[Federal Register Volume 63, Number 21 (Monday, February 2, 1998)]
[Notices]
[Pages 5360-5363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2478]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-337-804, A-533-813, A-560-802, and A-570-851]


Initiation of Antidumping Investigations: Certain Preserved 
Mushrooms From Chile, India, Indonesia, and the People's Republic of 
China

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

EFFECTIVE DATE: February 2, 1998.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger, Office 5, AD/CVD 
Enforcement Group II, Import Administration-Room B099, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W.,

[[Page 5361]]

Washington, DC 20230; telephone: (202) 482-4136.

SUPPLEMENTARY INFORMATION:

Initiation of Investigations

The Applicable State 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 are 
to the current regulations, as amended by the regulations published in 
the Federal Register on May 19, 1997 (62 FR 27296).

The Petition

    On January 6, 1998, the Department of Commerce (``the Department'') 
received a petition filed in proper form by the Coalition for Fair 
Preserved Mushroom Trade which is comprised of the following companies: 
L.K. Bowman, Inc., Modern Mushroom Farms, Inc., Monterey Mushrooms, 
Inc., Mount Laurel Canning Corp., Mushroom Canning Company, Sunny Dell 
Foods, Inc., and United Canning Corp. (``the petitioners''). The 
Department received supplemental information to the petitions on 
January 15 and 20, 1998.
    In accordance with section 732(b) of the Act, petitioners allege 
that imports of certain preserved mushrooms (``mushrooms'') from Chile, 
India, Indonesia, and the People's Republic of China (``PRC'') 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 an industry in the United States.
    The Department finds that petitioners filed the petition on behalf 
of the domestic industry because they are interested parties as defined 
in section 771(9)(C) and (D) of the Act and they have demonstrated 
sufficient industry support (see discussion below).

Scope of Investigations

    For purposes of these investigations, the products covered are 
certain preserved mushrooms whether imported whole, sliced, diced, or 
as stems and pieces. The preserved mushrooms covered under these 
investigations are the species Agaricus bisporus and Agaricus 
bitorquis. ``Preserved mushrooms'' refer to mushrooms that have been 
prepared or preserved by cleaning, blanching, and sometimes slicing or 
cutting. These mushrooms are then packed and heated in containers 
including but not limited to cans or glass jars in a suitable liquid 
medium, including but not limited to water, brine, butter or butter 
sauce. Preserved mushrooms may be imported whole. sliced, diced, or as 
stems and pieces. Included within the scope of the investigation are 
``brined'' mushrooms, which are presalted and packed in a heavy salt 
solution to provisionally preserve them for further processing.
    The merchandise subject to these investigations is classifiable 
under subheadings 2003.10.27, 2003.10.31, 2003.10.37, 2003.10.43, 
2003.10.47.2003.10.53, and 0711.90.4000 of the Harmonized Tariff 
Schedule of the United States (``HTS''). Although the HTS subheadings 
are provided for convenience and Customs purposes, the written 
description of the merchandise under investigation is dispositive.
    Excluded from the scope of this petition are the following: (1) All 
other species of mushroom including straw mushrooms; (2) all fresh and 
chilled mushrooms, including ``refrigerated'' or ``quick blanched 
mushrooms''; (3) dried mushrooms; (4) frozen mushrooms; and (5) 
``marinated,'' ``acidified'' or ``pickled'' mushrooms, which are 
prepared or preserved by means of vinegar or acetic acid, but may 
contain oil or other additives.

Determination of Industry Support for the Petition

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement 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.
    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 International Trade Commission 
(``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. 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.\1\ 
Section 771(10) of the Act defines domestic like product as ``a product 
which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
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    \1\ 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 FR 
32376, 32380-81 (July 16, 1991).
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    The domestic like product referred to in the petition is the single 
domestic like product defined in the ``Scope of Investigation'' 
section, above. The Department has no basis on the record to find the 
petition's definition of the domestic like product to be inaccurate. 
The Department has, therefore, adopted the domestic like product 
definition set forth in the petition. In this case, the petitioners 
established industry support above the statutory requirement, as 
detailed in a memorandum to the file dated January 23, 1998. 
Accordingly, the Department determines that the petition is filed on 
behalf of the domestic industry within the meaning of section 732(b)(1) 
of the Act.
    The Department received the following comments regarding industry 
support. With respect to the petition on imports of mushrooms from 
Chile, Nature's Farm Products (Chile) S.A. (``NFP Chile''), a foreign 
exporter of the subject merchandise, filed a submission on January 22, 
1998, which argued that the petitioners do not constitute a U.S. 
industry. NFP Chile stated that the petitioners are not producers 
because ``[f]ew of them even grow mushrooms which are the underlying 
product that is the subject of the investigation.'' According to NFP 
Chile, petitioners represent canners or packagers that cannot be 
considered an industry. Instead, NFP Chile requests that the Department 
poll members of the American Mushroom Institute to assess industry 
support.
    We disagree with NFP Chile that petitioners, that is, domestic 
producers

[[Page 5362]]

of preserved mushrooms, do not constitute an industry. As defined in 
the scope of the petition, ``preserved mushrooms'' refer to mushrooms 
that have been prepared or preserved by cleaning, blanching, and 
sometimes slicing or cutting, which are then packed and heated in 
various containers in a suitable liquid. Petition at 12. Therefore, the 
proper focus of our industry support analysis lies with the producers 
of preserved mushrooms, not the growers of mushrooms. We note that in 
an earlier antidumping investigation, Canned Mushrooms form the 
People's Republic of China, the petition was filed by a canner of 
mushrooms, the Four ``H'' Company. 48 Fed. Reg. 45,445, (10/5/83). In 
that investigation, the ITC concluded that the domestic industry was 
comprised of ``the U.S. facilities engaged in canning mushrooms.'' 
Canned Mushrooms from the People's Republic of China, Inv. No. 731-TA-
115 (Prelim.), USITC Pub. 1324 at 3-4 (1982). As described in our 
industry support memorandum, the Department confirmed with the ITC the 
known universe of producers of preserved mushrooms. There is no basis 
for polling an industry group (growers) which does not produce the 
merchandise identified in the petition.
    With respect to the petition on imports of preserved mushrooms from 
India, on January 22, 1998, we received an expression of opposition 
from Giorgio Foods Inc. (``Giorgio''), which is both a domestic 
producer of the subject merchandise, as well as an importer of subject 
merchandise from India. Because Giorgio is an importer of the subject 
merchandise from India the Department has the authority to disregard 
Giorgio's position, in accordance with section 732(c)(B)(ii) of the 
Act. However, our analysis shows that the supporters of the petition 
account for over 50 percent of production of the domestic producers who 
have expressed an opinion even if Giorgio's position is not disregard. 
See Memorandum to The File dated January 23, 1998, on Industry Support.

Export Price and Normal Value

    The following are descriptions of the allegations of sales at less 
than fair value upon which our decisions to initiate these 
investigations are based. Should the need arise to use any of this 
information in our preliminary or final determinations for purposes of 
facts available under section 776 of the Act, we may re-examine the 
information and revise the margin calculations, if appropriate.
Chile
    The petitioners identified NFP Chile as the sole exporter and 
producer of mushrooms from Chile. The petitioners based export price 
(``EP'') on U.S. sales prices obtained by one of the petitioning 
companies for the first sales to unaffiliated purchases, specifically, 
sales made by Nature's Farm-USA to a customer in 1997. The petitioners 
calculated a net U.S. price by subtracting import charges based upon 
the official U.S. import statistics and import duties based on the 1997 
import duty rate.
    Pursuant to sections 773(a)(4) and 773(e) of the Act, the 
petitioners based normal value (``NV'') for sales in Chile on 
constructed value (``CV''). The petitioners claimed that there are 
insufficient sales of the foreign like product in the home market to 
form an adequate basis for comparison with EPs to the United States.
    Pursuant to section 773(e) of the Act, CV consists of the cost of 
materials, fabrication, other processing (i.e., cost of manufacturing 
(``COM'')), selling, general, and administrative expenses (``SG&A''), 
and packing. To calculate COM and SG&A, the petitioners relied on 
market research and NFP Chile's corporate financial statements. The 
petitioners also based packing information on market research.
    Consistent with section 773(e)(2) of the Act, the petitioners also 
added to CV an amount for profit. Because the petitioners claim that 
NFP Chile has failed to realize a profit since 1990, the petitioners 
relied upon the 1996 profit margin for Iansafrut S.A., a leading 
Chilean fruit and vegetable producer, as a reasonable surrogate to 
estimate a profit margin for NFP Chile's sales.
    The estimated dumping margin in the petition, based on a comparison 
between NFP Chile's U.S. price and the CV, is 83.30 percent.
India
    The petitioners identified the following as exporters and producers 
of mushrooms from India: Agro Dutch Foods, Ltd. (``Agro Dutch''); 
Alpine Biotech Ltd. (``Alpine''); Mandeep Mushrooms Ltd. (``Mandeep''); 
Pond's India Ltd. (``Pond's''); Saptarishi Agro Industries Ltd. 
(``Saptarishi''); Transchem Ltd. (``Transchem''); Premier Mushroom 
Farms (``Premier''); and Flex Foods Ltd. (``Flex Foods''). For export 
price (``EP''), the petitioners used price quotes, as obtained from 
their market research, and average unit prices derived from U.S. 
Customs IM 146 statistical import data.
    The petitioners adjusted these prices by subtracting amounts for 
foreign inland freight and estimated international movement expenses, 
U.S. merchandise processing fee, and U.S. harbor maintenance fee, as 
appropriate. The movement expenses were based on information obtained 
from the petitioners' market research and the difference between the 
CIF import value and the Customs Import value reported in the official 
1997 U.S. import statistics for January through September 1997.
    With respect to NV, the petitioners provided calculations using 
both home market prices and CV. In addition, the petitioners provided 
information demonstrating reasonable grounds to believe or suspect that 
sales of mushrooms in the home market were made at prices below the 
cost of production (``COP''), within the meaning of section 773(b) of 
the Act, and requested that the Department conduct a country-wide sales 
below cost investigation. Therefore, pursuant to sections 773(a)(4) and 
773(e) of the Act, the petitioners also based NV for sales in India on 
CV.
    As noted above, CV consists of COM, SG&A, and profit. The 
petitioners calculated the direct portion of COM and packing based on 
Indian costs obtained through their market research. To calculate the 
indirect portion of COM, SG&A and CV profit, the petitioners relied on 
financial statements of Indian producers of the subject merchandise, as 
included in the petition.
    Based on comparisons of EP to NV, the petitioners estimate margins 
of 31.76 to 274.05 percent.
Indonesia
    The petitioners identified five exporters and producers of 
mushrooms: Dieng Djaya, PT (``Dieng Djaya''); Indo Evergreen Agro 
Business Co., PT (``Indo Evergreen''); Surya Jaya Abadi Perkasa, PT 
(``Surya Jaya''); Tuwuh Agung, PT (``Tuwuh Agung''); and Zeta Agro 
Corporation (``Zeta''). The petitioners based EPs on U.S. price quotes 
obtained from their market research, and average unit prices derived 
from U.S. Customs IM 146 statistical import data. Where appropriate, 
the petitioners subtracted foreign inland freight from the EP. As the 
petitioners could not obtain freight expense data from Indonesia, they 
applied a freight expense based on Indian data.
    The petitioners based NV on home market prices quotes, as obtained 
by their market research, and CV.
    As noted above, CV consists of COM, SG&A, packing and profit. The 
petitioners based their calculations for COM, SG&A and packing on 
Indonesian costs obtained through their market

[[Page 5363]]

research. Profit, net interest, and depreciation are based on public 
information from a major Indonesian food processing company. The 
petitioners made no adjustments to the home market price quote.
    Comparison of NV and net EPs for sales of mushrooms from Indonesia 
results in estimated dumping margins that range from 35.40 percent to 
42.30 percent.
People's Republic to China
    The petitioners identified 36 potential PRC exporters and producers 
of mushrooms. The petitioners based EP on average Customs import values 
and U.S. prices quotes obtained from industry contacts. From these 
starting prices, the petitioners deducted international freight and 
insurance fees, based on the difference between the CIF import value 
and the Customs import value. The petitioners then subtracted U.S. 
entry fees, U.S. merchandise processing fees and U.S. harbor 
maintenance fees.
    Because the PRC is considered a nonmarket economy (NME) country 
under section 771(18) of the Act, the petitioners based NV on the 
factors of production valued in a surrogate country, in accordance with 
section 773(c)(3) of the Act. For the factors of production, the 
petitioners used Indian consumption data for materials, labor, and 
energy, based on data in the market research report for the companion 
Indian petition and included in the public version of that petition. 
Materials were valued based on Indian prices obtained from the 
petitioner's market research. Labor was valued using the regression-
based wage rate for the PRC provided by the Department, in accordance 
with 19 CFR 351.408(c)(3). Electricity was valued using the rate 
published in the annual report of an Indian producer of the subject 
merchandise. For factory overhead, SG&A and profit, the petitioners 
applied rates derived from the public annual reports of several Indian 
preserved mushroom producers. Packing factors were based on the Indian 
market research report, and packing materials valued based on the 
Indian market research. Packing labor was valued in the same manner as 
direct labor.
    Based on comparisons of EP to NV, the petitioners estimate dumping 
margins from 85.38 percent to 198.63 percent.

Initiation of Cost Investigation

    Pursuant to section 773(b) of the Act, the petitioners alleged that 
sales in the home market of India were made at prices below the COP 
and, accordingly, requested that the Department conduct a country-wide 
sales below COP investigation in India. The Statement of Administrative 
Action (``SAA''), submitted to the 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 upon the 
comparison of the adjusted prices from the petition of the foreign like 
product in India to the COP calculated in the petition, we find 
``reasonable grounds to believe or suspect'' that sales of these 
foreign like products were made below their respective COP within the 
meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the 
Department is initiating the requested country-wide cost investigation 
for India.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of mushrooms from Chile, India, Indonesia, and the 
PRC are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

    The petition alleges that the U.S. industry producing the domestic 
like product is being materially injured, and is threatened with 
material injury, by reason of the individual and cumulated imports of 
the subject merchandise sold at less than NV. The allegations of injury 
and causation are supported by relevant evidence including business 
proprietary data from the petitioning firms, U.S. Customs import data 
and a pricing report from an industry trade journal. The Department 
assessed the allegations and supporting evidence regarding material 
injury and causation and determined that these allegations are 
sufficiently supported by accurate and adequate evidence and meet the 
statutory requirements for initiation.

Initiation of Antidumping Investigations

    We have examined the petition on mushrooms and have found that it 
meets the requirements of section 732 of the Act. Therefore, we are 
initiating antidumping duty investigations to determine whether imports 
of mushrooms from Chile, India, Indonesia, and the PRC are being, or 
are likely to be, sold in the United States at less than fair value. 
Unless extended, we will make our preliminary determinations for the 
antidumping duty investigations by June 15, 1998.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of each petition has been provided to the 
representatives of the governments of Chile, India, Indonesia, and the 
PRC. 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 initiations, as required by section 
732(d) of the Act.

Preliminary Determinations by the ITC

    The ITC will determine by February 20, 1998, whether there is a 
reasonable indication that imports of mushrooms from Chile, India, 
Indonesia, and the PRC are causing material injury, or threatening to 
cause material injury, to a U.S. industry. Negative ITC determinations 
will result in the particular investigations being terminated; 
otherwise, the investigations will proceed according to statutory and 
regulatory time limits.

    Dated: January 26, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-2478 Filed1-30-98; 8:45 am]
BILLING CODE 3510-DS-M