[Federal Register Volume 63, Number 150 (Wednesday, August 5, 1998)]
[Notices]
[Pages 41783-41786]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20909]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-560-802]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Certain Preserved 
Mushrooms From Indonesia

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

EFFECTIVE DATE: August 5, 1998.

FOR FURTHER INFORMATION CONTACT: Mary Jenkins or David J. Goldberger, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-1756 or (202) 482-4136, 
respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``the Act''), are references to the provisions 
effective January 1, 1995, the effective date of the amendments made to 
the Act by the Uruguay Round Agreements Act (``URAA''). In addition, 
unless otherwise indicated, all citations to the Department's 
regulations are to the regulations at 19 CFR Part 351, published at 62 
FR 27296 (May 19, 1997).

Preliminary Determination

    We preliminarily determine that certain preserved mushrooms 
(``mushrooms'') from Indonesia are being, or are likely to be, sold in 
the United States at less than fair value (``LTFV''), as provided in 
section 733(b) of the Act. The estimated margins of sales at LTFV are 
shown in the ``Suspension of Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation (Notice of Initiation of 
Antidumping Investigations: Certain Preserved Mushrooms From Chile, 
India, Indonesia, and the People's Republic of China (63 FR 5360, 
February 2, 1998)), the following events have occurred:
    During January through February of 1998, the Department of Commerce 
(``the Department'') requested information from the U.S. Embassy in 
Indonesia to identify producers/exporters of the subject merchandise. 
During the month of February 1998, the Department also requested and 
received comments from the petitioners and potential respondents 
regarding model matching criteria.
    On February 27, 1998, the United States International Trade 
Commission (``ITC'') notified the Department of its affirmative 
preliminary injury determination in this case.
    Also on February 27, 1998, the Department issued an antidumping 
duty questionnaire to the following producers: PT Dieng Djaya 
(``Dieng''), PT Indo Evergreen Agro Business Company, PT Surya Jaya 
Abadi Perkasa (``Surya''), PT Tuwuh Agung and PT Zeta Agro Corporation 
(``Zeta'').
    On March 30, 1998, the Department issued a notice setting aside a 
period for interested parties to raise issues regarding product 
coverage. Certain Preserved Mushrooms from Chile, India, Indonesia, and 
the People's Republic of China: Comments Regarding Product Coverage (63 
FR 16971 (April 7, 1998)). No parties to this investigation filed 
comments regarding product coverage.
    In April 1998, the Department received responses to Section A of 
the questionnaire from Dieng, PT Indo Evergreen Agro Business Company, 
Surya, PT Tuwuh Agung and Zeta. Dieng and Surya informed the Department 
that they were affiliated companies as defined by the Department's 
regulations; therefore, the two companies submitted a combined 
response, in accordance with 19 CFR 351.401(f). Dieng/Surya also 
informed the Department that PT Tuwuh Agung, a related company, was not 
a manufacturer or exporter of subject merchandise. Dieng/Surya and Zeta 
reported that their home market and third country markets were not 
viable during the period of investigation (``POI'') and, therefore, 
each of the companies would submit constructed value (``CV'') of the 
subject merchandise.
    On April 14, 1998, pursuant to section 777A(c) of the Act, the 
Department determined that, due to the large number of exporters/
producers of the subject merchandise, it would limit the number of 
mandatory respondents in this investigation. See ``Respondent

[[Page 41784]]

Selection'' section below. The Department determined that it would 
analyze the responses of the two largest exporters/producers of the 
subject merchandise in this investigation. Based on Section A 
questionnaire responses, the Department selected the two largest 
companies in Indonesia, Dieng/Surya and Zeta, to be mandatory 
respondents (see Memorandum to Louis Apple, dated April 14, 1998).
    We received responses to Sections C and D of the questionnaire from 
Dieng/Surya and Zeta in April 1998. We issued a supplemental 
questionnaire for Sections A, C, and D to Dieng/Surya and Zeta in April 
1998, and received responses to these questionnaires in June 1998.
    On May 1, 1998, pursuant to section 733(c)(1)(A) of the Act, the 
petitioners made a timely request to postpone the preliminary 
determination for forty days. We granted this request and, on May 8, 
1998, we postponed the preliminary determination until no later than 
July 27, 1998. See 63 FR 27264 (May 18, 1998). Petitioners and 
respondents provided additional comments on the responses during July 
1998.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on July 14, 1998, Dieng/
Surya and Zeta requested that, in the event of an affirmative 
preliminary determination in this investigation, the Department 
postpone its final determination until not later than 135 days after 
the date of the publication of an affirmative preliminary determination 
in the Federal Register. On July 23, 1998, Dieng/Surya and Zeta amended 
their request to include a request to extend the provisional measures 
by not more than six months. In accordance with 19 CFR 351.210(b), 
because our preliminary determination is affirmative, (2) Dieng/Surya 
and Zeta account for a significant proportion of exports of the subject 
merchandise, and (3) no compelling reasons for denial exist, we are 
granting the respondents' request and are postponing the final 
determination until no later than 135 days after the publication of 
this notice in the Federal Register. In addition, we are extending the 
provisional measures by not more than six months. Suspension of 
liquidation will be extended accordingly.

Scope of Investigation

    For purposes of this investigation, 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.
    Excluded from the scope of this investigation 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.
    The merchandise subject to this investigation 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.

Period of Investigation

    The POI is January 1, 1997, through December 31, 1997.

Fair Value Comparisons

    To determine whether sales of mushrooms from Indonesia to the 
United States were made at less than fair value, we compared export 
price (``EP'') to the Normal Value (``NV''), as described in the 
``Export Price'' and ``Normal Value'' sections of this notice, below. 
In accordance with section 777A(d)(1)(A)(i) of the Act, we calculated 
weighted-average EPs for comparison to weighted-average NVs.
    In this proceeding, none of the respondents had a viable home 
market or third country market. Therefore, as the basis for NV, we used 
CV when making comparisons, in accordance with section 773(a)(4) of the 
Act.

Export Price

    For both Dieng/Surya and Zeta we used EP methodology, in accordance 
with section 772(a) of the Act, because the merchandise was sold 
directly to the first unaffiliated purchaser in the United States prior 
to importation and CEP methodology was not otherwise indicated. For all 
respondents, we calculated EP based on packed prices charged to the 
first unaffiliated customer in the United States.
Dieng/Surya
    We based EP on the packed FOB seaport prices to unaffiliated 
purchasers in the United States. We made deductions, where appropriate, 
for foreign inland freight, foreign inland insurance, and brokerage and 
handling, in accordance with 772(c)(2)(A) of the Act. In addition, we 
made an adjustment to U.S. price for a refund in the form of a tax 
credit made to Dieng/Surya by the Indonesian government for excise tax 
paid on imported glass jars and tops that were eventually used for 
exported merchandise, in accordance with 772(c)(2)(B) of the Act.
Zeta
    We based EP on the packed FOB prices to unaffiliated purchasers in 
the United States. We made deductions, where appropriate, for foreign 
inland freight, foreign inland insurance, and brokerage and handling, 
in accordance with section 772(c)(2)(A) of the Act.

Normal Value

    After testing (1) home market viability, we calculated NV as noted 
in the ``Price-to-CV Comparisons'' section of this notice.

Home Market or Third Country Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market or third country to serve as a viable basis for 
calculating NV (i.e., the aggregate volume of home market or third 
country sales of the foreign like product are equal to or greater than 
five percent of the aggregate volume of U.S. sales), we compared the 
respondents' volume of home market and third country sales, 
respectively, of the foreign like product to the volume of U.S. sales 
of the subject merchandise, in accordance with sections 773(a)(1)(B) 
and (C) of the Act. Because each respondent reported that the aggregate 
volume of home market and/or third country sales of the foreign like 
product was less than five percent of its aggregate volume of U.S. 
sales of the subject merchandise, we determined for each respondent 
that the home and third country markets were not viable. Therefore, we 
used CV as a basis for calculating NV for both respondents, in

[[Page 41785]]

accordance with section 773(a)(4) of the Act.

Calculation of CV

    We calculated CV for each respondent in accordance with section 
773(e)(1) of the Act, which indicates that CV shall be based on the sum 
of each respondent's cost of materials and fabrication for the foreign 
like product, plus amounts for selling, general, and administrative 
expenses (SG&A), profit, and U.S. packing costs.
    We made the following adjustments for Zeta: Zeta allocated fresh 
mushroom costs between fresh and canned products based on the relative 
sale values of all mushroom products. This methodology is appropriate 
only in certain situations involving the allocation of joint-product 
costs (i.e., where a single production process yields simultaneously 
two or more products). In this case, the identical mushrooms are inputs 
into fresh and canned mushrooms products. Therefore, we recalculated 
the allocation of mushroom growing costs (i.e., material, direct labor, 
variable overhead, and fixed overhead incurred at the farm) between 
fresh mushrooms and canned mushrooms based on the respective quantity 
of fresh mushrooms used for each product.
    In its April 20, 1998, submission, Zeta claimed a startup 
adjustment under section 773(f)(1)(C)(ii) of the Act. In order to make 
a startup adjustment, the statute requires that (I) a producer is using 
new production facilities or producing a new product that requires 
substantial additional investment, and (II) production levels are 
limited by technical factors associated with the initial phase of 
production. Preliminarily, we determine that Zeta's canning factory is 
a new production facility. However, Zeta failed to identify suitable 
technical factors; therefore, we did not accept Zeta's startup 
adjustment. The technical factor identified by Zeta related to the lack 
of raw material supply because mushrooms were not grown until the 
cannery was built, which, in turn, resulted in a shortage of mushrooms 
at the beginning of the cannery's operation. We do not consider 
shortage of raw materials to be a technical factor associated with the 
canning facility.
    Because there are no viable comparison markets for Dieng/Surya and 
Zeta and, hence, no actual company-specific profit and SG&A data 
available for the respondents, we calculated profit and selling 
expenses in accordance with section 773(e)(2)(B)(iii) of the Act and 
the Statement of Administrative Action accompanying the URAA, H.R. Doc. 
No. 316, 103d Cong, 2d Sess (1994), (SAA) at 841.
    Specifically, the SAA provides that where, due to the absence of 
data, the Department cannot determine amounts for profit under 
alternatives (i) or (ii) of section 773(e)(2)(B) of the Act or a 
``profit cap'' under alternative (iii) of section 773(e)(2)(B) of the 
Act, the Department may apply alternative (iii) on the basis of the 
facts available. In this case, we are unable to determine an amount for 
profit under alternatives (i) or (ii), or a ``profit cap'' under 
alternative (iii) because none of the respondents has viable home 
markets. See 19 CFR 351.405(b)(2) of the Department's regulations 
(clarifying that under section 773(e)(2)(B) of the Act, ``foreign 
country'' means the country in which the merchandise is produced), (62 
FR 27296, 27412-13 (May 19, 1997)). The statute directs us to use an 
amount which reflects profit in connection with sales for consumption 
in the foreign country of the same general category of products as the 
subject merchandise See section 773(e)(2) of the Act. Because none of 
the respondents had a viable home market, the profit and selling 
expenses shown on their financial statements do not reflect profit and 
selling expenses realized in the home market. Therefore, we did not 
rely on the profit or selling expense data in the respondents' 
financial statements in calculating CV.
    Instead, we applied alternative (iii) and determined profit and 
selling expense on the basis of the facts available consistent with the 
SAA (See Shop Towels from Bangladesh; Final Results of Antidumping Duty 
Administrative Review, 61 FR 55957, October 30, 1996). As facts 
available, we calculated Zeta's and Dieng/Surya's profit and selling 
expenses for CV based on the weighted-average selling expenses and 
profit contained in PT Indofood Sukses Makmur's 1996 financial 
statements. PT Indofood Sukses Makmur is a large Indonesian processor 
of food products. For G&A expenses, we used the actual expenses 
contained in the respondents' financial statements.

Price-to-CV Comparisons

    For price-to-CV comparisons, we made adjustments to CV pursuant to 
section 773(a)(8) of the Act. Dieng/Surya did not provide costs to be 
used as CV for comparison for one product. As facts available, we have 
applied the costs from a comparable product.
    In their July 6, l998, submission, the petitioners argue that the 
Department should use two averaging periods in its margin calculations 
to account for the effect of the devaluation of the Indonesian rupiah. 
The petitioners contend that CV differs significantly and dramatically 
over the course of the POI when exchange rates are taken into account. 
To support their argument, petitioners cite Final Determination of 
Sales at Less Than Fair Value: Polyvinyl Alcohol from Taiwan, 61 FR 
14106, March 29, 1996, (``PVA from Taiwan''), where the Department 
established two averaging periods because of a ``distinct dividing 
line'' between price trends in the home market. Accordingly, the 
petitioners contend that the Department should calculate the weighted-
average EP for two averaging periods--January through June 1997 and 
July through December 1997--in order to avoid distorting dumping 
margins.
    We have examined the prices and selling practices of the two 
respondents in this investigation and find that the respondents' 
selling practices have been constant. We find no evidence that there 
has been a significant change in the respondents' pricing or marketing 
during the POI. This situation contrasts with PVA from Taiwan, where 
the respondent changed the way it conducted business with its principal 
home market customers, including its price structure, while at the same 
time, U.S. prices and input cost trends moved in tandem. Thus, contrary 
to the petitioners' assertions, this case is not analogous to PVA from 
Taiwan. Therefore, we find no basis to depart from our practice of 
calculating the weighted-average EPs for the entire POI.

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank, in accordance with section 773A of the Act.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information relied upon for use in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of all imports of subject 
merchandise that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct the Customs Service to require a 
cash deposit or the posting of a bond equal to the weighted-average 
amount by which the NV exceeds the export price, as indicated in the 
chart below. These suspension-of-

[[Page 41786]]

liquidation instructions will remain in effect until further notice. 
The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                               Weighted-
                                                                average 
                    Exporter/manufacturer                       margin  
                                                              percentage
------------------------------------------------------------------------
PT Dieng Djaya/PT Surya Jaya Abadi Perkasa..................       11.24
PT Zeta Agro Corporation....................................       29.58
All Others..................................................       15.35
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Public Comment

    Case briefs or other written comments in at least ten copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than October 16, 1998, and rebuttal briefs no later than October 
23, 1998. A list of authorities used and an executive summary of issues 
should accompany any briefs submitted to the Department. Such summary 
should be limited to five pages total, including footnotes. In 
accordance with section 774 of the Act, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. Tentatively, the hearing 
will be held on October 27, 1998, time and room to be determined, at 
the U.S. Department of Commerce, 14th Street and Constitution Avenue, 
N.W., Washington, D.C. 20230. Parties should confirm by telephone the 
time, date, and place of the hearing 48 hours before the scheduled 
time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) the party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs. If 
this investigation proceeds normally, we will make our final 
determination by no later than 135 days after the publication of this 
notice in the Federal Register.
    This determination is issued and published in accordance with 
sections 773(d) and 777(i)(1) of the Act.

    Dated: July 27, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-20909 Filed 8-4-98; 8:45 am]
BILLING CODE 3510-DS-P