[Federal Register Volume 64, Number 128 (Tuesday, July 6, 1999)]
[Notices]
[Pages 36330-36333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17050]


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

DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-855]


Initiation of Antidumping Duty Investigation: Certain Non-Frozen 
Apple Juice Concentrate From the People's Republic of China

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

EFFECTIVE DATE: July 6, 1999.

FOR FURTHER INFORMATION CONTACT: Suresh Maniam or Vincent Kane, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, Room 3099, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-0176 or 482-2815, 
respectively.

INITIATION OF INVESTIGATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 as amended (``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 provisions 
codified at 19 CFR Part 351 (1998).

The Petition

    On June 7, 1999, the Department received a petition filed in proper 
form by Tree Top, Inc.; Knouse Foods Cooperative, Inc.; Green Valley 
Packers; Mason County Fruit Packers; and Coloma Frozen Foods, Inc., 
hereinafter collectively referred to as ``the petitioners. On June 17 
and 25, 1999, at the request of the Department, petitioners provided 
public summaries for certain business proprietary information contained 
in the petition. On June 23, 1999, petitioners supplied information 
relating to their standing as petitioners and on June 25, 1999, 
petitioners clarified their calculation concerning industry support of 
the petition.
    In accordance with section 732(b) of the Act, the petitioners 
allege that imports of certain non-frozen apple juice concentrate 
(``NFAJC'') from 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 
both materially injuring and threatening material injury to an industry 
in the United States.
    The Department finds that the petitioners filed this petition on 
behalf of the domestic industry because they are interested parties as 
defined in section 771(9)(C) of the Act and they have demonstrated that 
they account for at least 25 percent of the total production of the 
domestic like product and more than 50 percent of the production of the 
domestic like product produced by that portion of the industry

[[Page 36331]]

expressing support for, or opposition to, the petition (see 
``Determination of Industry Support for the Petition'' section, below).

Scope of the Investigation

    For purposes of this investigation, the product covered by the 
scope is non-frozen concentrated apple juice having a Brix value of 40 
or greater, whether or not containing added sugar or other sweetening 
matter. Excluded from the scope of this investigation are: frozen 
concentrated apple juice, non-frozen concentrated apple juice fortified 
with vitamins or minerals, non-frozen concentrated apple juice that has 
been fermented, and non-frozen concentrated apple juice to which 
spirits have been added.
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (``HTSUS'') at 
subheading 2009.70.20. Although the HTSUS subheading is provided for 
convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.
    As discussed in the preamble to the Department's regulations (62 FR 
27323 February 26, 1997), we are setting aside a period for parties to 
raise issues regarding product coverage. The Department encourages all 
parties to submit such comments within 20 days of publication of this 
notice in the Federal Register. Comments should be addressed to Import 
Administration's Central Records Unit at Room 1870, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230. The period of scope consultations is intended to provide the 
Department with ample opportunity to consider all comments and consult 
with parties prior to the issuance of our preliminary determination.

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 as a whole 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 
definition regarding the domestic like product, 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 like product, such differences do not render the decision of 
either agency contrary to the law.\1\ Section 771(10) of the Act 
defines the 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 subtitle.'' 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.
---------------------------------------------------------------------------

    \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 from Japan: Final Determination; Rescission of 
Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-
81 (July 16, 1991).
---------------------------------------------------------------------------

    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 this 
definition of the domestic like product to be inaccurate. The 
Department, therefore, has adopted this domestic like product 
definition.
    In this case, the Department has determined that the petition and 
supplemental information contained adequate evidence of sufficient 
industry support; therefore, polling was not necessary. See Initiation 
Checklist dated June 28, 1999 (public versions on file in the Central 
Records Unit of the Department of Commerce, Room B-099). To the best of 
the Department's knowledge, the producers who support the petition 
account for more than 50 percent of the production of the domestic like 
product. Additionally, no person who would qualify as an interested 
party pursuant to section 771(b)(A), (C), (D), (E) or (F) of the Act 
has expressed opposition on the record to the petition. Accordingly, 
the Department determines that this petition is filed on behalf of the 
domestic industry within the meaning of section 732(b)(1) of the Act.
    A potential respondent in this proceeding requested that the 
Department poll the U.S. industry to determine industry support and 
check the validity of petitioners' calculations of their percent of 
U.S. production. We addressed this respondent's concerns in the June 
28, 1998 initiation checklist.

Export Price and Normal Value

    The following is a description of the allegation of sales at less 
than fair value upon which our decision to initiate this investigation 
is based. Should the need arise to use any of this information in our 
preliminary or final determination for purposes of facts available 
under section 776 of the Act, we may re-examine the information and 
revise the margin calculations, if appropriate.
    The petitioners have based U.S. price on export price (``EP'') 
because information obtained by the petitioners indicates that PRC 
producers sold NFAJC outside the United States to unaffiliated 
importers in the United States prior to importation. As a basis for its 
EP calculation, the petitioners have used an invoice price for sale of 
the subject merchandise by an unaffiliated U.S. distributor to an 
unaffiliated purchaser in the United States in the last quarter of 
1998. The petitioners calculated a net U.S. price by subtracting from 
the invoice price the U.S. distributor's markup, ocean freight, and 
insurance. The petitioners based the cost of ocean freight and 
insurance on the difference between the C.I.F. price and the F.A.S. 
price of NFAJC from the PRC as reflected in the IM-145 statistics 
published by the U.S. Bureau of the Census. The petitioners used the 
IM-145 statistics for the month in which the U.S. sale occurred for 
calculating ocean freight and insurance. Petitioners based the 
distributor's markup on an affidavit attesting to the standard 
distributor markup in the industry.
    Because the PRC is considered a nonmarket economy (NME) country 
under section 771(18) of the Act, the petitioners based normal value 
(NV) on the factors of production valued in a surrogate country, in 
accordance with section 773(c)(3) of the Act. The petitioners selected 
India as the most appropriate surrogate market economy. For the factors 
of production, the petitioners relied upon the factor usage rates of 
what it claimed was the world's most efficient NFAJC producer.
    The petitioners first derived a cost for apple juice and then, 
based on this cost,

[[Page 36332]]

they derived a cost of apple juice concentrate. The cost of apples was 
based on the current price of juice apples in India as reported in a 
market research study included in the petition. Labor was valued using 
the methodology described by the Department in 19 CFR 351.408(c)(3). 
For energy, the petitioners used data from Energy Prices & Taxes, 
Fourth Quarter 1998, which shows 1995 electricity rates in India to be 
Rs. 2.1836 per kwh. They then adjusted this 1995 electricity rate for 
inflation based on the increase in the wholesale price index in India 
from 1995 to 1998 as reported in the IMF's International Financial 
Statistics. For natural gas, the petitioners obtained a price of US 
$1.96 per thousand cubic feet based on the first quarter 1999 report of 
Enron Corp., a large, publicly traded oil and gas company selling 
energy products in India. For processing agents, maintenance supplies, 
and miscellaneous costs, the petitioners used the costs of a U.S. 
producer because Indian values for these inputs were not reasonably 
available to them.
    Selling, general, and administrative (SG&A) expenses, depreciation, 
and financial expenses were based on the 1997 financial statements of 
an Indian NFAJC producer. For packing costs, including drums, liners, 
and pallets, the petitioners used the costs of a U.S. NFAJC producer 
because Indian values for these inputs were not reasonably available to 
them.
    Based on a comparison of EP to NV, as adjusted by the Department, 
the information in the petition and other information reasonably 
available to the Department indicates dumping margins of 51.69 and 
65.64 percent. A description of the adjustments which the Department 
made to petitioners' calculations of export price and normal value are 
contained in the June 28, 1999 initiation checklist, a public version 
of which is available in the Central Records Unit, Room B-099, Main 
Commerce, 14th and Constitution Avenue, N.W., Washington, D.C. 20230.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of NFAJC from 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 imports of the subject merchandise 
sold at less than NV. The petitioners explained that the industry's 
injured condition is evident in the declining trends in net operating 
profits and income, net sales volumes and values, profit to sales 
ratios, and capacity utilization. The allegations of injury and 
causation are supported by relevant evidence including U.S. Customs 
import data, lost sales, and pricing information. The Department 
assessed the allegations and supporting evidence regarding material 
injury and causation and determined that these allegations are 
supported by accurate and adequate evidence and meet the statutory 
requirements for initiation. See Initiation Checklist.

Allegation of Critical Circumstances

    The petitioners allege that critical circumstances exist with 
respect to imports of NFAJC from the PRC and have supported their 
allegations with the following information.
    First, the petitioners claim that the importers knew, or should 
have known, that NFAJC from the PRC was being sold at less than normal 
value. Specifically, the petitioners allege that the margins calculated 
in the petition exceed the 25 percent threshold used by the Department 
to impute importer knowledge of dumping.
    The petitioners also have alleged that imports have been massive 
over a relatively short period. Alleging that there was sufficient pre-
filing notice of this antidumping petition, the petitioners contend 
that the Department should compare imports during June 1998-October 
1998 to imports during November 1998-March 1999 for purposes of this 
determination. Specifically, petitioners supported this allegation with 
copies of a news article and a transcript of a television program. The 
new article appeared in the September 1998 edition of ``The Great Lakes 
Fruit Grower News,'' which reported that the U.S. Apple Association was 
considering filing an antidumping action against NFAJC from the PRC. 
The television program, ``The World Today,'' aired on CNN on October 5, 
1998. The program also reported that the U.S. Apple Association was 
considering filing an antidumping action on NFAJC from the PRC. On 
October 6, 1998, the Associated Press Newswire carried a story that the 
apple industry planned to file an antidumping action on NFAJC from the 
PRC. Accordingly, the petitioners provided import statistics for the 
periods November 1998-March 1999 and June 1998-October 1998. Based on 
this comparison, imports of NFAJC from the PRC increased by 111 
percent.
    Although the ITC has not yet made a preliminary decision with 
respect to injury, the petitioners note that in the past the Department 
has also considered the extent of the increase in the volume of imports 
of the subject merchandise as one indicator of whether a reasonable 
basis exists to impute knowledge that material injury was likely. In 
this case, the petitioners allege that the increase in imports was more 
than double the amount considered ``massive.'' Taking into 
consideration the foregoing, we find that the petitioners have alleged 
the elements of critical circumstances and supported them with 
information reasonably available for purposes of initiating a critical 
circumstances inquiry. For these reasons, we will investigate this 
matter further and will make a preliminary determination at the 
appropriate time, in accordance with section 735(e)(1) of the Act and 
Department practice (see Policy Bulletin 98/4 (63 FR 55364, October 15, 
1998)).

Initiation of Antidumping Investigation

    Based upon our examination of the petition, we have found that the 
petition meets the requirements of section 732 of the Act. Therefore, 
we are initiating an antidumping duty investigation to determine 
whether imports of NFAJC from the PRC are being, or are likely to be, 
sold in the United States at less than fair value. Unless this deadline 
is extended, we will make our preliminary determination by November 15, 
1999.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the petition has been provided to the representatives 
of the Government of the People's Republic of China. We will attempt to 
provide a copy of the public version of the petition to the exporters 
named in the petition.

International Trade Commission Notification

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

Preliminary Determination by the ITC

    The ITC will determine by July 22, 1999, whether there is a 
reasonable indication that an industry in the United States is 
materially injured, or is threatened with material injury, by reason of 
imports of NFAJC from the PRC. A negative ITC determination will result 
in the investigation being terminated; otherwise, this investigation 
will proceed according to statutory and regulatory time limits.
    This notice is published in accordance with section 777(i) of the 
Act.


[[Page 36333]]


    Dated: June 28, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-17050 Filed 7-2-99; 8:45 am]
BILLING CODE 3510-DS-P