[Federal Register Volume 64, Number 73 (Friday, April 16, 1999)]
[Notices]
[Pages 18878-18885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9612]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-331-602]


Certain Fresh Cut Flowers From Ecuador: Preliminary Results and 
Partial Rescission of Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review

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SUMMARY: In response to a request from a domestic interested party, the 
Department of Commerce is conducting an administrative review of the 
antidumping duty order on certain fresh cut flowers from Ecuador for 
the period March 1, 1997, through February 28, 1998.
    We have preliminarily determined that sales have been made below 
normal

[[Page 18879]]

value by various companies subject to this review. If these preliminary 
results are adopted in the final results of this administrative review, 
we will instruct the Customs Service to assess antidumping duties equal 
to the difference between the export price or constructed export price 
and the normal value. We invite interested parties to comment on these 
preliminary results.

EFFECTIVE DATE: April 16, 1999.

FOR FURTHER INFORMATION CONTACT: Mark Ross or Edythe Artman, Office of 
Antidumping/Countervailing Duty Enforcement, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, DC 20230; telephone 
(202) 482-4794 or (202) 482-3931, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    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 of Commerce's (the 
Department's) regulations are to the regulations codified at 19 CFR 
Part 351 (1998).

Background

    On March 11, 1998, the Department published a notice of 
``Opportunity to Request Administrative Review'' with respect to the 
antidumping duty order on certain fresh cut flowers from Ecuador (63 FR 
11868). The Floral Trade Council (FTC) requested a review on March 31, 
1998. An association of U.S. flower producers, the FTC was the 
petitioner in the original investigation of this proceeding. In 
response to the FTC's request, the Department published a notice of 
initiation of an administrative review on April 24, 1998, in accordance 
with 19 CFR 351.213(b) (63 FR 20378). On November 24, 1998, we extended 
the deadline for the preliminary results of the review until March 30, 
1999 (see 63 FR 66528).

Scope of Review

    Imports covered by this review are shipments of certain fresh cut 
flowers from Ecuador. Specifically, the products are standard 
carnations, standard chrysanthemums, and pompon chrysanthemums. These 
products are currently classifiable under item numbers 0603.10.70.10, 
0603.10.70.20, and 0603.10.70.30, respectively, of the Harmonized 
Tariff Schedule of the United States (HTSUS). Although the HTSUS item 
numbers are provided for convenience and for customs purposes, the 
Department's written description of the scope of this proceeding 
remains dispositive.

Period of Review

    The period of review (POR) is from March 1, 1997, through February 
28, 1998.

Partial Rescission of the Review

    In light of past administrative practice and relevant provisions of 
the law, we are rescinding some companies from the review which were 
listed in the notice of initiation.
    The respondent U.S. Floral Corporation submitted a letter stating 
that it was an importer of Ecuadorian fresh cut flowers. It stated that 
it had no ownership or affiliation with any farm or exporter in Ecuador 
and did not exist as a corporate entity in Ecuador. The company also 
stated that it had made no shipments of subject merchandise to the 
United States during the POR.
    A review of Customs Service documentation regarding shipments of 
the subject merchandise during the POR confirms that U.S. Floral did 
not have any shipments of the merchandise. See Memorandum from Laurie 
Parkhill to Richard W. Moreland (May 26, 1998). Therefore, we have 
rescinded our review of U.S. Floral in accordance with 19 CFR 
351.213(d).
    Flores Equinocciales (listed in the notice of initiation as 
Florequisa) stated in a submission that it had received a de minimis 
weighted-average margin in the original investigation. It stated that, 
as a result, it had never been subject to suspension of liquidation and 
did not consider itself a candidate for an administrative review. We 
agree (see Letter from Laurie Parkhill to Flores Equinocciales (June 3, 
1998)) and have rescinded the review of this company.
    Noelia Flowers (listed in the notice of initiation as 
Noeliaflowers) reported that it had shipped flowers to the United 
States during the POR, but that all of the shipments had been supplied 
by a single, unaffiliated farm which knew that the destination of the 
merchandise was within the United States. It submitted a copy of a 
receipt from a farm which shows that the farm knew of the ultimate 
destination of the flowers. Because the supplier of the flowers that 
Noelia Flowers shipped to the United States during the POR had 
knowledge, at the time it sold the merchandise to Noelia Flowers, that 
those sales were destined for export to the United States, the 
Department considers the supplier to be the source of any dumping 
activity, not Noelia Flowers. As such, the supplier established the 
price of the subject merchandise we would use in our antidumping 
analysis. Therefore, we have rescinded the review of Noelia Flowers. 
This is consistent with our practice of rescinding a review of an 
exporter where the producer had knowledge that the subject merchandise 
would ultimately end up in the United States. See Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof from France, 
Germany, Japan, Singapore, Sweden, Thailand, and the United Kingdom; 
Preliminary Results of Antidumping Duty Administrative Reviews, Partial 
Termination of Administrative Reviews, and Notice of Intent to Revoke 
Order, 60 FR 62817, 62818 (December 7, 1995). Request for Revocation of 
the Antidumping Duty Order.
    On May 29, 1998, Florisol Cia. Ltda. (also listed as Florisol in 
the notice of initiation) submitted a letter in which it requested 
revocation of the antidumping duty order with respect to its sales.
    Section 351.222(e) of the Department's regulations states that a 
request for revocation of an order may be submitted ``[d]uring the 
third and subsequent annual anniversary months of the publication of an 
antidumping order.'' The anniversary month of the order under review is 
March. Hence, the request for revocation was received two months 
following the prescribed time frame for its submission. For this 
reason, the Department found that the request was untimely and, 
therefore, rejected the request. See Memorandum from the Ecuadorian 
Flowers Team to Laurie Parkhill (March 3, 1999).

Selected Respondents

    Section 777A(c)(2) of the Act provides the Department with the 
authority to determine margins either by limiting its examination to a 
statistically valid sample of exporters or by limiting its examination 
to exporters which account for the largest volume of the subject 
merchandise that can reasonably be examined. This subparagraph is 
formulated as an exception to the general requirement of the Act that 
we examine each company, for which a review is requested, individually 
and calculate a company-specific margin.
    Because over 40 companies were named in the initiation notice for 
this review and because of the limited resources available to calculate 
individual margins, we determined that it was necessary to restrict the 
number of respondents selected for examination. This approach enabled 
the Department

[[Page 18880]]

to analyze the responses of the selected companies thoroughly and 
carefully to consider all issues raised in the proceeding within the 
statutory deadlines. This approach is consistent with that taken in 
reviews of the antidumping duty order on certain fresh cut flowers from 
Colombia (see, e.g., Certain Fresh Cut Flowers from Colombia: 
Preliminary Results and Partial Termination of Antidumping Duty 
Administrative Review, 63 FR 5354 (February 2, 1998)).
    Consistent with section 777A(c)(2)(B) of the Act, we limited our 
examination to six respondents since the sales of these companies 
accounted for over ninety percent of the sales to the United States by 
companies for which the review was requested. See Memorandum from 
Laurie Parkhill to Richard W. Moreland (June 15, 1998). The six 
selected respondents for this review are Agritab Cia. Ltda. (Agritab), 
Claveles de la Montana, S.A. (Montana), Flores del Quinche S.A. 
(Floraquin), Floricultura Ecuaclavel S.A. (Ecuaclavel), Florisol Cia. 
Ltda. (Florisol), and Flores Mitad del Mundo, S.A. (Floremit).

Non-Selected Respondents

    On May 1, 1998, the Department issued a questionnaire to each of 
the companies named in the initiation notice. Sixteen of the companies 
completed and returned the questionnaire and 22 sent letters in which 
they reported having no shipments of subject merchandise during the 
POR.
    Of the sixteen who returned the questionnaire, we selected six as 
respondents, as discussed above, and we consider the remaining ten as 
non-selected respondents. Consistent with our practice in recent 
administrative reviews of the antidumping duty order on certain fresh 
cut flowers from Colombia, we are assigning the non-selected, 
cooperative respondents a weighted-average margin based on the 
calculated margins of the selected respondents, excluding any zero or 
de minimis margins and margins based entirely on facts available. See 
Memorandum from Laurie Parkhill to the File (July 17, 1998), and 
Certain Fresh Cut Flowers from Colombia: Final Results of Antidumping 
Duty Administrative Review, 63 FR 31724 (June 10, 1998) (Colombian 
Flowers Tenth Review).
    For companies that reported having no shipments during the POR, we 
reviewed the Customs Service entry documentation for the subject 
merchandise from Ecuador during the POR, which confirmed that these 
companies had no shipments of the merchandise. Consequently, these 
respondents will either retain the company-specific rate most recently 
assigned to them (as a result of a prior review or the original less-
than-fair-value investigation) or their entries will receive the ``all 
others'' rate for future cash-deposit purposes.
    The non-selected companies are listed as the ``Non-Selected 
Respondents'' in the ``Preliminary Results of Review'' section below.

Facts Available

    Two companies, Ecuaplanta and San Alfonso, did not respond to our 
original questionnaire or to a follow-up letter that was issued to 
them. Section 776(a)(2) of the Act provides that, if an interested 
party (1) withholds information that has been requested by the 
Department, (2) fails to provide such information in a timely manner or 
in the form or manner requested, subject to subsections 782(c)(1) and 
(e) of the Act, (3) significantly impedes a determination under the 
antidumping statute, or (4) provides such information but the 
information cannot be verified as provided in section 782(i) of the 
Act, then the Department shall, subject to section 782(d) of the Act, 
use facts otherwise available in reaching the applicable determination. 
Because Ecuaplanta and San Alfonso did not respond to the questionnaire 
or the follow-up letter, the provisions of sections 782(c)(1) and (e) 
of the Act do not apply and we must use facts otherwise available to 
determine their dumping margins.
    Section 776(b) of the Act provides that, if the Department finds 
that an interested party has failed to cooperate by not acting to the 
best of its ability to comply with a request for information, the 
Department may use an inference that is adverse to the interests of 
that party in selecting from among the facts otherwise available. The 
section provides that an adverse inference may include reliance on 
information derived from (1) the petition, (2) the final determination 
in the investigation segment of the proceeding, (3) a previous review 
under section 751 of the Act or a determination under section 753 of 
the Act, or (4) any other information placed on the record. In 
addition, the Statement of Administrative Action accompanying the URAA, 
H.R. Doc. 316, Vol. 1, 103d Cong. (1994) (SAA), establishes that the 
Department may employ an adverse inference ``to ensure that the party 
does not obtain a more favorable result by failing to cooperate than if 
it had cooperated fully.'' SAA at 870. In employing adverse inferences, 
the Department is instructed to consider ``the extent to which a party 
may benefit from its own lack of cooperation.'' Id. Because Ecuaplanta 
and San Alfonso did not cooperate by complying with our request for 
information and in order to ensure that they do not benefit from their 
lack of cooperation, we are employing an adverse inference in selecting 
from the facts available.
    The Department's practice when selecting an adverse rate from among 
the possible sources of information has been to ensure that the margin 
is sufficiently adverse ``as to effectuate the purpose of the facts 
available rule to induce respondents to provide the Department with 
complete and accurate information in a timely manner.'' See Static 
Random Access Memory Semiconductors From Taiwan; Final Determination of 
Sales at Less Than Fair Value, 63 FR 8909, 8932 (February 23, 1998). 
The Department will also consider the extent to which a party may 
benefit from its own lack of cooperation in selecting a rate. See 
Roller Chain Other Than Bicycle, From Japan; Notice of Final Results 
and Partial Recission of Antidumping Duty Administrative Review, 62 FR 
69472, 69477 (November 10, 1997), and Certain Welded Carbon Steel Pipes 
and Tubes from Thailand: Final Results of Antidumping Administrative 
Review, 62 FR 53808, 53820-21 (October 16, 1997).
    In order to ensure that the rate is sufficiently adverse so as to 
induce Ecuaplanta's and San Alfonso's cooperation, we have assigned 
these companies as adverse facts available a rate of 23.50 percent, the 
highest margin determined in any segment of this proceeding. This rate 
was calculated for Eden Flowers in the amended final determination. See 
Amendment to Final Determination of Sales at Less Than Fair Value and 
Antidumping Duty Order in Accordance with Decision Upon Remand: Certain 
Fresh Cut Flowers from Ecuador, 54 FR 29595 (July 13, 1989). As such, 
the margin constitutes ``secondary information'' under section 776(c) 
of the Act.
    Section 776(c) of the Act provides that the Department shall, to 
the extent practicable, corroborate secondary information used for 
facts available by reviewing independent sources reasonably at its 
disposal. The SAA provides that to ``corroborate'' means simply that 
the Department will satisfy itself that the secondary information to be 
used has probative value. SAA at 870. As noted in Tapered Roller 
Bearings and Parts Thereof, Finished and Unfinished, from Japan, and 
Tapered Roller Bearings, Four Inches or

[[Page 18881]]

Less in Outside Diameter, and Components Thereof, from Japan; 
Preliminary Results of Antidumping Duty Administrative Reviews and 
Partial Termination of Administrative Reviews, 61 FR 57391, 57392 
(November 6, 1996), to corroborate secondary information, the 
Department will, to the extent practicable, examine the reliability and 
relevance of the information used. However, unlike other types of 
information, such as input costs or selling expenses, there are no 
independent sources from which the Department can derive calculated 
dumping margins; the only source for margins is administrative 
determinations. Thus, in an administrative review, if the Department 
chooses as total adverse facts available a calculated dumping margin 
from a prior segment of the proceeding, it is not necessary to question 
the reliability of the margin for that time period.
    As to the relevance of the margin used for adverse facts available, 
the Department stated in Tapered Roller Bearings that it will 
``consider information reasonably at its disposal'' as to whether there 
are circumstances that would render a margin irrelevant. Where 
circumstances indicate that the selected margin is not appropriate as 
adverse facts available, the Department will disregard the margin and 
determine an appropriate margin.'' Id.; see also Fresh Cut Flowers from 
Mexico; Preliminary Results of Antidumping Duty Administrative Review, 
60 FR 49567 (September 26, 1995).
    As stated above, the highest rate determined in any segment of this 
proceeding is 23.50 percent for Eden Flowers. We have determined that 
there is no evidence on the administrative record for the less-than-
fair-value investigation which indicates that the 23.50 percent rate is 
irrelevant or inappropriate as total facts available for Ecuaplanta and 
San Alfonso for this review.

The FTC's Status as a Domestic Interested Party

    Five of the respondents requested that the Department require the 
FTC to identify its members, citing 19 CFR 351.213(b)(1) as requiring 
that an administrative review be requested by a domestic interested 
party. They argued that section 771(9)(E) of the Act provides that a 
trade association may constitute a domestic interested party if the 
majority of its members are manufacturers, producers or wholesalers of 
a domestic like product in the United States but that, because the FTC 
had not identified its members in its request for a review or any 
subsequent submissions to the Department, it was impossible to know if 
the FTC met the definition of domestic interested party. In the event 
that the FTC was not found to meet the definition of interested party, 
the respondents argued that the Department should terminate the review.
    Further submissions by the FTC clarified the position of the FTC in 
the industry. We determined that a November 1998 affidavit by the 
President of the FTC stating that the majority of the association's 
members were growers or wholesalers of the subject merchandise was 
sufficient evidence of the nature of the association's membership. 
Therefore, we concluded that the FTC meets the definition of ``domestic 
interested party'' within the meaning of section 771(9)(E) of the Act. 
See Memorandum from Laurie Parkhill to Richard W. Moreland (January 27, 
1999).

Request for Separate Rates

    Since the original investigation the Department has calculated 
company-specific weighted-average margins for all subject merchandise. 
Because the International Trade Commission (ITC) found that each of the 
three flower types subject to investigation was a separate like 
product, five of the respondents requested that the Department 
calculate a weighted-average rate for each flower type. Because the 
order is subject to a ``sunset'' review in 1999, the respondents 
contend that the ITC would most likely use the like-product analysis 
that it had developed at the investigation stage.
    The purpose of an administrative review is to determine the amount 
of duties due on entries during the POR and to establish estimated 
antidumping duties for future entries. We calculate, where possible, 
customer-specific duty-assessment rates and it is our long-established 
practice to calculate a weighted-average margin for the subject 
merchandise to set the cash-deposit rate for future entries. 
Respondents' argument addresses the conduct of the sunset review, not 
the assessment of antidumping duties. Therefore, we find no basis upon 
which to assign separate weighted-average margins for the three flower 
types in this administrative review.

Duty Absorption

    On March 31, 1998, the FTC requested that the Department determine 
whether antidumping duties had been absorbed by the respondents during 
the POR. Section 751(a)(4) of the Act provides for the Department, if 
requested, to determine, during an administrative review initiated two 
years or four years after publication of the order, whether antidumping 
duties have been absorbed by a foreign producer or exporter subject to 
the order if the subject merchandise is sold in the United States 
through an importer who is affiliated with such foreign producer or 
exporter. For transition orders as defined in section 751(c)(6)(C) of 
the Act (i.e., orders in effect as of January 1, 1995), section 
351.213(j)(2) of our regulations provides that we will make a duty-
absorption determination, if requested, for any administrative review 
initiated in 1996 or 1998. This approach ensures that interested 
parties will have the opportunity to request a duty-absorption 
determination prior to the time of a sunset review of an antidumping 
order under section 751(c) of the Act, even though the second and 
fourth years following the issuance of that order have passed.
    Since the order on certain fresh cut flowers from Ecuador has been 
in effect since 1987, it is a transition order. Furthermore, we 
received the request for a duty-absorption determination in connection 
with a review that we initiated in 1998. Consequently, in accordance 
with the policy described above, it is appropriate to examine duty 
absorption in this review.
    Section 751(a)(4) of the Act provides that duty absorption may 
occur if the subject merchandise is sold in the United States through 
an affiliated importer. Of the selected respondents, Agritab, Floremit, 
and Ecuaclavel have affiliated importers. We have preliminarily 
determined that the following percentage of their U.S. affiliates' 
sales, by quantity, have dumping margins:

------------------------------------------------------------------------
                                                           Percentage of
                                                               U.S.
                                                            affiliate's
                      Name of firm                          sales with
                                                              dumping
                                                              margins
------------------------------------------------------------------------
Agritab.................................................           13.79
Floricultura Ecuaclavel S.A.............................           38.04
Flores Mitad del Mundo, S.A.............................           15.00
------------------------------------------------------------------------

    With respect to the above companies, we presume that the duties 
will be absorbed for those sales that we found to have been dumped. 
However, this presumption can be rebutted with evidence (e.g., an 
agreement between the affiliated importer and the unaffiliated 
purchaser) that the unaffiliated purchasers in the United States will 
pay the full duty ultimately assessed on the subject merchandise. An 
interested party who wishes to submit such evidence may do so no later 
than 15 days after publication of these

[[Page 18882]]

preliminary results. In the absence of such evidence, we will find that 
the antidumping duties have been absorbed by the above-listed firms on 
the percentage of U.S. sales indicated.

Export Price and Constructed Export Price

    As permitted by section 777A(d)(2) of the Act, we have 
preliminarily determined that it is appropriate to average U.S. prices 
on a monthly basis in order to use actual price information (often 
available only on a monthly basis) and account for practices associated 
with pricing perishable products. The Department has used this 
averaging technique in the most recently completed review of this order 
and other reviews of the order covering certain fresh cut flowers from 
Colombia. Certain Fresh Cut Flowers from Ecuador; Final Results of 
Antidumping Duty Administrative Review, 61 FR 37044 (July 16, 1996), 
and Colombian Flowers Tenth Review.
    For the price to the United States, we used export price (EP) or 
constructed export price (CEP) as defined in sections 772(a) and 772(b) 
of the Act, as appropriate. CEP was used for consignment sales through 
unaffiliated U.S. consignees and sales (consignment or otherwise) made 
through affiliated importers.
    We calculated EP based on the packed price, consisting of invoice 
price plus certain additional charges (e.g., box charges), to the first 
unaffiliated purchaser in the United States. We made deductions, where 
appropriate, for foreign inland freight and return credits.
    For sales made on consignment, we calculated CEP based on the 
packed price consisting of invoice price plus certain additional 
charges by the consignee (e.g., box charges) to the unaffiliated 
purchaser. For sales made through affiliated parties, we based CEP on 
the packed price, consisting of invoice price plus certain additional 
charges (e.g., box charges), to the first unaffiliated customer in the 
United States. We made adjustments to these prices, where appropriate, 
for discounts and rebates, foreign inland freight, international (air) 
freight, freight charges incurred in the United States, brokerage and 
handling, U.S. customs fees, direct selling expenses related to 
commercial activity in the United States, return credits and royalties. 
Finally, consistent with our approach in the previous review, we made 
adjustments for either commissions paid to unaffiliated U.S. consignees 
or for the U.S. selling expenses of affiliated consignees.
    Pursuant to sections 772(d)(3) and 772(f) of the Act, we calculated 
and reduced the price further by an amount for profit on sales made 
through affiliated parties to arrive at CEP.

Normal Value

1. Basis for Calculating Normal Value

    Section 773(a)(1)(B)(i) of the Act defines normal value (NV) as the 
price at which the foreign like product is first sold for consumption 
in the exporting country (home market). However, pursuant to section 
773(a) of the Act, certain conditions must be satisfied in order for 
the Department to consider sales in the home market as the basis for 
calculating NV. One condition is that the home market must be viable. 
Generally, the Department will consider the home market to be viable if 
the aggregate quantity (or, if quantity is not appropriate, value) of 
sales of the foreign like product sold by an exporter or producer in 
that market is five percent or more of the aggregate quantity (or 
value) of its sales of the subject merchandise to the United States. 
Where the home market is not viable, NV may be calculated based on 
sales to a viable third-country market or on constructed value (CV). 
See sections 773(a)(1) and 773(a)(4) of the Act.
    Agritab, Florisol, and Floraquin had sales in excess of five 
percent of their aggregate quantity of sales of the subject merchandise 
to the United States. Thus, we found the home market to be viable for 
them.
    Ecuaclavel had sales in the home market, but they constituted less 
than five percent of its aggregate sales to the United States. 
Therefore, its home market is not viable. Floremit had no home market 
sales and Montana had only ``cull'' sales. We consider sales of culls, 
or flowers of lesser grade than those produced for export to the United 
States, to be sales of by-products of the flowers grown for export. See 
Certain Fresh Cut Flowers from Colombia; Final Results and Partial 
Rescission of Antidumping Duty Administrative Review, 62 FR 53287, 
53298 (October 14, 1997). Hence, we examined the viability of third-
country-market sales for these three companies.
    The test for viability of a third-country market is also whether 
the sales in that market equal five percent or more of the aggregate 
sales to the United States. See section 773(a)(1)(B)(ii)(II) of the 
Act. In the case of Floremit, there were no third-country sales equal 
to or greater than five percent of its U.S. aggregate sales, so we have 
based NV for this company on CV.
    Montana and Ecuaclavel had sales to a third-country, Russia, that 
accounted for more than five percent of sales to the United States. We 
have concluded, however, that conditions existed in Russia that 
rendered a comparison between a NV based on sales in Russia and an EP 
or CEP inappropriate. Specifically, the Department found that the 
flower prices in the United States were more volatile than those in 
Russia where there is a more constant demand for the product. There 
were also different peak price periods, or holidays, in the two 
countries; since the United States had three of these peak periods and 
Russia had only one, these periods affected price volatility in the 
United States to a greater extent than prices in Russia. Thus, we have 
concluded that a particular market situation exists which prevents a 
proper comparison between a NV based on the third-country-market sales 
and the EP or CEP.
    In such a circumstance, we may decline to calculate a NV based on 
the sales of the third-country market. See 19 CFR 351.404(c)(2). 
Rather, we may opt to calculate the NV based on CV, pursuant to section 
773(a)(4) of the Act. Because we found the comparison of prices between 
the third-country market and the U.S. market to be inappropriate, we 
have used CV to establish NV for Montana and Ecuaclavel. For a more 
detailed explanation of this determination and the other NV 
determinations, see Memorandum from Laurie Parkhill to Susan Kuhbach 
(August 12, 1998).

2. Arm's-Length Test

    During the POR, Agritab reported home market sales to employees. We 
tested Agritab's home market sales to employees to see if they were 
made at arm's-length prices. To test whether these sales were made at 
arm's-length prices, we compared, by flower type, the prices of sales 
to employees and unaffiliated customers net of appropriate home market 
price adjustments (for Agritab these adjustments consisted of credit 
expenses and packing expenses incurred on home market sales). Since we 
found that the prices to the employees were on average less than 99.5 
percent of the price to unaffiliated parties, we determined that all 
sales made to the employees were not at arm's length and disregarded 
them in determining NV. See 19 CFR 351.403(c).

3. Sales Below the Cost of Production

    On September 11, 1998, the FTC alleged that Agritab, Florisol, and 
Floraquin made home market sales of

[[Page 18883]]

certain fresh cut flowers at prices below the cost of production (COP) 
and requested that the Department initiate a below-cost investigation.
    Upon review of the allegation with regard to Agritab, we determined 
that there were reasonable grounds to believe or suspect that Agritab 
made sales at prices below its COP, in accordance with section 
773(b)(2)(A)(i) of the Act. Accordingly, we initiated a COP 
investigation of this company pursuant to section 773(b)(1) of the Act. 
With regard to Florisol and Floraquin, we determined that the FTC's 
allegations of below-cost sales did not provide reasonable grounds to 
believe or suspect that their home market sales were made at prices 
below COP. Therefore, we did not initiate COP investigations of 
Florisol and Floraquin. For a more detailed explanation of our analysis 
of the allegations of below-cost sales, see Memorandum from Laurie 
Parkhill to Richard W. Moreland (November 2, 1998).
    In our COP analysis, we used the information that Agritab provided 
in its questionnaire responses. In accordance with section 773(b)(3) of 
the Act, we calculated the COP based on the sum of the costs of 
materials and fabrication employed in producing the foreign like 
product, plus general and administrative expenses and all costs and 
expenses incidental to packing the merchandise. Section 773(b)(3) of 
the Act provides for the inclusion of home market selling expenses in 
COP. However, Agritab reported that it had no selling expenses on sales 
of export-quality flowers in the home market. For Agritab's COP, 
therefore, we used zero as the actual amount of selling expenses 
incurred on home market sales.
    After calculating the COP, in accordance with section 773(b)(1) of 
the Act we tested whether Agritab's home market sales of certain fresh 
cut flowers were made at prices below the COP. We compared the COP of 
each flower type to the reported home market prices less any applicable 
movement charges. As a result of our comparisons of prices to weighted-
average COPs for the POR, we determined that all of Agritab's home 
market sales were below the COP and were not at prices which would 
permit recovery of all costs within a reasonable period of time, as 
defined by section 773(b)(2)(D) of the Act. Therefore, we disregarded 
all of Agritab's home market sales.

4. Calculation of NV

    For Florisol and Floraquin, we based NV on the reported home market 
prices. We based home market prices for these two respondents on their 
packed, ex-farm or delivered prices to unaffiliated purchasers. When 
applicable, we made adjustments for differences in packing and for 
movement expenses in accordance with section 773(a)(6)(A) and (B) of 
the Act and for differences in circumstances of sale (COS) in 
accordance with section 773(a)(6)(C)(iii) of the Act. For comparisons 
to EP, we made COS adjustments by adding U.S. direct selling expenses 
to NV.
    In accordance with section 773(a)(1)(B)(i) of the Act, we based NV 
on sales at the same level of trade as the EP or CEP. Since NV was 
always calculated at the same level of trade, we did not make any 
adjustments for differences in the level of trade. (See ``Level of 
Trade'' section below.) For Agritab, Floremit, Montana, and Ecuaclavel, 
in accordance with section 773(a)(4) of the Act, we used CV as the 
basis for NV when there were no usable sales of the foreign like 
product in the comparison market. We calculated CV in accordance with 
section 773(e) of the Act.
    For CV, we used the cost of materials, direct labor, and overhead 
as reported by the respondents. Some respondents reported revenues from 
the sale of non-export-quality flowers. As noted above, we consider 
non-export-quality flowers, or culls, which are produced in conjunction 
with export-quality flowers, to be by-products. Therefore, we adjusted 
the cost of materials, direct labor, and overhead to reflect revenue 
from sales of the culls.
    Section 773(e) of the Act also provides for the inclusion of 
selling, general, and administrative expenses in the calculation of CV. 
We used the general and administrative expenses reported by each 
respondent. With regard to selling expenses, all respondents reporting 
sales of export-quality flowers in the home market reported that they 
had no selling expenses. Therefore, we used zero as the actual amount 
of selling expenses incurred by the exporters and producers examined in 
this review.
    With respect to profit, section 773(e)(2)(A) of the Act instructs 
us to calculate the amount realized in connection with the production 
and sale of the foreign like product in the ordinary course of trade 
for consumption in the home market. However, for all the respondents 
for which we based NV on CV, it was necessary to calculate profit for 
CV using an alternative methodology because the calculation of profit 
in accordance with section 773(e)(2)(A) of the Act was not attainable 
from the information on the record. Specifically, for Agritab there 
were no home market sales above COP. For Montana, Floremit, and 
Ecuaclavel, the respondents do not have home market sales of the 
foreign like product under consideration for NV on which to calculate 
profit for CV. Therefore, we selected an alternative CV-profit 
calculation methodology for these four firms pursuant to section 
773(e)(2)(B)(iii) of the Act, which permits us to use ``any other 
reasonable method'' to compute an amount for profit, provided that the 
amount does ``not exceed the amount normally realized by exporters or 
producers * * * in connection with the sale, for consumption in the 
foreign country, of merchandise that is in the same general category of 
products as the subject merchandise.'' In reviewing the record for 
information on profits earned in Ecuador by producers of merchandise 
that is in the same general category of products as flowers, we 
determined that the best available sources of information are the 1997 
financial statements that producers of certain fresh cut flowers from 
Ecuador submitted in response to section A of our questionnaire. Where 
there was a positive profit amount on the 1997 financial statements, we 
used the data to calculate an average profit rate. In order to 
calculate a positive amount for profit consistent with Silicomanganese 
from Brazil: Final Results of Antidumping Administrative Review, 62 FR 
37877 (July 15, 1997), we disregarded financial statements of producers 
that incurred losses. Disregarding these financial statements enabled 
us to derive an ``element of profit'' as contemplated by the SAA. See 
SAA at 839. Furthermore, we disregarded financial statements that were 
not contemporaneous with sales during the POR (e.g., 1996 financial 
statements).
    We included U.S. packing expenses in the calculation of CV. In 
addition, for EP sales, we made COS adjustments for direct selling 
expenses, where appropriate, in accordance with section 
773(a)(6)(C)(iii) of the Act.
    Consistent with the methodology we used in recent reviews of the 
order on certain fresh cut flowers from Colombia, we first converted 
each month's CV from Ecuadorian sucres to dollars using that month's 
exchange rate. We then totaled the monthly cost, expressed in dollars 
over the POR, and divided by the quantity of export-quality flowers 
sold by the producer/exporter in order to arrive at the per-stem CV in 
dollars. The CV was then converted to Ecuadorian sucres using the 
period-end exchange rate; we deflated each monthly figure to ensure a 
constant cost over the POR. We converted the sucre per-stem CV to 
dollars based on the date

[[Page 18884]]

of the U.S. sale, in accordance with section 773A(a) of the Act.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the comparison 
market at the same level of trade (LOT) as the EP or CEP transaction. 
The NV LOT is that of the starting-price sales in the comparison market 
or, when NV is based on CV, that of the sales from which we derive SG&A 
and profit.
    For EP, the LOT is also the level of the starting-price sale, which 
is usually from the exporter to the importer. For CEP, it is the level 
of the constructed export sale from the exporter to the affiliated 
importer.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different LOT and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the farm than the CEP level and there is no basis for 
determining whether the differences in the levels between NV and CEP 
sales affect price comparability, we adjust NV under section 
773(A)(7)(B) of the Act (the CEP offset provision). See Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).
    In this review, no respondent requested a LOT adjustment or a CEP 
offset. To determine whether a LOT adjustment was necessary, in 
accordance with principles discussed above, we examined information 
regarding the distribution systems in both the U.S. and Ecuadorian 
markets, including the selling functions, classes of customer, and 
selling expenses for each respondent. We determined that no LOT 
adjustment or CEP offset was necessary for any of the respondents.
    For a company-specific description of our LOT analysis for these 
preliminary results, see the Level of Trade Memorandum from the 
Ecuadorian Flowers Team to Laurie Parkhill (March 26, 1999).

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act. The Department's preferred source for daily 
exchange rates is the Federal Reserve Bank.

Preliminary Results of Review

    As a result of our comparison of EP and CEP with NV, we 
preliminarily determine that there are margins in the amounts listed 
below for the period March 1, 1997, through February 28, 1998. When a 
different spelling of a respondent's name appears in parentheses beside 
its listed name, it is because we used that alternative spelling of the 
name in the initiation notice.

Selected Respondents

    The following six respondents received individual rates, as 
indicated below:

------------------------------------------------------------------------
                                                             Weighted-
                       Respondent                         average margin
                                                             (percent)
------------------------------------------------------------------------
Agritab Cia. Ltda.......................................            1.16
Claveles de la Montana, S.A.............................            6.18
Flores del Quinche S.A. (Flores del Qinche, S.A.).......            0.00
Floricultura Ecuaclavel S.A. (Floricultural Ecuaclavel).           15.11
Florisol Cia. Ltda......................................            0.00
Flores Mitad del Mundo, S.A.............................            0.27
------------------------------------------------------------------------

Non-Selected Respondents

    The following respondents, which reported shipments of subject 
merchandise during the POR but were not selected for examination, will 
receive a weighted-average rate of 6.43 percent:

Agricola Landwork Cia. Ltda.
Agroindustrial Espialmor Ltda.
Colors from the World (Colorsfromtheworld)
Flores del Ecuador Armizo Cia. Ltda. (Armizo)
Flores La Antonia
Guala Export/Import (Guala Import)
Illinizia Flowers
Miliflowers Cia.
Nerita Flowers
Plantaciones Malima

    The following respondents reported no shipments or sales of the 
subject merchandise during the POR. A previously-reviewed or -
investigated company will retain the company-specific rate most 
recently assigned to it. A company not subject to the investigation or 
a prior review will be assigned a cash deposit rate of 5.89 percent, 
the adjusted ``all others'' rate from the LTFV investigation. This 
determination applies to the following companies:

Americflowers
Arco Valeno
Biocare Limited
Comedinsa
Comercializadora Agricola Caribe
Comprinz S.A.
Ecoflowers/Ecopacifico Cia. Ltda. (Ecoflowers)
Ecuaflor
Ecuaplanet Trading
Empagri Cia. Ltda.
Flores Barragan Rodriguez Cia. Ltda.
Florimex Verwaltung GMBH
Guanguilqui-Agro-Industrial S.A. (Guaiisa Farms)
Incaflor
Maximafarms
Navado Naranjo Ecuador
Panorama Roses S.A.
Quito Inor Flowers
Trevis S.A.
Velvet Flores Cia. Ltda. (Velvet)

    Entries from the following companies will receive an adverse facts-
available rate of 23.50 percent:

Ecuaplanta
San Alfonso

    Interested parties may request a hearing not later than 30 days 
after publication of this notice. Interested parties may also submit 
written arguments in case briefs on these preliminary results within 30 
days of the date of publication of this notice. Rebuttal briefs, 
limited to issues raised in case briefs, may be filed no later than 
five days after the time limit for filing case briefs. Parties who 
submit arguments are requested to submit with each argument a statement 
of the issue and a brief summary of the argument. All memoranda to 
which we refer in this notice can be found in the public reading room, 
located in the Central

[[Page 18885]]

Records Unit, room B-099 of the main Department of Commerce building. 
Any hearing, if requested, will be held two days after the scheduled 
date for submission of rebuttal briefs.
    The Department will publish the final results of this 
administrative review, including a discussion of its analysis of issues 
raised in any case or rebuttal brief or at a hearing. The Department 
will issue final results of this review within 120 days of publication 
of these preliminary results.
    Upon completion of the final results in this review, the Department 
shall determine, and the Customs Service shall assess, antidumping 
duties on all appropriate entries. We have calculated an importer/
customer-specific per-stem duty-assessment rate based on the ratio of 
the total amount of antidumping duties calculated for the examined 
sales to the quantity of subject merchandise shipped during the POR. 
This rate will be assessed uniformly on all entries of that particular 
importer/customer made during the POR. The Department will issue 
appraisement instructions on each exporter directly to the 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)(1) of the Act: (1) The cash deposit rates for the reviewed 
companies will be those rates established in the final results of this 
review, except that no cash deposit will be required if the rate is de 
minimis, i.e., less than 0.5 percent; (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) for all other producers and/or exporters of this merchandise, the 
cash deposit rate shall be 5.89 percent, the adjusted ``all others'' 
rate from the less-than-fair-value investigation. These deposit 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.401(f)(2) 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 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: March 30, 1999.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-9612 Filed 4-15-99; 8:45 am]
BILLING CODE 3510-DS-P