[Federal Register Volume 65, Number 153 (Tuesday, August 8, 2000)]
[Notices]
[Pages 48457-48464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20029]


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DEPARTMENT OF COMMERCE

International Trade Administration

(A-337-803)


Notice of Preliminary Results of Antidumping Duty Administrative 
Review and Partial Rescission of Antidumping Duty Administrative 
Review: Fresh Atlantic Salmon From Chile

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

SUMMARY: In response to requests by eight producers/exporters of 
subject merchandise and the petitioners, the Department of Commerce 
(the Department) is conducting an administrative review of the 
antidumping duty order on fresh Atlantic salmon from Chile. This review 
covers nine producers/exporters of the subject merchandise. The period 
of review (POR) is July 28, 1998, through June 30, 1999.
    We preliminarily determine that sales have been made below normal 
value (NV). If these preliminary results are adopted in our final 
results, we will instruct the U.S. Customs Service to assess 
antidumping duties based on the difference between the export price 
(EP) or constructed export price (CEP) and the normal value.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments are requested to submit with each 
argument: (1) A statement of the issue and (2) a brief summary of the 
argument. Further, we would appreciate parties submitting comments to 
provide the Department with an additional copy of the public version of 
any such comments on diskette.

EFFECTIVE DATE: August 8, 2000.

FOR FURTHER INFORMATION CONTACT: Edward Easton or Gabriel Adler, at 
(202) 482-3003 or (202) 482-3813, respectively; AD/CVD Enforcement 
Office V, Group II, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street & Constitution 
Avenue, NW, Washington, D.C. 20230.

SUPPLEMENTARY INFORMATION:

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's regulations are 
to 19 CFR Part 351 (1999).

Case History

    On July 30, 1998, the Department issued an antidumping duty order 
on fresh Atlantic salmon from Chile. See Notice of Amended Final 
Determination of Sales at Less Than Fair Value and Antidumping Duty 
Order: Fresh Atlantic Salmon from Chile, 63 FR 40699 (July 30, 1998). 
On July 9, 1999, the Department issued a notice of opportunity to 
request an administrative review of this order. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 64 FR 38181 (July 15, 
1999). On July 30, 1999, in accordance with 19 CFR 351.213(b)(1), the 
Coalition for Fair Atlantic Salmon Trade (the petitioners) requested a 
review of 61 producers/exporters of fresh Atlantic salmon.
    On October 5, 1999, the petitioners withdrew their request for all 
companies except: (1) Cultivos Marinos Chiloe Ltda. (Cultivos Marinos); 
(2) Chisal S.A (Chisal); (3) Cultivadora de Salmones Linao Ltda. 
(Linao); (4) Fiordo Blanco, S.A. (Fiordo Blanco); (5) I.P. (Invertec 
Pesquera) Mar de Chiloe, S.A. (Invertec); (6) Pesquera Mares Australes 
(Mares Australes); (7) Salmones Pacific Star (Pacific Star); (8) 
Salmones Mainstream, S.A. (Mainstream); (9) Salmones Pacifico Sur, S.A. 
(Pacifico Sur); and (10) Salmones Tecmar, S.A. (Tecmar). Petitioners 
subsequently withdrew their request for a review of Invertec and 
Chisal. See Partial Rescission of Antidumping Duty Administrative 
Review, below.
    Also on July 30, 1999, the following companies requested that the 
Department conduct an administrative review for the period from July 
28, 1998, through June 30, 1999: (1) Cultivos Marinos; (2) Pesquera 
Eicosal Ltda. (Eicosal); (3) Fiordo Blanco; (4) Linao; (5) Mainstream; 
(6) Mares Australes; (7) Pacifico Sur; and (8) Tecmar.
    On August 30, 1999, we published the notice of initiation of this 
antidumping duty administrative review, covering the period July 28, 
1998, through June 30, 1999. See Initiation of Antidumping and 
Countervailing Duty Administrative Reviews and Requests for Revocation 
in Part, 64 FR 47167 (August 30, 1999).

Partial Rescission of Antidumping Duty Administrative Review

    On October 5, 1999, the petitioners withdrew their requests for 
review of the following companies:

Aquacultura de Aguas Australes
Agromar Ltda.
Aquachile S.A.
Aguas Claras S.A.
Aquasur Fisheries Ltda.
Asesoria Acuicola S.A.
Best Salmon
C.M. Chiloe Ltda.
Cenculmavique
Centro de Cultivo de Moluscos
Cerro Farellon Ltda.
Chile S.A.
Complejo Piscicola Coyhaique
Cultivos San Juan
Cultivos Yardan S.A.
Fisher Farms
Fitz Roy
G.M. Tornagaleones S.A.

[[Page 48458]]

Huitosal
Huitosal Mares Australes Salmo Pac.
I.P. Mar de Chiloe S.A.
Invertec Seafood S.A.
Manao Bay Fisheries
Mardim Ltda.
Ocean Horizons
P. Antares S.A.
P. Chiloe S.A.
P. Friosur S.A.
P. Los Fiordas
Pacific Mariculture
Patagonia Fish Farming S.A.
Patagonia Salmon Farming, S.A.
Pes Quellon Ltda.
Pesca Chile S.A.
Piscicultura Iculpe
Piscicultura La Cascada
Piscicultura Santa Margarita
Prosmolt S.A.
Salmon Andes S.A.
Salmones Americanos S.A.
Salmones Antarctica S.A.
Salmones Caicaen S.A.
Salmones Llanquihue
Salmones Multiexport Ltda.
Salmones Quellon
Salmones Ranco Sur Ltda.
Salmones Unimarc S.A.
Salmosan
Seafine
Trusal S.A.
Ventisqueros S.A.

    In addition, on October 21, 1999, and November 12, 1999, the 
petitioners withdrew their request that the Department conduct an 
administrative review of the entries of Invertec and of Chisal, 
respectively. Pursuant to 19 CFR 315.213(d)(1), we are rescinding the 
review with respect to these companies.
    From April 2000 through July 2000, we conducted verifications of 
sales and cost data submitted by respondents Cultivos Marinos, Eicosal, 
Fiordo Blanco, Salmones Mainstream, Mares Australes, and Pacifico Sur. 
The verification of most elements of the sales data submitted by Fiordo 
Blanco is scheduled to take place at the offices of the respondent's 
affiliated Canadian reseller in early August 2000. Shortly before the 
issuance of these preliminary results of review, Fiordo Blanco 
submitted a letter purporting to contain minor corrections to its sales 
data. Given the lateness of that filing, we have not considered it for 
these preliminary results of review. Further, the Department has not 
yet determined whether this submission properly contains only minor 
corrections to the record pursuant to verification. The Department will 
make this determination after the sales verification scheduled to take 
place in Canada in August 2000.

Scope of the Review

    The product covered by this review is fresh, farmed Atlantic 
salmon, whether imported ``dressed'' or cut. Atlantic salmon is the 
species Salmo salar, in the genus Salmo of the family salmoninae. 
``Dressed'' Atlantic salmon refers to salmon that has been bled, 
gutted, and cleaned. Dressed Atlantic salmon may be imported with the 
head on or off; with the tail on or off; and with the gills in or out. 
All cuts of fresh Atlantic salmon are included in the scope of the 
review. Examples of cuts include, but are not limited to: crosswise 
cuts (steaks), lengthwise cuts (fillets), lengthwise cuts attached by 
skin (butterfly cuts), combinations of crosswise and lengthwise cuts 
(combination packages), and Atlantic salmon that is minced, shredded, 
or ground. Cuts may be subjected to various degrees of trimming, and 
imported with the skin on or off and with the ``pin bones'' in or out.
    Excluded from the scope are (1) fresh Atlantic salmon that is ``not 
farmed'' (i.e., wild Atlantic salmon); (2) live Atlantic salmon; and 
(3) Atlantic salmon that has been subject to further processing, such 
as frozen, canned, dried, and smoked Atlantic salmon, or processed into 
forms such as sausages, hot dogs, and burgers.
    The merchandise subject to this investigation is classifiable as 
item numbers 0302.12.0003 and 0304.10.4093 of the Harmonized Tariff 
Schedule of the United States (HTSUS). Although the HTSUS statistical 
reporting numbers are provided for convenience and customs purposes, 
the written description of the merchandise is dispositive.

Use of Facts Available

    We have preliminarily determined, as a result of a partial 
verification conducted by the Department, to base Fiordo Blanco's 
antidumping rate on the facts available in accordance with section 
776(a) of the Act. The Department conducted verification of cost and 
some sales data in Chile before the issuance of the preliminary results 
of this review, and is scheduled to conduct additional verification 
procedures at the Canadian offices of Fiordo Blanco's North American 
distributor after the issuance of the preliminary results. As described 
below, during the verification in Chile, the Department determined that 
there were errors in the reporting of date of sale for U.S. and 
Canadian sales, which call into question the overall reliability of the 
data submitted by Fiordo Blanco for purposes of these preliminary 
results. Therefore, we have preliminarily assigned to Fiordo Blanco a 
margin based on adverse facts available, which, in this case, is the 
highest margin calculated for any respondent in the original 
investigation.
    The specific findings at verification which led to this decision 
are as follows. From June 26 through June 30, 2000, the Department 
conducted a verification in Puerto Montt, Chile, of the cost data 
submitted by Fiordo Blanco. The major portion of the sales verification 
was scheduled to take place after the issuance of the preliminary 
results of this review, at the Canadian offices of Heritage, Fiordo 
Blanco's affiliated North American consignment reseller, where all of 
the sales to the first unaffiliated customers in the U.S. and Canadian 
markets were generated. However, since certain expenses associated with 
those sales were incurred in Chile, and recorded in the books of Fiordo 
Blanco's Chilean operations, the Department conducted verification of 
those elements in Chile, concurrent with the cost verification.
    In its questionnaire responses, Fiordo Blanco had stated that the 
appropriate date of sale for both markets was the date of shipment. 
Fiordo Blanco noted that material terms of sale were established 
earlier, on the date that sales personnel recorded a customer's order, 
but claimed that the date of order could not be easily reported:

    We are reporting the date of sale, both for U.S. and Canadian 
sales, as the date of shipment from { the North American warehouse 
}. While the order may be negotiated one or two days prior to 
shipment, we do not track the order date electronically in our 
system. It would be extremely burdensome to search paper records 
concerning thousands of sales to determine the actual order date for 
all sales * * *

See Fiordo Blanco Section A response at 20.

    In conducting verification of reported expenses based on the books 
of Fiordo Blanco in Chile, the verifiers noted an irregularity in the 
reporting of date of sale, which appeared to derive from the records 
maintained by Heritage in Canada. Late on the evening prior to the last 
day of verification, the respondent notified the verifiers that it had 
inadvertently reported the date of order, rather than the date of 
shipment, as the date of sale. (According to Fiordo Blanco, the date of 
shipment had not been reported at all, and the date of order, which was 
in fact recorded electronically, had been erroneously reported 
instead.) The company could not explain why the date of order, which it 
had suggested was not recorded electronically, had been inadvertently 
reported to the Department in lieu of the shipment date. Heritage 
officials, contacted by

[[Page 48459]]

telephone, were also unable to reconcile these inconsistencies.
    In preparing these preliminary results, two weeks after the 
verification of Fiordo Blanco's data in Chile, the Department requested 
that Fiordo Blanco provide order dates and shipment dates for a 
randomly selected sample of thirty U.S. and Canadian sales, and also 
provide documentation supporting these dates. The Department compared 
these dates to those originally reported in the Section B and C 
responses, and found that for some sales the respondent had actually 
reported the date of shipment as the date of sale, and for others it 
had reported the date of order. There appeared to be no systematic 
pattern to the choice of date of sale, and the respondent was unable to 
explain this discrepancy. See Memorandum from the Team to the File, 
dated July 11, 2000.
    These discrepancies and contradictions in the reporting of date of 
sale are of concern in that the date of sale is an important element in 
identifying appropriate sales comparisons, particularly in an 
administrative review. While additional verification at Fiordo Blanco's 
North American affiliate, scheduled to take place after the issuance of 
these results, might give the Department greater confidence in the 
reliability of Fiordo Blanco's submitted data, at present the 
Department cannot rely on these data to calculate a dumping margin for 
the preliminary results of review. As such, consistent with section 
776(a) of the Act, the Department has based the preliminary results of 
review for Fiordo Blanco on the facts available.
    Consistent with section 782(d) of the Act, Fiordo Blanco was given 
opportunities to correct its defective submissions. On January 18, 
2000, the Department issued a supplemental questionnaire to Fiordo 
Blanco, requesting confirmation that the date of shipment from 
Heritage's warehouses was the earliest date upon which all material 
terms of sale are set. In its response, Fiordo Blanco confirmed that 
the date of shipment was the only date tracked and that it had been 
reported as the date of sale. On April 17, 2000, Fiordo Blanco 
submitted the overall reconciliation of the company's sales database to 
its financial statements, as called for in section A of the antidumping 
questionnaire. This exercise required the respondent to confirm that 
the appropriate sales had been reported for the POR, and was an 
opportunity for Fiordo Blanco to examine the correctness of its 
reported dates of sale. Fiordo Blanco did not mention any problem with 
the date of sale in its submitted reconciliation. Despite these 
opportunities, Fiordo Blanco did not act to the best of its ability to 
confirm the accuracy of its reported data and to provide any necessary 
corrections. Therefore, we preliminarily determine that the use of 
adverse facts available is appropriate, in accordance with section 
776(b) of the Act.
    Where we must base the entire dumping margin for a respondent in an 
administrative review on facts available because that respondent failed 
to cooperate by not acting to the best of its ability to comply with a 
request for information, section 776(b) of the Act authorizes the use 
of inferences adverse to the interests of that respondent in choosing 
facts available. Section 776(b) of the Act also authorizes the 
Department to use, as adverse facts available, information derived from 
the petition, the final determination, a previous administrative 
review, or other information placed on the record. We have 
preliminarily assigned to Fiordo Blanco, as adverse facts available, a 
rate of 10.69 percent, the highest rate determined for any respondent 
during any segment of this proceeding. This rate was calculated for a 
respondent in the less-than-fair-value (LTFV) investigation.
    Because information from prior segments of the proceeding 
constitutes secondary information, section 776(c) of the Act provides 
that the Department shall, to the extent practicable, corroborate that 
secondary information from independent sources reasonably at its 
disposal. The Statement of Administrative Action (SAA) says that 
``corroborate'' means simply that the Department will satisfy itself 
that the secondary information to be used has probative value. See H.R. 
Doc. 316, vol. 1, at 870 (1994).
    To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information to be used. However, unlike other types of information, 
such as input costs or selling expenses, there are no independent 
sources for calculated dumping margins. Thus, in an administrative 
review, if the Department chooses as 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. With respect to the relevance aspect of corroboration, however, 
the Department will consider information reasonably at its disposal as 
to whether there are circumstances that would render a margin 
inappropriate. 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. See, e.g., 
Fresh Cut Flowers from Mexico; Final Results of Antidumping Duty 
Administrative Review, 61 FR 6812, 6814 (February 22, 1996) (where the 
Department disregarded the highest margin as adverse facts available 
because the margin was based on another company's uncharacteristic 
business expense resulting in an unusually high margin). In this 
review, we are not aware of any circumstances that would render 
inappropriate the preliminary use of the margin selected for Fiordo 
Blanco.
    We note that, as scheduled, the Department intends to conduct a 
sales verification at the offices of Heritage after the issuance of 
these preliminary results. Depending on the findings of that 
verification, the Department may find it appropriate, for the final 
results of review, to calculate a dumping margin for Fiordo Blanco 
using some or all of the data submitted by the respondent.

Fair Value Comparisons

    We compared the EP or CEP to the NV, as described in the Export 
Price and Constructed Export Price and Normal Value sections of this 
notice. We first attempted to compare contemporaneous sales of products 
sold in the United States and comparison markets that are identical 
with respect to the matching characteristics. Pursuant to section 
771(16) of the Act, all products produced by the respondents that fit 
the definition of the scope of the review and were sold in the 
comparison markets during the POR fall within the definition of the 
foreign like product. We have relied on four criteria to match U.S. 
sales of subject merchandise to comparison market sales of the foreign 
like product: form, grade, weight band, and trim.\1\ As in the original 
LTFV investigation, we have determined that it is generally not 
possible to match similar products, because there are significant 
differences among products that cannot be accounted for by means of a 
difference-in-merchandise adjustment. See Notice of Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination: Fresh Atlantic Salmon from Chile, 63 FR 2664 
(January 16, 1998). Therefore, we have compared

[[Page 48460]]

U.S. sales to comparison market sales of identical merchandise, and 
have not compared U.S. sales to comparison market sales of similar 
merchandise. Where there were no appropriate sales of comparable 
merchandise, we compared the merchandise sold in the United States to 
constructed value (CV).
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    \1\ The ``trim'' characteristic was not a matching criterion in 
the original investigation. However, the Department has 
preliminarily incorporated it into the model matching hierarchy 
based on evidence of pricing and cost differences for salmon of 
different trims.
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Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP as defined in sections 772(a) and 772(b) of the Act, respectively. 
Section 772(a) of the Act defines EP as the price at which the subject 
merchandise is first sold by the exporter or producer outside the 
United States to an unaffiliated purchaser for exportation to the 
United States, before the date of importation, or to an unaffiliated 
purchaser for exportation to the United States. Section 772(b) of the 
Act defines CEP as the price at which the subject merchandise is first 
sold inside the United States before or after the date of importation, 
by or for the account of the producer or exporter of the merchandise, 
or by a seller affiliated with the producer or exporter, to an 
unaffiliated purchaser, as adjusted under subsections 772(c) and (d) of 
the Act.
    For all respondents, we calculated EP and CEP, as appropriate, 
based on the packed prices charged to the first unaffiliated customer 
in the United States. Where sales were made through an unaffiliated 
consignment seller, we did not consider the consignment seller to be 
the customer; rather, we considered the customer to be the consignment 
seller's customer.
    In accordance with section 772(c)(2) of the Act, we reduced the EP 
and CEP by movement expenses and export taxes and duties, where 
appropriate. Section 772(d)(1) of the Act provides for additional 
adjustments to CEP. In this case, all CEP sales were made through 
unaffiliated resellers for the account of the producer/exporter. 
Consistent with past practice, for these sales we deducted from the CEP 
commissions charged to, and other direct expenses incurred for the 
account of, the producer/exporter. We did not deduct an amount for CEP 
profit, because the commission already contains an element for profit 
realized by the unaffiliated reseller.
    We determined the EP or CEP for each company as follows:

Cultivos Marinos

    We calculated an EP for all of Cultivos Marinos' sales because the 
merchandise was sold directly by Cultivos Marinos to the first 
unaffiliated purchaser in the United States prior to importation, and 
CEP was not otherwise warranted based on the facts of record. We made 
deductions from the starting price for movement expenses in accordance 
with section 772(c)(2)(A) of the Act. These include foreign movement 
expense (inland freight), international freight, U.S. brokerage and 
U.S. duties. We also deducted the amount for billing adjustments from 
the starting price and added duty drawback, in accordance with section 
772(c)(1)(B) of the Act.

Eicosal

    We calculated an EP for all of Eicosal's sales because the 
merchandise was sold directly by Eicosal to the first unaffiliated 
purchaser in the United States prior to importation, and CEP was not 
otherwise warranted based on the facts of record. We made deductions 
from the starting price for movement expenses in accordance with 
section 772(c)(2)(A) of the Act. These include foreign movement expense 
(inland freight), international freight, U.S. brokerage and U.S. 
duties. We also deducted the amount for billing adjustments from the 
starting price and added duty drawback, in accordance with section 
772(c)(1)(B) of the Act.

Linao

    During the POR, Linao made both EP and CEP transactions. We 
calculated an EP for sales where the merchandise was sold directly by 
Linao to the first unaffiliated purchaser in the United States prior to 
importation, and CEP was not otherwise warranted based on the facts of 
record. We calculated a CEP for sales made for the account of the 
producer/exporter by an unaffiliated consignment broker in the United 
States after the date of importation. EP and CEP sales were based on 
the packed, delivered and duty-paid (DDP) U.S. port and C&F U.S. port 
price for exportation to the United States. We made deductions from the 
starting price for discounts and rebates, as well as movement expenses 
in accordance with section 772(c)(2)(A) of the Act. These include 
foreign movement expense (inland freight), international freight, U.S. 
brokerage, and U.S. duties. We also deducted the amount for billing 
adjustments from the starting price and added the amount for duty 
drawback, in accordance with section 772(c)(1)(B) of the Act.
    In accordance with section 772(d)(1) of the Act, for CEP sales, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including commissions, direct selling expenses (credit expenses and 
industry association fees), and indirect selling expenses incurred in 
the United States by the unaffiliated consignment agent on behalf of 
the exporter which were charged to the respondent separately from the 
commission.

Mainstream

    We calculated an EP for all of Mainstream's sales because the 
merchandise was sold directly by Mainstream to the first unaffiliated 
purchaser in the United States prior to importation, and CEP was not 
otherwise warranted based on the facts of record. We made deductions 
from the starting price for movement expenses in accordance with 
section 772(c)(2)(A) of the Act. These include foreign movement expense 
(inland freight), international freight, brokerage and handling, and 
U.S. customs duties. We also deducted the amount for billing 
adjustments from the starting price and added duty drawback, in 
accordance with section 772(c)(1)(B) of the Act.

Mares Australes

    We calculated an EP for all of Mares Australes' sales because the 
merchandise was sold directly by Mares Australes to the first 
unaffiliated purchaser in the United States prior to importation, and 
CEP was not otherwise warranted based on the facts of record. We made 
deductions from the starting price for movement expenses in accordance 
with section 772(c)(2)(A) of the Act. These include foreign movement 
expense (inland freight), customs brokerage fees, international 
freight, U.S. customs duties and U.S. handling charges. We also added 
duty drawback, in accordance with section 772(c)(1)(B) of the Act.

Pacific Star

    We calculated an EP for all of Pacific Star's sales because the 
merchandise was sold directly by Pacific Star to the first unaffiliated 
purchaser in the United States prior to importation, and CEP was not 
otherwise warranted based on the facts of record. We made deductions 
from the starting price for movement expenses in accordance with 
section 772(c)(2)(A) of the Act. These include foreign movement expense 
(inland freight), customs brokerage fees, international freight, U.S. 
customs duties and U.S. handling charges. We also added duty drawback, 
in accordance with section 772(c)(1)(B) of the Act.

Pacifico Sur

    During the POR, Pacifico Sur made both EP and CEP transactions. We 
calculated an EP for sales where the

[[Page 48461]]

merchandise was sold directly by Pacifico Sur to the first unaffiliated 
purchaser in the United States prior to importation, and CEP was not 
otherwise warranted based on the facts of record. We calculated a CEP 
for sales made for the account of the producer/exporter by an 
unaffiliated consignment broker in the United States after the date of 
importation. EP and CEP sales were based on the packed DDP U.S. port 
and C&F U.S. port price for exportation to the United States. We made 
deductions from the starting price for movement expenses in accordance 
with section 772(c)(2)(A) of the Act. These include foreign movement 
expense (inland freight), international freight, U.S. brokerage, and 
U.S. duties. We also deducted the amount for billing adjustments from 
the starting price and added the amount for duty drawback, in 
accordance with section 772(c)(1)(B) of the Act.
    In accordance with section 772(d)(1) of the Act, for CEP sales, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including commissions and other direct selling expenses (credit, 
industry association fees, product claims and repacking).

Tecmar

    We calculated an EP for all of Tecmar's sales because the 
merchandise was sold directly by Tecmar to the first unaffiliated 
purchaser in the United States prior to importation, and CEP was not 
otherwise warranted based on the facts of record. We made deductions 
from the starting price for movement expenses in accordance with 
section 772(c)(2)(A) of the Act. These include foreign movement expense 
(inland freight), international freight, U.S. brokerage and handling, 
and U.S. duties. We also added the amount for duty drawback to the 
starting price, in accordance with section 772(c)(1)(B) of the Act.

Normal Value

A. Selection of Comparison Markets

    Based on a comparison of the aggregate quantity of home market 
sales and U.S. sales by Cultivos Marinos and Eicosal, we determined 
that the quantity of foreign like product sold in Chile permitted a 
proper comparison with the sales of the subject merchandise to the 
United States pursuant to section 773(a)(1)(B) of the Act, because the 
quantity of sales in the home market was more than five percent of the 
quantity of sales to the U.S. market. Accordingly, for those two 
respondents we based NV on home market sales.\2\
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    \2\ In the original LTFV investigation, the Department rejected 
the use of home market sales for purposes of establishing NV for two 
respondents, finding that a particular market situation existed with 
respect to those sales. In reaching that determination, the 
Department noted that those respondents' home market sales were 
almost exclusively of industrial grade salmon, which were incidental 
to their export-oriented businesses, and were sold essentially for 
salvage value. In this review, we have accepted the use of home 
market sales by Cultivos Marinos and Eicosal, since these sales 
included export-grade salmon sold to customers with a specific 
demand for those products.
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    Respondents Linao, Mares Australes, Pacific Star, Mainstream, 
Pacifico Sur, and Tecmar did not have viable home markets, as defined 
above. Therefore, for these respondents, in accordance with section 
773(a)(1)(C) of the Act, we based NV on the price at which the foreign 
like product was first sold for consumption in each respondent's 
largest third-country market. For Linao, Mainstream,\3\ and Pacific 
Star, the largest third-country market is Brazil; for Tecmar, the 
largest third-country market is Argentina. Respondents Mares Australes 
and Pacifico Sur did not have any viable comparison market. Therefore, 
in accordance with section 773(e) of the Act, we based NV for these 
respondents on CV.
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    \3\ We note that the petitioners have called into question the 
use of sales to the Brazilian market as the basis for NV for 
Mainstream. According to the petitioners, the respondent's U.S. 
sales are primarily of fillets, and fillets were introduced to the 
Brazilian market by Mainstream in small quantities only after the 
issuance of the antidumping order in this case. We have 
preliminarily accepted the use of sales to the Brazilian market as 
the basis for NV for Mainstream. However, we will give further 
consideration to this issue for the final results of review, and 
invite parties to submit comments in their case briefs in this 
regard.
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B. Cost of Production Analysis

    Based on timely allegations filed by the petitioners, we initiated 
cost of production (COP) investigations of Cultivos Marinos, Fiordo 
Blanco, Pacific Star, and Tecmar, to determine whether sales were made 
at prices below the COP. See Memorandum From Case Analysts to Gary 
Taverman, dated January 12, 2000. In addition, because we disregarded 
below-cost sales in the final determination of the LTFV investigation 
of Eicosal, we had reasonable grounds to believe or suspect that home 
market sales of the foreign like product by this company have been made 
at prices below the COP during the period of the first review. 
Therefore, pursuant to section 773(b)(1) of the Act, we also initiated 
a COP investigation of sales by Eicosal.
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP, by model, based on the sum of materials, 
fabrication, and general expenses. We relied on the submitted COPs 
except in the specific instances noted below, where the submitted costs 
were not appropriately quantified or valued.
    We made the following company-specific adjustments to the cost data 
submitted in this review:
    Cultivos Marinos: We adjusted Cultivos Marinos' general and 
administrative (G&A) expense ratio to include certain depreciation 
expenses which had been omitted from its submitted calculation and we 
adjusted the company's financial expense ratio to exclude offsets for 
estimated monetary gains associated with debt.
    Eicosal: We calculated Eicosal's financial expenses from its parent 
company's consolidated financial statements. We also adjusted Eicosal's 
financial expense ratio to exclude offsets for estimated monetary gains 
associated with debt.
    Pacific Star: We adjusted Pacific Star's financial expense ratio to 
exclude offsets for estimated monetary gains associated with debt.
    Tecmar: We adjusted Tecmar's financial expense ratio to exclude 
offsets for estimated monetary gains associated with debt.
2. Test of Comparison Market Sales Prices
    As required by section 773(b) of the Act, we compared the adjusted 
weighted-average COP for each respondent subject to a cost 
investigation to the comparison-market sales prices of the foreign like 
product, in order to determine whether these sales had been made at 
prices below the COP within an extended period of time in substantial 
quantities, and whether such prices were sufficient to permit the 
recovery of all costs within a reasonable period of time. On a product-
specific basis, we compared the revised COP to the comparison-market 
prices, less any applicable movement charges, taxes, rebates, 
commissions, and other direct and indirect selling expenses.
3. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given product were made at prices 
below the COP, we did not disregard any below-cost sales of that 
product because the below-cost sales were not made in ``substantial 
quantities.'' Where (1) 20 percent or

[[Page 48462]]

more of a respondent's sales of a given product were made at prices 
below the COP and thus such sales were made within an extended period 
of time in substantial quantities in accordance with sections 
773(b)(2)(B) and (C) of the Act, and (2) based on comparisons of price 
to weighted-average COPs for the POR, we determined that the below-cost 
sales of the product were at prices which would not permit recovery of 
all costs within a reasonable time period, in accordance with section 
773(b)(2)(D) of the Act, we disregarded the below-cost sales.
    We found that for certain fresh Atlantic salmon products, Cultivos 
Marinos, Eicosal, Pacific Star, and Tecmar made comparison-market sales 
at prices below the COP within an extended period of time in 
substantial quantities. Further, we found that these sales prices did 
not permit the recovery of costs within a reasonable period of time. We 
therefore excluded these sales from our analysis in accordance with 
section 773(b)(1) of the Act.

C. Calculation of Normal Value Based on Comparison-Market Prices

    We determined price-based NVs for respondent companies as follows. 
For all respondents, we made adjustments for any differences in 
packing, and we deducted movement expenses pursuant to section 
773(a)(6)(B)(ii) of the Act. In addition, where applicable, we made 
adjustments for differences in circumstances of sale (COS) pursuant to 
section 773(a)(6)(C)(iii) of the Act. We also made adjustments, 
pursuant to 19 CFR 351.410(e), for indirect selling expenses incurred 
on comparison-market or U.S. sales where commissions were granted on 
sales in one market but not in the other (the commission offset).
    Company-specific adjustments are described below.
    Cultivos Marinos: We based home market prices on the packed prices 
to unaffiliated purchasers in Chile. We adjusted the starting price for 
foreign inland freight, interest revenue and billing adjustments. We 
made COS adjustments by deducting direct selling expenses incurred for 
home market sales (credit expense) and adding U.S. direct selling 
expenses (credit expense). No other adjustments to NV were claimed or 
allowed.
    Eicosal: We based home market prices on the packed prices to 
unaffiliated purchasers in Chile. We adjusted the starting price for 
foreign inland freight. We made COS adjustments by deducting direct 
selling expenses incurred for home market sales (credit expense) and 
adding U.S. direct selling expenses (credit expense, inspection fees, 
and bank charges). No other adjustments to NV were claimed or allowed.
    Linao: We based third-country market prices on the packed, FOB 
plant or C&F port-city prices to unaffiliated purchasers in Brazil. We 
adjusted for the following movement expenses: foreign inland freight, 
airport handling fees, and customs brokerage. We made COS adjustments 
by deducting direct selling expenses incurred for third-country market 
sales (credit, quality control and inspection, certification expenses, 
and bank charges) and adding U.S. direct selling expenses (credit and 
association fees). We also added the amount for third country duty 
drawback to the starting price.
    Mainstream: We based third-country market prices on the packed, FOB 
plant or C&F port-city prices to unaffiliated purchasers in Brazil. We 
adjusted for the following movement expenses: foreign inland freight, 
international freight, customs fees and airport handling charges. We 
made COS adjustments by deducting direct selling expenses incurred for 
third-country market sales (credit, sanitary certification, association 
fees, bank charges and loan guarantees) and adding U.S. direct selling 
expenses (credit, association fees, and bank charges). We also added 
the amount for third country duty drawback to the starting price.
    Pacific Star: We based third-country market prices on the packed, 
FOB plant or C&F port-city prices to unaffiliated purchasers in Brazil. 
We adjusted for the following movement expenses: foreign inland 
freight, airport handling fees, and Customs brokerage. We made COS 
adjustments by deducting direct selling expenses incurred for third-
country market sales (credit, quality control and inspection, 
certification expenses, and bank charges) and adding U.S. direct 
selling expenses (credit and association fees). We also added the 
amount for third country duty drawback to the starting price.
    Tecmar: We based third-country market prices on the packed, FOB 
plant or C&F port-city prices to unaffiliated purchasers in Argentina. 
We adjusted for the following movement expenses: foreign inland 
freight, international freight and brokerage and handling. We made COS 
adjustments by deducting direct selling expenses incurred for third-
country market sales (credit, quality control, health certificate and 
bank charges) and adding U.S. direct selling expenses (credit, quality 
control, inspection and bank charges). We also added the amount for 
third country duty drawback to the starting price.

D. Calculation of Normal Value Based on Constructed Value

    For those sales for which we could not determine NV based on 
comparison-market sales because there were no contemporaneous sales of 
a comparable product in the ordinary course of trade, we compared EP, 
or CEP, to CV. Section 773(e) of the Act provides that CV shall be 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus amounts for SG&A, profit, and U.S. packing. 
For Cultivos Marinos, Eicosal, Pacific Star, and Tecmar, we calculated 
CV based on the methodology described in the COP section, above. For 
Linao, Mares Australes, and Pacifico Sur, we calculated CV as discussed 
below. In accordance with section 773(e)(2)(A) of the Act, we used the 
actual amounts incurred and realized by each respondent in connection 
with the production and sale of the foreign like product, in the 
ordinary course of trade, for consumption in the comparison market to 
calculate SG&A expenses and profit. For Mares Australes and Pacifico 
Sur, which had no comparison market sales, we relied on the weighted-
average SG&A and profit ratios of the two respondents with home market 
sales, consistent with section 773(e)(2)(B)(ii) of the Act.
    For price-to-CV comparisons, we made adjustments to CV for COS 
differences, pursuant to section 773(a)(8) of the Act. For comparisons 
to EP, we made COS adjustments by deducting direct selling expenses 
incurred on comparison market sales and adding U.S. direct selling 
expenses. We also adjusted, where applicable, for the commission offset 
described in Calculation of Normal Value Based on Comparison-Market 
Prices, above.
    Company-specific adjustments are described below.
    Cultivos Marinos: We made COS adjustments by deducting direct 
selling expenses incurred for home market sales (credit expense) and 
adding U.S. direct selling expenses (credit expense).
    Eicosal: We made COS adjustments by deducting direct selling 
expenses incurred for home market sales (credit expense) and adding 
U.S. direct selling expenses (credit expense, inspection fees, and bank 
charges).
    Linao: We adjusted Linao's financial expense ratio to exclude 
offsets for estimated monetary gains associated with debt. In addition, 
we made COS adjustments by deducting average direct selling expenses 
incurred by Linao for third-country market sales and adding U.S. direct 
selling expenses (credit and association fees).

[[Page 48463]]

    Mares Australes: We adjusted Mares Australes' general and 
administrative expense ratio to include charges to a provision for 
catastrophic stock losses and certain other miscellaneous expenses. In 
addition, we made COS adjustments by adding U.S. direct selling 
expenses (credit and association fees) and deducting the weighted-
average direct selling expenses incurred by the two respondents that 
had a viable home market during the period.
    Pacific Star: We made COS adjustments by deducting direct selling 
expenses incurred for third-country market sales (credit, quality 
control and inspection, certification expenses, and bank charges) and 
adding U.S. direct selling expenses (credit, products claims, and 
repacking expenses and association fees).
    Pacifico Sur: We adjusted Pacifico Sur's financial expense ratio to 
exclude offsets for estimated monetary gains associated with debt. In 
addition, we made COS adjustments by adding U.S. direct selling 
expenses (credit and association fees) and deducting the weighted-
average direct selling expenses incurred by the two respondents that 
had a viable home market during the period. Because Pacifico Sur had 
commissions in the U.S. market, we also adjusted the CV by a commission 
offset, based on the weighted-average indirect selling expenses 
incurred by the two respondents that had a viable home market during 
the period.
    Tecmar: We made COS adjustments by deducting direct selling 
expenses incurred for third-country market sales (credit, quality 
control, health certificate and bank charges) and adding U.S. direct 
selling expenses (credit, quality control, inspection and bank 
charges).

Level of Trade/CEP Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade as the EP or CEP transaction. The NV level of 
trade is that of the starting-price sale in the comparison market or, 
when the NV is based on CV, that of the sales from which we derive SG&A 
expenses and profit. For EP sales, the U.S. level of trade is also the 
level of the starting-price sale, which is usually from the exporter to 
the importer. For CEP sales, it is the level of the constructed sale 
from the exporter to the importer.
    The U.S. Court of International Trade (CIT) has held that the 
Department's practice of determining LOT for CEP transactions after CEP 
deductions is an impermissible interpretation of section 772 (d) of the 
Act. See Borden, Inc. v. United States, 4 F. Supp. 2d 1221, 1241-42 
(CIT March 26, 1998) (Borden II). The Department believes, however, 
that its practice is in full compliance with the statute. On June 4, 
1999, the CIT entered final judgment in Borden II on the LOT issue. See 
Borden, Inc. v. United States, Court No. 96-08-01970, Slip Op. 99-50 
(CIT, June 4, 1999). The government has appealed Borden II to the Court 
of Appeals for the Federal Circuit. Consequently, the Department has 
continued to follow its normal practice of adjusting CEP under section 
772(d) of the Act prior to starting a LOT analysis, as articulated in 
the Department's regulations at section 351.412.
    To determine whether NV sales are at a different level of trade 
than EP or CEP, 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 level of trade, and the difference affects price 
comparability with U.S. sales, as manifested in a pattern of consistent 
price differences between the sales on which NV is based and 
comparison-market sales at the level of trade of the export 
transaction, we make a level-of-trade adjustment pursuant to section 
773(a)(7)(A) of the Act. For CEP sales, if the NV level is more remote 
from the factory than the CEP level and there is no basis for 
determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV pursuant to section 
773(a)(7)(B) of the Act (the CEP offset provision).
    To apply these guidelines in this review, we obtained information 
from each respondent about the marketing stage involved in its reported 
U.S. and comparison-market sales, including a description of the 
selling activities performed by the respondent for each of its channels 
of distribution. In identifying levels of trade for EP and comparison 
market sales, we considered the selling functions reflected in the 
starting price before any adjustments. For CEP sales, we considered 
only the selling activities reflected in the price after the deduction 
of expenses and profit pursuant to section 772(d) of the Act. 
Generally, if the claimed levels of trade are the same, the functions 
and activities of the seller should be similar. Conversely, if a party 
claims that levels of trade are different for different groups of 
sales, the functions and activities of the seller should be dissimilar.
    In conducting our level-of-trade analysis for each respondent, we 
took into account the specific customer types, channels of 
distribution, and selling practices of each respondent. We found that, 
for all respondents, the fact pattern was virtually identical. Sales to 
both the U.S. and comparison markets were made to distributors, 
retailers, and, less commonly, to further-processors. In all cases, the 
selling functions performed by the respondents for the different 
customer types and channels of distribution were very limited, and 
identical in both markets. Therefore, for all respondents, we found 
that there was a single level of trade in the United States, and a 
single, identical level of trade in the comparison market. As such, it 
was not necessary to make any level of trade adjustments.

Currency Conversion

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

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following weighted-average margins exist for the period July 28, 1998, 
through June 30, 1999:

------------------------------------------------------------------------
                                                            Weighted  -
                                                              average
                  Exporter/manufacturer                       Margin
                                                            percentage
------------------------------------------------------------------------
Cultivos Marinos........................................        \1\0.01.
Eicosal.................................................        \1\0.40.
Fiordo Blanco...........................................          10.69.
Linao...................................................           0.00.
Mainstream..............................................           0.00.
Mares Australes.........................................           0.00.
Pacific Star............................................           4.52.
Pacifico Sur............................................           0.00.
Tecmar..................................................       \1\0.01.
------------------------------------------------------------------------
\1\ De minimis.

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of this 
proceeding in accordance with 19 CFR 351.224(b). An interested party 
may request a hearing within 30 days of publication of these 
preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, 
will be held 44 days after the date of publication, or the first 
working day thereafter. Interested parties may submit case briefs and/
or written comments no later than 30 days after the date of publication 
of these preliminary results of review. Rebuttal briefs and rebuttals 
to written comments, limited to issues raised in such briefs or 
comments, may be filed no later than 37 days after the date of 
publication. Parties who submit arguments are requested to submit with

[[Page 48464]]

the argument (1) a statement of the issue, (2) a brief summary of the 
argument and (3) a table of authorities. Further, we would appreciate 
it if parties submitting written comments would provide the Department 
with an additional copy of the public version of any such comments on 
diskette. The Department will issue the final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such comments, within 120 days of publication 
of these preliminary results.
    Pursuant to 19 CFR 351.212(b), the Department calculated an 
assessment rate on all appropriate entries. Eicosal, Linao, Mainstream, 
Mares Australes, Pacific Star, and Tecmar reported the entered value of 
each of their sales. Cultivos Marinos and Pacifico reported the entered 
value of some, but not all, of their sales. For those sales for which 
the entered value was not reported, we calculated entered value by 
subtracting international freight from the gross unit price of the U.S. 
sale. We calculated importer-specific duty assessment rates on the 
basis of the ratio of the total amount of antidumping duties calculated 
for the examined sales to the total entered value of the examined 
sales. These rates will be assessed uniformly on all of the entries 
made during the POR. The Department will issue appraisement 
instructions directly to the U.S. Customs Service upon completion of 
the final results of this administrative review.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of fresh Atlantic salmon from Chile entered, or withdrawn 
from warehouse, for consumption on or after the publication date, as 
provided by section 751(a)(1) of the Act: (1) The cash deposit rate for 
companies listed above will be the rate established in the final 
results of this review, except if the rate is less than 0.5 percent, 
and therefore, de minimis, the cash deposit will be zero; (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 LTFV 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) if neither the exporter nor the manufacturer is a firm covered in 
this or any previous review conducted by the Department, the cash 
deposit rate will be 4.57 percent, the All Others rate established in 
the LTFV investigation.
    These cash deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review. \4\
---------------------------------------------------------------------------

    \4\ We note that shortly after the end of the period of the 
first review, the parent company of Mares Australes purchased Marine 
Harvest, another producer of fresh Atlantic salmon from Chile, and 
subsequently merged the operations of the two companies. More 
recently, the two companies merged formally under the name of Marine 
Harvest. This issue may require consideration in a future segment of 
this proceeding.
---------------------------------------------------------------------------

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant entities 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 determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 31, 2000.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-20029 Filed 8-7-00; 8:45 am]
BILLING CODE 3510-DS-P