[Federal Register Volume 62, Number 132 (Thursday, July 10, 1997)]
[Notices]
[Pages 37027-37030]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18112]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-337-803]


Initiation of Antidumping Duty Investigation: Fresh Atlantic 
Salmon From Chile

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

EFFECTIVE DATE: July 10, 1997.

FOR FURTHER INFORMATION CONTACT: Michelle Frederick, at (202) 482-0186, 
or Kris Campbell, at (202) 482-3813; Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230.

INITIATION OF INVESTIGATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations refer to the 
regulations, codified at 19 CFR part 353, as they existed on April 1, 
1997.

The Petition

    On June 12, 1997, the Department of Commerce (the Department) 
received a petition filed in proper form by the Coalition for Fair 
Atlantic Salmon Trade (FAST) and the following individual members of 
FAST: Atlantic Salmon of Maine; Cooke Aquaculture U.S., Inc.; DE 
Salmon, Inc.; Global Aqua--USA, LLC; Island Aquaculture Corp.; Maine 
Coast Nordic, Inc.; ScanAm Fish Farms; and Treats Island Fisheries 
(collectively referred to hereafter as ``the petitioners''). The 
petitioners submitted information supplementing the petition on June 
23, 1997.
    The petitioners allege that imports of fresh Atlantic salmon from 
Chile are being, or are likely to be, sold in the United States at less 
than fair value within the meaning of section 731 of the Act, and that 
such imports are materially injuring, or threatening material injury 
to, a U.S. industry.
    The Department finds that the petitioners have standing to file the 
petition because they are interested parties as defined in section 
771(9)(C) of the Act, and because they have demonstrated sufficient 
industry support (see discussion below).

Scope of Investigation

    The scope of this investigation covers fresh, farmed Atlantic 
salmon, whether imported ``dressed'' or cut. Atlantic salmon is the 
species Salmo salar, in the genus Salmo of the family salmoninae. 
``Dressed'' Atlantic salmon refers to salmon that has been bled, 
gutted, and cleaned. Dressed Atlantic salmon may be imported with the 
head on or off; with the tail on or off; and with the gills in or out. 
All cuts of fresh Atlantic salmon are included in the scope of the 
investigation. Examples of cuts include, but are not limited to: 
crosswise cuts (steaks), lengthwise cuts (fillets), lengthwise cuts 
attached by skin (butterfly cuts), combinations of crosswise and 
lengthwise cuts (combination packages), and Atlantic salmon that is 
minced, shredded, or ground. Cuts may be subjected to various degrees 
of trimming, and imported with the skin on or off and with the ``pin 
bones'' in or out.
    Excluded from the scope of this petition are (1) fresh Atlantic 
salmon that is ``not farmed'' (i.e., wild Atlantic salmon); (2) live 
Atlantic salmon and Atlantic salmon that has been subjected to further 
processing, such as frozen, canned, dried, and smoked Atlantic salmon; 
and (3) Atlantic salmon that has been further processed into forms such 
as sausages, hot dogs, and burgers.
    The merchandise subject to this investigation is classifiable as 
statistical reporting numbers 0302.12.0003 and 0304.10.4091 of the 
Harmonized Tariff Schedule (HTS) of the United States. Although the HTS 
subheadings are provided for convenience and customs purposes, the 
written description of the merchandise is dispositive.

[[Page 37028]]

    During pre-filing consultations and as a result of our review of 
the petition, we discussed with the petitioners whether the proposed 
scope was an accurate reflection of the product for which the domestic 
industry is seeking relief. We noted that the scope in the petition 
appeared to include both farmed and not farmed Atlantic salmon. The 
petitioners subsequently notified the Department on June 26, 1997, that 
Atlantic salmon that is not farmed should be excluded from the scope of 
the investigation. Accordingly, we have done so.
    We are setting aside a period for interested parties to raise 
issues regarding product coverage. The Department encourages all 
interested parties to submit such comments before August 4, 1997. This 
period of scope consultation is intended to provide the Department 
ample opportunity to consider all comments and consult with parties 
prior to the issuance of the preliminary determination.

Determination of Industry Support for the Petition

    Section 732(c)(4)(A) of the Act requires that the Department 
determine, prior to the initiation of an investigation, that a minimum 
percentage of the domestic industry supports an antidumping petition. A 
petition meets these minimum requirements if the domestic producers or 
workers who support the petition account for: (1) At least 25 percent 
of the total production of the domestic like product, and (2) more than 
50 percent of the production of the domestic like product produced by 
that portion of the industry expressing support for, or opposition to, 
the petition. Under section 732(c)(4)(D) of the Act, if the petitioners 
account for more than 50 percent of the total production of the 
domestic like product, the Department is not required to poll the 
industry to determine the extent of industry support.
    Based on U.S. salmon production information published by the State 
of Maine Department of Marine Resources and the Washington Farmed 
Salmon Commission, the petitioners claimed that they account for over 
70 percent of total production of fresh Atlantic salmon in the United 
States. The petitioners further claimed that, when the U.S. producers 
related to foreign producers are excluded from the analysis, the 
petitioners represent approximately 97 percent of domestic production 
of fresh Atlantic salmon.
    On June 27, 1997, the Association of Chilean Salmon and Trout 
Producers (the Association) contested the petitioners' standing claim. 
The Association stated that the petitioners' standing calculations 
focused exclusively on dressed salmon producers while ignoring U.S. 
fillet producers and claimed that fillet salmon represents a separate 
domestic like product from dressed salmon under the five-part domestic 
like product test used by the International Trade Commission (ITC). The 
Association argued that these facts suggest: (1) The petitioners do not 
have standing with respect to fillets, and; (2) even if the Department 
accepts the petitioners' single domestic like product definition, the 
petitioners have failed to provide adequate industry support data since 
fillet producers represent a significant portion of the industry 
producing the domestic like product. This submission included certain 
letters in opposition to the petition submitted by U.S. fillet 
processors, some of whom identified themselves as importers of dressed 
salmon from Chile.
    On June 30, 1997, the petitioners submitted a rebuttal, stating 
that the Association failed to refute the ``total domestic production'' 
and ``percent of production'' industry support figures contained in the 
petition and failed to provide any information that would indicate that 
the petitioners do not have standing even under a two-like-product 
analysis. The petitioners argued that the facts in this case do not 
support a finding that fillet salmon is a separate domestic like 
product because there are no clear dividing lines, in terms of 
characteristics or uses, between dressed salmon and salmon fillets. 
Specifically, petitioners contended that, inter alia,: (1) Salmon 
fillets are derived from dressed Atlantic salmon and, in fact, all 
forms of fresh Atlantic salmon include the salmon meat that is 
ultimately consumed; (2) respondents focused solely on one cut of fresh 
Atlantic salmon (fillet) while ignoring other cuts (e.g., steak); (3) 
the one cutting step that does play a significant role in the physical 
characteristic of the product (the initial cutting of the fish in order 
to bleed it) has been performed on both dressed and fillet salmon; 
1 and (4) fillet cutting is not a ``value added'' operation, 
but instead results in a higher-priced end product primarily because 
much waste has been eliminated. With respect to the last point, the 
petitioners argued that the price trends of fillets compared with 
dressed salmon suggest that there is no value added, but in fact 
negative value added, because the price of Chilean fillets, when 
adjusted for the cost of processing dressed salmon into fillets, is 
less than the price of dressed salmon.
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    \1\ In this respect, the petitioners distinguish this case from 
the like product decisions in Live Swine and Pork from Canada, Inv. 
No. 701-TA-22 (Final), USITC pub. 2218 (September 1989).
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    On July 1, 1997, the Association submitted further comments in 
response to the petitioners' arguments.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who account for production 
of the domestic like product. The ITC, which is responsible for 
determining whether ``the domestic industry'' has been injured, must 
also determine what constitutes a domestic like product in order to 
define the industry. However, while both the Department and the ITC 
must apply the same statutory provision regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to separate and distinct authority. In addition, the 
Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
domestic like product, such differences do not render the decision of 
either agency contrary to the law.2 Therefore, we have 
examined the Association's arguments regarding the definition of the 
domestic like product in the petition in the context of the statutory 
provisions governing initiation and the facts of the record.
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    \2\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefor from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 
Fed. Reg. 32376, 32380-81 (July 16, 1991).
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    The Association's contention is based on an examination of like 
product determinations made in prior ITC cases, and follows an analysis 
of factors traditionally examined by the ITC. However, as noted above, 
the Department's analysis of like product is not bound by ITC practice. 
The Department's analysis begins with section 771(10) of the Act, which 
defines domestic like product as ``a product that is like, or in the 
absence of like, most similar in characteristics and uses with, the 
article subject to an investigation under this title.'' After 
considering the information presented by the petitioner and the 
Association, we do not find that the petitioner's domestic like product 
definition is inconsistent with this statutory definition. While both 
parties have cited to various cases involving agricultural

[[Page 37029]]

and other products, in light of the information presented in the 
petition, we have concluded that there is no basis on which to reject 
as clearly inaccurate the petitioners' representations that there are 
no clear dividing lines, in terms of characteristics or uses, between 
dressed and cut salmon. Therefore, we have adopted the single domestic 
like product definition set forth in the petition.
    Having found that dressed and cut salmon constitute a single like 
product, we considered the Association's arguments that U.S. production 
of salmon cuts had not been accounted for in the petition's 
demonstration of industry support. The calculation of the standing 
ratio in the petition was based on a comparison of the volume of the 
petitioners' total 1996 production of dressed salmon to the volume of 
the industry's total 1996 production of dressed salmon. We have revised 
the petitioner's industry support calculations to add to the total U.S. 
domestic industry figure an amount representing the estimated economic 
value of U.S. fillet processing, in order to be as conservative as 
possible in our evaluation of industry support.
    In order to factor fillet processing into our analysis, we used a 
value-based analysis. We determined that the calculation of industry 
support on the basis of weight is inappropriate because the further 
processing of dressed salmon into cuts involves significant weight 
yield loss. In this regard, we note that the Statement of 
Administrative Action (SAA) for the URAA explicitly provides that the 
Department may determine the existence of industry support based on the 
value of production. SAA at 862. For a further explanation of our 
inclusion of salmon processing in the total U.S. domestic industry 
figure, which served as the denominator in the industry support 
calculation, see the Initiation Checklist prepared for this case, dated 
July 1, 1997.
    Having accounted for U.S. production of salmon cuts, we find that 
the production data provided in the petition indicate that the 
petitioners account for more than 50 percent of the total production of 
the domestic like product, thus meeting the requirements of section 
732(c)(4)(A) of the Act. Since the petitioners exceed the industry 
support threshold, we have not taken the letters of opposition that 
were filed with the Association's June 27, 1997, submission into 
account in our determination of industry support.

Export Price and Normal Value

    The petitioners calculated separate export prices for dressed 
Atlantic salmon (dressed salmon), fillets of Atlantic salmon (fillets), 
and steaks of Atlantic salmon (steaks).
    For dressed salmon and fillets, the petitioners based export price 
on 1996 CIF price quotes to U.S. customers, as reported by the Urner 
Barry guide, an industry standard for seafood price quotes. The 
petitioners made deductions for foreign inland freight, international 
freight, and brokerage fees.
    For steaks, the petitioners based export price on 1996 FOB Chilean 
export values derived from Chilean Customs Service statistics, because 
the Urner Barry guide does not track salmon steak. The petitioners made 
deductions for foreign inland freight.
    With respect to normal value, the petitioners could not find 
specific data regarding the size of the Chilean domestic market for 
Atlantic salmon. However, they obtained statements from several 
sources, including the Chilean Salmon and Trout Producers Association 
and the U.S. Department of Agriculture, indicating that virtually all 
production of Chilean Atlantic salmon is exported. Given these 
statements, and the lack of information about the size of the Chilean 
domestic market, the petitioners turned to third country exports as the 
basis for normal value. The petitioners determined that Japan and 
Brazil are the largest third country markets, based on statistics taken 
from an export statistics bulletin published by the Chilean 
Government's Instituto de Fomento Pesquero (IFOP).
    The petitioners obtained prices for exports to Japan and Brazil 
from the IFOP export statistics bulletin, but did not rely upon these 
prices for a price-to-price comparison of U.S. sales to third country 
sales. Instead, the petitioners alleged that sales in the third country 
markets of Japan and Brazil were made at prices below the fully 
allocated cost of production (COP), and cannot serve as the basis for 
normal value.
    The petitioners calculated COP using data derived primarily from a 
consultant's report commissioned by the Alaska Department of Commerce 
and Economic Development, as well as from the financial statements of 
two Chilean fresh Atlantic salmon producers.
    The Statement of Administrative Action (SAA), submitted to Congress 
in connection with the interpretation and application of the Uruguay 
Round Agreements, states that an allegation of sales below COP need not 
be specific to individual exporters or producers. SAA, H.R. Doc. No. 
316, 103d Cong., 2d Sess., at 833 (1994). The SAA, at 833, states that 
``Commerce will consider allegations of below-cost sales in the 
aggregate for a foreign country, just as Commerce currently considers 
allegations of sales at less than fair value on a country-wide basis 
for purposes of initiating an antidumping investigation.''
    Further, the SAA provides that ``new section 773(b)(2)(A) retains 
the current requirement that Commerce have ``reasonable grounds to 
believe or suspect'' that below cost sales have occurred before 
initiating such an investigation. ``Reasonable grounds'' * * * exist 
when an interested party provides specific factual information on costs 
and prices, observed or constructed, indicating that sales in the 
foreign market in question are at below-cost prices.'' Id.
    Based on a comparison of the Japan and Brazil prices for fresh 
Atlantic salmon to the COP calculated in the petition, we find 
reasonable grounds to believe or suspect that sales of the foreign like 
product were made at prices below COP in accordance with section 
773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating 
the requested country-wide cost investigation. We note, however, that 
if we determine that the home market (i.e., Chile) is viable, our 
initiation of a country-wide cost investigation with respect to sales 
to Japan and Brazil will be rendered moot.
    Since, as described above, we have found reasonable grounds to 
believe or suspect that sales of the foreign like product were made at 
prices below COP, for purposes of this initiation we have accepted the 
use of CV as the basis for normal value.
    The petitioners calculated CVs for dressed salmon, fillets, and 
steaks using the same cost of manufacturing, SG&A, and packing expense 
figures that were used to compute COP. Consistent with section 
773(e)(2), the petitioners included profit in the calculation of CV, 
based on the financial statements of Chilean producers of fresh 
Atlantic salmon.

Fair Value Comparison

    Based on the data provided by the petitioners, there is reason to 
believe that imports of fresh Atlantic salmon from Chile are being, or 
are likely to be, sold at less than fair value. The weighted-average 
dumping margin based on price-to-CV comparisons is 41.78 percent. If it 
becomes necessary at a later date to consider the petition as a source 
of facts available under section 776 of the Act, we may further review 
the margin calculations in the petition.

[[Page 37030]]

Initiation of Antidumping Investigation

    We have examined the petition on fresh Atlantic salmon from Chile 
and have found that it meets the requirements of section 732 of the 
Act, including the requirement concerning allegation of material injury 
or threat of material injury to the domestic producers of a domestic 
like product by reason of subject imports allegedly sold at less than 
fair value. Therefore, we are initiating an antidumping duty 
investigation to determine whether imports of fresh Atlantic salmon 
from Chile are being, or are likely to be, sold in the United States at 
less than fair value. Our preliminary determination will be issued by 
November 19, 1997, unless the deadline for the determination is 
extended.

Distribution of Copies of the Petition

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

International Trade Commission Notification

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

Preliminary Determination by the ITC

    The ITC will determine by July 28, 1997, whether there is a 
reasonable indication that imports of fresh Atlantic salmon from Chile 
are causing material injury, or threatening to cause material injury, 
to a U.S. industry. A negative ITC determination will result in 
termination of the investigation; otherwise, the investigation will 
proceed according to statutory and regulatory time limits.

    Dated: July 2, 1997.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-18112 Filed 7-9-97; 8:45 am]
BILLING CODE 3510-DS-P