales of kiwifruit by respondents to the 
United States were made at less than fair value, we compared the CEP to 
the NV, as described in the ``Constructed Export Price'' and ``Normal 
Value'' sections of this notice. In accordance with section 777A(d)(2), 
we calculated monthly weighted-average prices for NV and compared these 
to individual U.S. transactions. Where possible, in calculating a 
monthly weighted average normal value, we averaged home market sales 
across the channel of distribution most comparable to that in which the 
U.S. transaction was made. Where there were no home market sales 
through that channel of distribution, we averaged home market sales 
through the other channel of distribution.

Preliminary Results of Review

    We preliminarily determine that the following margin exists for the 
period June 1, 1994, through May 31, 1995:

------------------------------------------------------------------------
                                                                Percent 
                    Manufacturer/Exporter                        margin 
------------------------------------------------------------------------
New Zealand Kiwifruit Marketing Board........................       6.33
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between USP and NV may vary from the percentage stated 
above. Upon completion of this review, the Department will issue 
assessment instructions concerning the respondent directly to the U.S. 
Customs Service.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise, entered, or withdrawn 
from warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided for by section 
751(a) of the Act: (1) The cash deposit rate for the reviewed firm will 
be that firm's rate established in the final results of this 
administrative review; (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 
in the original less-than-fair-value (LTFV) 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; (4) If 
neither the manufacturer nor the exporter is a firm covered in this or 
any previous review

[[Page 15925]]
conducted by the Department, the cash deposit rate will be 98.60 
percent, the ``all others'' rate established in the LTFV investigation.
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    Interested parties may request disclosure within five days of the 
date of publication of this notice, and may request a hearing within 
ten days of the date of publication. Any hearing, if requested, will be 
held as early as convenient for the parties but not later than 44 days 
after the date of publication or the first work day thereafter. Case 
briefs or other written comments from interested parties may be 
submitted not later than 30 days after the date of publication of this 
notice. Rebuttal briefs and rebuttal comments, limited to issues raised 
in the case briefs, may be filed not later than 37 days after the date 
of publication. The Department will publish the final results of this 
administrative review, including the results of its analysis of issues 
raised in any such written comments.
    This notice serves as a preliminary 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 administrative review 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.

    Dated: March 29, 1996.
Paul L. Joffe,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 96-8968 Filed 4-9-96; 8:45 am]
BILLING CODE 3510-DS-P