[Federal Register Volume 66, Number 92 (Friday, May 11, 2001)]
[Notices]
[Pages 24101-24108]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-11940]



[[Page 24101]]

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-863]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Honey From the People's Republic of China

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

ACTION: Notice of Preliminary Determination of Sales at Less Than Fair 
Value; Honey from the People's Republic of China

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EFFECTIVE DATE: May 11, 2001.

FOR FURTHER INFORMATION CONTACT: Angelica Mendoza (Inner Mongolia and 
Zhejiang) at (202) 482-3019, Fred Baker (Kunshan) at (202) 482-2924, 
Charles Rast at (202) 482-1324 or Donna Kinsella at (202) 482-0194; 
Antidumping and Countervailing Duty Enforcement Group III, Office 
Eight, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue NW., 
Washington, DC 20230.

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 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department of Commerce (the Department) 
regulations refer to the regulations codified at 19 CFR part 351 (April 
2000).

Preliminary Determination

    We preliminarily determine that honey from the People's Republic of 
China (the PRC) is being, or is likely to be, sold in the United States 
at less than fair value (LTFV), as provided in section 733 of the Act. 
The estimated margin of sales at LTFV is shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    On October 26, 2000, the Department initiated antidumping 
investigations of honey from Argentina and the PRC. See Initiation of 
Antidumping Duty Investigations: Honey From Argentina and the People's 
Republic of China, 65 FR 65831-65834 (November 2, 2000) (Initiation 
Notice). The petitioners in these investigations are the American Honey 
Producers Association and the Sioux Honey Association. Since the 
initiation of these investigations, the following events have occurred 
with respect to honey from the PRC.
    On November 13, 2000, the United States International Trade 
Commission (ITC) notified the Department of its affirmative preliminary 
injury determination on imports of subject merchandise from Argentina 
and the PRC. On November 17, 2000, the ITC published its preliminary 
determination that there is a reasonable indication that an industry in 
the United States is materially injured by reason of imports of the 
subject merchandise from Argentina and the PRC (65 FR 69573).
    On November 27, 2000, the Department issued Section A of its 
antidumping duty questionnaire to the Embassy of the PRC with a letter 
requesting that it forward the questionnaire to all exporters of honey 
who shipped subject merchandise to the United States during the period 
of investigation (POI) and instruct those exporters to respond to 
Question 1, Section A. On December 12, 2000, the Department received 
responses from Inner Mongolia Autonomous Region Native Produce and 
Animal By-Products Import and Export Corporation (Inner Mongolia), 
Kunshan Foreign Trading Company (Kunshan), Zhejiang Native Produce and 
Animal By-Products Import and Export Corporation (Zhejiang), High Hope 
International Group Jiangsu Foodstuffs Import and Export Corporation 
(High Hope), Shanghai Eswell Enterprise Company Ltd. (Shanghai Eswell), 
Anhui Native Produce Import and Export Corporation (Anhui), and Henan 
Native Produce Import and Export Corporation (Henan). Based on this 
information, the Department selected Inner Mongolia, Kunshan, and 
Zhejiang as mandatory respondents in this investigation because they 
represent, by volume, the three largest exporters of subject 
merchandise during the POI. See Memorandum to Joseph A. Spetrini, 
Selection of Respondents, dated December 19, 2000.
    On December 19, 2000, the Department issued all sections of the 
antidumping duty questionnaire to Inner Mongolia, Kunshan, and 
Zhejiang. On January 19, 2001, we received responses to Section A of 
the Department's questionnaire from these three exporters as well as 
Section A responses from High Hope, Shanghai Eswell, Anhui, and Henan. 
On February 2, 2001, the Department issued supplemental Section A 
questionnaires to Inner Mongolia, Kunshan, Zhejiang, High Hope, 
Shanghai Eswell, Anhui, and Henan. On February 23, 2001, we received 
responses from all seven exporters.
    On February 9, 2001, Inner Mongolia, Kunshan, and Zhejiang 
responded to Sections C and D of the Department's questionnaire. 
Petitioners submitted comments on these responses on February 20, 2001. 
On February 13, 2001, we solicited comments from interested parties on 
surrogate country selection for purposes of this investigation. We 
received comments from petitioners and respondents Inner Mongolia, 
Kunshan, and Zhejiang on March 15, 2001. On February 23, 2001, the 
Department issued a supplemental questionnaire with respect to Sections 
C and D to the mandatory respondents. The Department issued a second 
supplemental questionnaire for Section A to the mandatory respondents 
on March 1, 2001. On March 16, 2001, Inner Mongolia, Kunshan, and 
Zhejiang responded to the supplemental questionnaire concerning 
Sections C and D and responded to the second supplemental questionnaire 
for Section A. Petitioners submitted comments on respondents' 
supplemental questionnaire responses (from March 16, 2001) on April 20, 
2001 and April 23, 2001. OnApril 25, 2001, the mandatory respondents 
commented on petitioners' April 20, 2001 filing.
    On March 19, 2001, we invited interested parties to provide 
publicly available information for valuing the factors of production. 
On April 4, 2001, we received comments and information from interested 
parties regarding valuation of the factors of production Petitioners 
and respondents filed rebuttal comments on April 11, 2001. On April 12, 
2001, petitioners commented on respondents' April 11, 2001 filing. 
Respondents submitted additional comments and information on April 18, 
2001. Petitioners also filed additional comments regarding the 
valuation of the factors of production on April 20, 2001 and April 23, 
2001. On April 24, 2001, the Department requested that petitioners and 
respondents provide additional information and comments concerning the 
calculation of a surrogate value for factory overhead. See Memorandum 
to the File from Donna L. Kinsella (April 24, 2001). On April 27, 2001, 
we received responses from petitioners and respondents.
    On March 29, 2001, the Department requested additional information 
on the export licensing system for honey in the PRC. On April 12, 2001 
and April 18, 2001, all respondents provided this information.
    On February 14, 2001, petitioners made a timely request for a 
fifty-day

[[Page 24102]]

postponement of the preliminary determination pursuant to section 
733(c)(1)(A) of the Act. On February 22, 2001, we postponed the 
preliminary determination until no later than May 4, 2001. See Honey 
from Argentina and the People's Republic of China: Notice of 
Postponement of Preliminary Antidumping Duty Determinations, 66 FR 
12924 (March 1, 2001).
    On February 23, 2001, the petitioners alleged that there is a 
reasonable basis to believe or suspect that critical circumstances 
exist with respect to imports of honey from the PRC. On March 19, 2001, 
the Department requested monthly shipment data for the period February 
1999 through February 2001 from Inner Mongolia, Kunshan, Zhejiang, High 
Hope, Shanghai Eswell, Anhui, and Henan. On April 2, 2001, Inner 
Mongolia, Kunshan, Zhejiang, High Hope, Shanghai Eswell, Anhui, and 
Henan responded to this request.

Period of Investigation

    In accordance with section 351.204(b)(1) of the Department's 
regulations, the POI comprises the two most recently completed fiscal 
quarters as of the month in which the petition was filed. For all 
exporters, this is the period of January 1, 2000 through June 30, 2000.

Scope of Investigation

    For purposes of this investigation, the products covered are 
natural honey, artificial honey containing more than 50 percent natural 
honey by weight, preparations of natural honey containing more than 50 
percent natural honey by weight, and flavored honey. The subject 
merchandise includes all grades and colors of honey whether in liquid, 
creamed, comb, cut comb, or chunk form, and whether packaged for retail 
or in bulk form.
    The merchandise subject to this investigation is currently 
classifiable under subheadings 0409.00.00, 1702.90, and 2106.90.99 of 
the Harmonized Tariff Schedule of the United States (HTSUS). Although 
the HTSUS subheadings are provided for convenience and U.S. Customs 
Service (U.S. Customs) purposes, the Department's written description 
of the merchandise under investigation is dispositive.

Non-Market Economy Status for the People's Republic of China

    The Department has treated the PRC as a non-market economy (NME) 
country in all past antidumping investigations. See, e.g., Notice of 
Final Determination of Sales at Less Than Fair Value: Bulk Aspirin From 
the People's Republic of China, 65 FR 33805 (May 25, 2000), and Notice 
of Final Determination of Sales at Less Than Fair Value: Certain Non-
Frozen Apple Juice Concentrate from the People's Republic of China, 65 
FR 19873 (April 13, 2000). A designation as an NME remains in effect 
until it is revoked by the Department. See Section 771(18)(C) of the 
Act. The respondents in this investigation have not requested a 
revocation of the PRC's NME status. We have, therefore, preliminarily 
determined to continue to treat the PRC as an NME. When the Department 
is investigating imports from an NME, section 773(c)(1) of the Act 
directs us to base the normal value (NV) on the NME producer's factors 
of production, valued in a comparable market economy that is a 
significant producer of comparable merchandise. The sources used to 
value individual factors are discussed under the ``Normal Value'' 
section, below.

Separate Rates

    It is the Department's policy to assign all exporters of 
merchandise subject to investigation in an NME country a single rate, 
unless an exporter can demonstrate that it is sufficiently independent 
so as to be entitled to a separate rate. Inner Mongolia, Kunshan, 
Zhejiang, High Hope, Shanghai Eswell, Anhui, and Henan have provided 
company-specific separate rate information and have stated that there 
is no element of government ownership or control. In their 
questionnaire responses, Inner Mongolia, Kunshan, Zhejiang, High Hope, 
Shanghai Eswell, Anhui, and Henan state that they are independent 
companies ``owned by all the people'' and controlled by the general 
assembly of workers and employees. Inner Mongolia, Kunshan, Zhejiang, 
High Hope, Shanghai Eswell, Anhui, and Henan further claim that they do 
not maintain any corporate relationship with the central, provincial, 
and local government in terms of production, management, and 
operations.
    Inner Mongolia, Kunshan, Zhejiang, High Hope, Shanghai Eswell, 
Anhui, and Henan have stated that their exports of subject merchandise 
to the United States were subject to the export licensing system 
governing all exports of honey from the PRC. They submitted for the 
record the following relevant State Council laws and regulations 
governing the export licensing system: ``Notice on Issuing Guidelines 
of Quota Bidding for Exporting Commodities,'' ``Detailed Rules on 
Bidding for Exporting Commodity Quotas,'' and ``Notice of Issuing List 
of Commodities Subject to Export License Administration, 2001.'' While 
exports of honey from the PRC have been subject to licensing 
requirements for many years, during the POI of this proceeding, the 
export licensing system in effect was largely dictated by the terms of 
the Agreement Suspending the Antidumping Investigation of Honey from 
the PRC (the ``Agreement''). See 60 FR 42521 (August 16, 1995). In 
October 1995, for example, the Ministry of Foreign Trade and Economic 
Cooperation (MOFTEC) issued the Provisional Regulations for the 
Administration of Export of Honey to the United States (Provisional 
Regulations), which implemented the Agreement and established the 
process for PRC exporters to obtain the quotas necessary to export 
honey to the United States.
    Under the terms of the Agreement, exports of PRC honey to the 
United States were subject to an annual limitation and a reference 
price at or above which all exports of honey to the United States were 
required to be sold. The annual limit for exports to the United States 
was allocated by MOFTEC to specific exporters through an open bidding 
process, in which the largest exporters bid first based on their 
historical export levels. Bid applications were processed by the China 
Chamber of Commerce of Importers and Exporters of Foodstuffs, Native 
Produce and Animal By-Products (the ``Chamber''). After the largest 10 
exporters bid and were allocated export volume, an open bidding process 
was initiated for the remaining 18 eligible exporters.\1\ The total fee 
for the bid that the winner paid to MOFTEC for the export volume was 
based on the bidding prices and the quantity of the quota that the 
recipient won. Individual companies that had successfully bid for 
export limit were then notified of their respective quota allocation by 
the Foreign Trade Administration Department (FTA).\2\
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    \1\ Only those exporters that participated in the original 1994-
95 PRC honey antidumping investigation were eligible to bid, on the 
grounds that only those companies had demonstrated their willingness 
to reliably participate in the investigation.
    \2\ If an export subsequently realized it could not fully 
utilize its export volume, it could ask the Chamber to allow it to 
transfer the unused portion to another exporter. Likewise, if an 
exporter realized it could export more than its export volume, it 
could apply to the Chamber for unused export volume transferred by 
other exporters.
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    Upon completion of the bidding process, the Chamber issued letters 
to each company successfully bidding for export volume, confirming that 
the company was eligible for an export license. This confirmation of 
eligibility for an export license, coupled with the

[[Page 24103]]

notification of volume allocation from the FTA, allowed the exporter to 
enter into a contract for the sale of honey to the United States. The 
exporter then submitted to the Chamber the formal notification of 
volume allocation and a copy of its contract for sale of honey to the 
United States. The Chamber then reviewed the contract to ensure that 
the sale price was above the applicable reference price set by the 
Department.
    The exporter then submitted to the Quota Licensing Board (QLB) or 
the Special Commissioners Office an application for an export license, 
including a copy of the formal notice of volume allocation from the 
FTA, the relevant contract for the sale of honey to the United States, 
and the letter of eligibility for an export license issued by the 
Chamber. Export licenses were issued on a shipment-specific basis, 
identified the price, quantity, and destination of the honey to be 
exported, and were valid for a period of three months from the date of 
issuance. After receiving an export license, the exporter would apply 
for a export volume certificate confirming that the exporter was 
authorized to export the quantity of honey covered by the sales 
contract. The QLB kept a running tally of the amount of export volume 
available to any individual exporter, and ensured that the amount of 
honey covered in a contract was less than or equal to that exporter's 
remaining export volume. The final step prior to exportation involved 
the submission of all relevant documents, including the export volume 
certificate and export license, to the PRC Customs Service, which 
checked the documentation before authorizing export.
    The Agreement was terminated in July 2000. See Notice of Final 
Results of Five-Year (``Sunset'') Review, Termination of Suspended 
Antidumping Investigation on Honey From the People's Republic of China, 
65 FR 46426 (July 28, 2000). Thereafter, MOFTEC made slight 
modifications to the export licensing system for honey. For example, 
under a new regulation issued by MOFTEC in December 2000, ``The Notice 
of Issuing List of Commodities Subject to Export License 
Administration, 2001 and Relevant Issues,'' export volume certificates 
are no longer required for exports of PRC honey to the United States. 
In the absence of a reference price issued by the Department and in an 
attempt to ensure that there is no dumping of Chinese honey, the 
Chamber, in consultation with the affected exporters, periodically 
establishes a minimum export price (EP) based on recent EPs. All 
exports of honey to the United States are required to be sold at or 
above this minimum EP.
    The bidding process for export volume, however, remains the same as 
that in operation under the Agreement, and the annual limitation on 
exports of Chinese honey to the United States in effect at the time the 
Agreement was terminated remains in effect through July 2001.
    The Department's separate rate test is not concerned, in general, 
with macroeconomic border-type controls (e.g., export licenses, quotas, 
and minimum EPs), particularly if these controls are imposed to prevent 
dumping. Rather, the test focuses on controls over the export-related 
investment, pricing, and output-decision-making process at the 
individual firm level. See Certain Cut-to-Length Carbon Steel Plate 
from Ukraine: Final Determination of Sales at Less than Fair Value, 62 
FR 61754, 61757 (November 19, 1997); Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, from the People's Republic of China: 
Final Results of Antidumping Duty Administrative Review, 62 FR 61276, 
61279 (November 17, 1997); and Honey from the People's Republic of 
China: Preliminary Determination of Sales at Less than Fair Value, 60 
FR 14725, 14726 (March 20, 1995). In determining whether the export 
licensing system for Chinese honey is consistent with the application 
of separate rates to eligible exporters for purposes of this 
investigation, we believe it is appropriate to focus on the export 
licensing system and minimum price floor currently in effect rather 
than the system in effect during the POI because the system in effect 
during the POI was largely driven and governed by the Agreement which 
has since been terminated.
    In the Department's preliminary determination in the original 
antidumping duty investigation of honey from the PRC (see Notice of 
Preliminary Determination of Sales at Less than Fair Value: Honey from 
the People's Republic of China, 60 FR 14725 (March 20, 1995)) 
(Preliminary Determination), the Department determined that the 
existence of the export licensing system and minimum price floor for 
exports of Chinese honey to the United States were consistent with the 
Department's determination to grant separate rates to certain exporters 
of Chinese honey. We preliminarily determine in this investigation that 
the export licensing system and minimum price floor for exports of 
Chinese honey to the United States currently in effect are nearly 
identical to those examined in the original investigation and as a 
result are also consistent with the application of separate rates to 
those exporters who otherwise qualify. The bidding process, as 
described on the record, permits independent export pricing decisions 
and the export volume system operates on the basis of transparent and 
well-defined rules. All eligible exporters are free to bid for the 
right to export honey according to their own business plans. Further, 
exporters are free to independently negotiate EPs with their customers 
above the minimum EP. Allocation of export limits takes place in a 
competitive manner and exporters compete with each other for customers 
in the global marketplace. Thus, the export licensing system and 
minimum EP currently in effect does not involve the type of de jure 
government control over export pricing and marketing decisions that 
would preclude respondents from being eligible to receive separate 
rates.
    With respect to the claims for entitlement to separate rates put 
forth by Inner Mongolia, Kunshan, Zhejiang, High Hope, Shanghai Eswell, 
Anhui, and Henan, as stated in the Final Determinations of Sales at 
Less-Than-Fair-Value: Silicon Carbide from the People's Republic of 
China, 59 FR 22585 (May 2, 1994) (Silicon Carbide), and Final 
Determination of Sales at Less than Fair Value: Furfuryl Alcohol, 60 FR 
22545 (May 8, 1995) (Furfuryl Alcohol), ownership of a company by ``all 
the people'' does not require the application of a single rate. As 
noted above, the Department's test for separate rates focuses on 
controls over export-related investment, pricing, and output decision-
making process at the individual firm level. To establish whether a 
firm is sufficiently independent to be entitled to a separate rate, the 
Department analyzes each exporting entity under the test established in 
the Final Determination of Sales at Less Than Fair Value: Sparklers 
from the People's Republic of China, 56 FR 20588 (May 6, 1991), and 
amplified in Silicon Carbide. Under this test, the Department assigns 
separate rates in NME cases only if an exporter can affirmatively 
demonstrate the absence of both (1) de jure and (2) de facto 
governmental control over export activities. See Silicon Carbide and 
Furfuryl Alcohol.

1. Absence of De Jure Control

    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) An absence of restrictive stipulations associated with an 
individual exporter's business

[[Page 24104]]

and export licenses; (2) any legislative enactments decentralizing 
control of companies; and (3) any other formal measures by the 
government decentralizing control of companies.
    Inner Mongolia, Kunshan, Zhejiang, High Hope, Shanghai Eswell, 
Anhui, and Henan, have placed on the record a number of documents to 
demonstrate absence of de jure control, including the ``Foreign Trade 
Law of the People's Republic of China,'' promulgated on May 12, 1994, 
the ``Law of the People's Republic of China in Industrial Enterprises 
Owned by the Whole People,'' adopted on April 13, 1998 (1988 Law), the 
``Law of the People's Republic of China on Chinese-Foreign Cooperative 
Joint Ventures,'' and ``Regulations for Transformation of Operational 
Mechanism of State-Owned Enterprises,'' effective as of July 23, 1992 
(1992 Regulations).
    In prior cases, the Department has analyzed the 1988 Law and 1992 
Regulations and found that they establish an absence of de jure 
control. See, e.g., Notice of Final Determination of Sales at Less Than 
Fair Value: Certain Partial-Extension Steel Drawer Slides with Rollers 
from the People's Republic of China, 60 FR 54472 (October 24, 1995). We 
have no new information in this proceeding which would cause us to 
reconsider this determination.
    As stated in previous cases, there is some evidence that the 
provisions of the above-cited 1988 Law and 1992 Regulations regarding 
enterprise autonomy have not been implemented uniformly among different 
sectors and/or jurisdictions in the PRC. See ``PRC Government Findings 
on Enterprise Autonomy,'' in Foreign Broadcast Information Service-
China-93-133 (July 14, 1993). Therefore, the Department has determined 
that an analysis of de facto control is critical in determining whether 
respondents are, in fact, subject to a degree of governmental control 
which would preclude the Department from assigning separate rates.

2. Absence of De Facto Control

    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the EPs are set by or are subject to 
the approval of a governmental agency; (2) whether the respondent has 
authority to negotiate and sign contracts and other agreements; (3) 
whether the respondent has autonomy from the government in making 
decisions regarding the selection of management; and (4) whether the 
respondent retains the proceeds of its export sales and makes 
independent decisions regarding disposition of profits or financing of 
losses.
    Inner Mongolia, Kunshan, Zhejiang, High Hope, Shanghai Eswell, 
Anhui, and Henan assert the following: (1) They each establish their 
own EPs independent of the government and without the approval of a 
government authority; (2) they each negotiate contracts, without 
guidance from any governmental entities or organizations; (3) they each 
make their own personnel decisions including the selection of 
management; and (4) they each retain the proceeds of their export 
sales, and utilize profits according to business needs. This 
information supports a preliminary finding that there is a de facto 
absence of governmental control of the management of these exporters. 
The de facto impact of the regulatory provisions embodied in the above-
referenced laws and regulations, including those governing the 
administration of the Agreement, do not constitute the degree of 
control of these firms which would preclude the calculation of 
antidumping rates based on their own, separate competitively-set 
prices.
    Consequently, we preliminarily determine that Inner Mongolia, 
Kunshan, Zhejiang, High Hope, Shanghai Eswell, Anhui, and Henan have 
met the criteria for the application of separate rates. We will examine 
this matter further at verification.
    Since Inner Mongolia, Kunshan, Zhejiang, High Hope, Shanghai 
Eswell, Anhui, and Henan, are the only responding producers/exporters 
and they do not account for all shipments of subject merchandise to the 
United States during the POI, we preliminarily determine, as facts 
available, that all other, non-responsive, producers/exporters have not 
met the criteria for application of separate rates. See the discussion 
of the PRC-wide rate below.

Margins for Cooperative Exporters Not Selected

    The exporters who responded to Section A of the Department's 
antidumping questionnaire but were not selected as respondents in this 
investigation (High Hope, Shanghai Eswell, Anhui, and Henan) have 
applied for separate rates, and provided information for the Department 
to consider for this purpose. Although the Department is unable, due to 
administrative constraints (see Respondent Selection Memo), to 
calculate for each of these named parties who are exporters a rate 
based on their own data, these companies cooperated in providing all 
the information that the Department requested of them. For High Hope, 
Shanghai Eswell, Anhui, and Henan, we have calculated a weighted-
average margin based on the rates calculated for those exporters that 
were selected to respond in this investigation. Companies receiving 
this rate are identified by name in the ``Suspension of Liquidation'' 
section of this notice.

The PRC-Wide Rate

    All exporters were given the opportunity to respond to the 
Department's questionnaire. As explained above, we received timely 
responses from Inner Mongolia, Kunshan, and Zhejiang, for which we have 
calculated company-specific rates, and timely responses to Section A of 
the Department's antidumping questionnaire from High Hope, Shanghai 
Eswell, Anhui, and Henan for which we have assigned a margin based on 
the weighted-average rate of the calculated company-specific rates of 
Inner Mongolia, Kunshan, and Zhejiang. U.S. import statistics indicate 
that the total quantity and value of U.S. imports of honey from the PRC 
is greater than the total quantity and value of honey reported by the 
seven PRC producers/exporters that submitted responses in this 
investigation. For this reason, we preliminarily determine that some 
PRC exporters of honey failed to respond to our questionnaire. 
Consequently, we are applying a single antidumping rate--the PRC-wide 
rate--to all other exporters in the PRC based on our presumption that 
those respondents who failed to demonstrate entitlement to a separate 
rate constitute a single enterprise under common control by the 
government of the PRC. See, e.g., Final Determination of Sales at Less 
Than Fair Value: Synthetic Indigo from the People's Republic of China, 
65 FR 25706, 25707 (May 3, 2000) (Synthetic Indigo). The PRC-wide rate 
applies to all entries of subject merchandise except for entries from 
Inner Mongolia, Kunshan, Zhejiang, High Hope, Shanghai Eswell, Anhui, 
and Henan.

Use of Facts Otherwise Available

    Section 776(a) of the Act provides that, if an interested party 
withholds information that has been requested by the Department, fails 
to provide such information in a timely manner or in the form or manner 
requested, significantly impedes a proceeding under the antidumping 
statute, or provides information which cannot be verified, the 
Department shall use, subject to sections 782(d) and (e) of the Act, 
facts otherwise available in reaching the applicable determination. 
Pursuant to section 782(e) of the Act, the

[[Page 24105]]

Department shall not decline to consider submitted information if that 
information is necessary to the determination but does not meet all of 
the requirements established by the Department provided that all of the 
following requirements are met: (1) The information is submitted by the 
established deadline; (2) the information can be verified; (3) the 
information is not so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination; (4) the interested 
party has demonstrated that it acted to the best of its ability; and 
(5) the information can be used without undue difficulties.
    Section 776(a)(2)(B) of the Act requires the Department to use 
facts available when a party does not provide the Department with 
information by the established deadline or in the form and manner 
requested by the Department. In addition, 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 information 
that is adverse to the interests of that party as facts otherwise 
available.

PRC-Wide Rate

    As explained above, the exporters comprising the single PRC-wide 
entity failed to respond to the Department's request for information. 
Pursuant to section 776(a) of the Act, in reaching our preliminary 
determination, we have used total facts available for the PRC-wide rate 
because we did not receive the data needed to calculate a margin for 
that entity. Also, because the exporters comprising the PRC-wide entity 
failed to respond to the Department's requests for information, the 
Department has found that the PRC-wide entity failed to cooperate to 
the best of its ability. Therefore, pursuant to section 776(b) of the 
Act, we have used an adverse inference in selecting from the facts 
available for the margin for that entity. As adverse facts available, 
we assigned the highest margin based on information in the petition, 
because the margins derived from the petition are higher than the 
calculated margins for the selected respondents.
    Section 776(c) of the Act provides that where the Department 
selects from among the facts otherwise available and relies on 
``secondary information,'' such as the petition, the Department shall, 
to the extent practicable, corroborate that information from 
independent sources reasonably at the Department's disposal. The 
Statement of Administrative Action accompanying the URAA, H.R. Doc. No. 
103-316, (1994) (SAA), states that ``corroborate'' means to determine 
that the information used has probative value. See SAA at 870.
    The petitioners' methodology for calculating the EP and NV, in the 
petition, is discussed in the initiation notice. To corroborate the 
petitioners' EP calculations, we compared the prices in the petition to 
the prices submitted by respondents for the same honey product. To 
corroborate the petitioners' NV calculations, we compared the 
petitioners' factor consumption data to the data reported by the 
respondents, and the surrogate values for these factors in the petition 
to the values selected for the preliminary determination.
    As discussed in the Memorandum to the file entitled Corroboration 
of the Petition Data for the PRC-wide entity, dated May 4, 2001, we 
found that the EP and factors of production information in the petition 
were reasonable and of probative value. As a number of the surrogate 
values selected from the preliminary determination differed from those 
used in the petition, notably the value for raw honey and ratio for 
factory overhead, we compared the petition margin calculations to the 
calculations based on the selected surrogate values wherever possible 
and found them to be reasonable. Therefore, we preliminarily determine 
that the petition information has probative value. Accordingly, we find 
that the highest margin from the petition, 183.80 percent, is 
corroborated within the meaning of section 776(c) of the Act.

Fair Value Comparisons

    To determine whether sales of honey from the PRC were made in the 
United States at less than fair value, we compared EP to NV based on an 
NME analysis, as described below. In accordance with section 
777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs.

Export Price

    We used EP methodology in accordance with section 772(a) of the Act 
because Inner Mongolia, Kunshan, and Zhejiang sold the subject 
merchandise directly to unaffiliated purchasers in the United States 
and because CEP methodology was not otherwise appropriate. We 
calculated EP based on packed FOB or, where appropriate, C & F prices 
to the first unaffiliated purchaser in the United States. Where 
appropriate, we made deductions from the starting price (gross unit 
price) for inland freight from the plant/warehouse to the port of 
exportation, and any insurance, brokerage and handling charges paid by 
Inner Mongolia, Kunshan, and Zhejiang, in the PRC. Because certain 
domestic factors, such as inland freight, insurance, brokerage and 
handling were provided by NME companies, we valued those factors using 
surrogate rates from India. Where appropriate, we calculated expenses 
which were incurred in U.S. dollars (i.e., international freight) based 
on the actual U.S. dollar amounts paid for such expenses. (See 
Memoranda from the Team to the File regarding Margin Analysis for 
Kunshan and Xinlong, Inner Mongolia and Sheng Li, and Zhejiang, Hubei 
and Hangzhou, dated May 4, 2001 (Margin Analysis Memoranda)).

Normal Value

1. Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value the 
NME producer's factors of production, to the extent possible, in one or 
more market economy countries that: (1) are at a level of economic 
development comparable to that of the NME country; and (2) are 
significant producers of comparable merchandise. The Department 
initially determined that India, Pakistan, Indonesia, Sri Lanka, and 
the Philippines were the countries most comparable to the PRC in terms 
of overall economic development (see the January 9, 2001 memorandum, 
Antidumping Duty Investigation on Honey from the People's Republic of 
China: Nonmarket Economy Status and Surrogate Country Selection).
    We have relied, where possible, on information from India, as it is 
the source of the most complete information and the only country from 
among the potential surrogate countries that produces comparable 
merchandise in commercial quantities. Accordingly, we have calculated 
NV by applying Indian values to virtually all of Inner Mongolia's, 
Kunshan's, and Zhejiang's factors of production. See Margin Analysis 
Memoranda.

2. Factors of Production

    In accordance with section 773(c)(4) of the Act, we calculated NV 
based on factors of production as reported by Inner Mongolia and its 
supplier (Inner Mongolia Sheng Li Food Co. Ltd. (Sheng Li)), Kunshan 
and its supplier (Kunshan Xinlong Food Co. Ltd. (Xinlong)), and 
Zhejiang and its suppliers (Hubei Yangzijiang Apiculture Co. Ltd. 
(Hubei)) and Hangzhou Green Forever Apiculture (Group) Co. (Hangzhou)) 
for the POI. To calculate NV, the reported per-unit factor quantities 
were multiplied by publicly available Indian

[[Page 24106]]

surrogate values (except as noted below).
    In selecting the surrogate values, we considered the quality, 
specificity, and contemporaneity of the data. As appropriate, we 
adjusted input prices by including freight costs to convert them to 
delivered prices. When we used Indian import values to value inputs 
sourced domestically by the Chinese producers, we added to Indian 
surrogate values a surrogate freight cost calculated using the shorter 
of the reported distance from the domestic supplier to the factory or 
the distance from the nearest seaport to the factory. This adjustment 
is in accordance with the Court of Appeals for the Federal Circuit's 
decision in Sigma Corp. v. United States, 117 F. 3d 1401 (Fed. Cir. 
1997). When we used non-import surrogate values for factors sourced 
domestically by the Chinese producers, we based freight for inputs on 
the actual distance from the input supplier to the site at which the 
input was used. For those values not contemporaneous with the POI, we 
adjusted for inflation using wholesale price indices published in the 
International Monetary Fund's International Financial Statistics.
    To value raw honey, we used an average of the highest and lowest 
price for raw honey given in an article published in The Tribune of 
India on January 3, 2000, entitled, ``Apiculture, a major foreign 
exchange earner.''
    To value electricity, we used publicly available per kilowatt hour 
electricity charges as reported in the financial statements of seven 
Indian companies, as adjusted for inflation, for the period April 1, 
1998 through March 31, 1999.
    To value coal, we used the per kilogram rupee price, adjusted to 
the POI, as reported in the April 1, 1999 through March 31, 1999 Annual 
Report for Polychem, an Indian manufacturer.
    To value water, we used publicly available water tariff rates (as 
of 1995-1996 for three areas in India: Chennai, Delhi, and Mumbai) 
reported in the second Water Utilities Data Book: Asian and Pacific 
Region, published by the Asian Development Bank.
    We valued labor using the U.S. dollar-denominated regression-based 
wage rate, adjusted to the POI (i.e., US$0.80) in accordance with 19 
CFR 351.408(c)(3).
    To value beeswax, a raw honey by-product, we used the average per 
kilogram import value of beeswax into India from April 1998 to December 
1998, adjusted for inflation. Because there is no information on the 
record at this time for another raw honey by-product, scrap honey, we 
are not valuing this factor for purposes of our preliminary 
determination. We will continue to search for an appropriate value for 
scrap honey, and include our findings in our final determination.
    To value truck freight rates, we used freight costs, adjusted for 
inflation, based on Indian domestic prices of truck freight rates (for 
the period of October 1998 through March 1999) as published in the 
Economic Times, an Indian newspaper.
    As a surrogate value for rail transportation, we used the average 
train freight rates in India for fruit juices and syrups, published in 
November 1999, and adjusted for inflation.
    To value inland water transportation, we used the surrogate value, 
adjusted for inflation, for inland water freight used in the 
Preliminary Results of the Antidumping Duty Administrative Review: 
Certain Helical Spring Lock Washers from the People's Republic of 
China, 65 FR 5493 (September 8, 2000). This rate was reported to the 
Department in the August, 1993 cable from the U.S. Embassy in India.
    For brokerage and handling, we used price quotes from two Indian 
freight forwarders in November 1999, and adjusted for inflation.
    We based our calculation of factory overhead, selling, general, and 
administrative (SG&A) expenses on actual data reported in the 1998-1999 
annual report of the Mahabaleshwar Honey Producers Cooperative Society, 
Ltd. (MHPC), a producer of the subject merchandise in India, as 
adjusted for inflation.
    We valued packing materials (iron drums) on an offer for sale from 
an Indian manufacturer of iron drums (September 2000).
    For a complete analysis of surrogate values, see Margin Analysis 
Memoranda.

Critical Circumstances

    On February 23, 2001, petitioners alleged that there is a 
reasonable basis to believe or suspect that critical circumstances 
exist with respect to imports of honey from the PRC. In accordance with 
19 CFR 351.206(c)(2)(i), given that this allegation was filed at least 
20 days prior to the preliminary determination, the Department must 
issue its preliminary critical circumstances determination no later 
than the preliminary determination.
    Section 733(e)(1) of the Act provides that the Department will 
preliminarily determine that critical circumstances exist if there is a 
reasonable basis to believe or suspect that: (A)(i) there is a history 
of dumping and material injury by reason of dumped imports in the 
United States or elsewhere of the subject merchandise, or (ii) the 
person by whom, or for whose account, the merchandise was imported knew 
or should have known that the exporter was selling the subject 
merchandise at less than its fair value and that there was likely to be 
material injury by reason of such sales, and (B) there have been 
massive imports of the subject merchandise over a relatively short 
period.

History of Dumping or Importer Knowledge of Dumping

    To determine whether there is a history of injurious dumping of the 
merchandise under investigation, the Department considers evidence of 
an existing antidumping order on honey from other countries to be 
sufficient. We are unaware of any antidumping order on honey from the 
PRC worldwide. Petitioners stated in their allegation of critical 
circumstances that the Preliminary Determination and the Agreement from 
the original investigation of honey from the PRC (1995) sufficiently 
establishes a history of injurious dumping in the PRC with respect to 
subject merchandise. The Department, however, does not consider either 
a preliminary determination or the existence of a suspension agreement 
as sufficient evidence of a history of injurious dumping of honey. 
Therefore, the Department must examine part (ii) of the first prong of 
the critical circumstances test.
    In determining whether there is a reasonable basis to believe or 
suspect that an importer knew or should have known that the exporter 
was selling honey at less than fair value, the Department normally 
considers margins of 25 percent or more for EP sales sufficient to 
impute knowledge of dumping. (See, e.g., Preliminary Determination of 
Critical Circumstances: Certain Small Diameter Carbon and Alloy Steel 
Seamless Standard, Line and Pressure Pipe from the Czech Republic, 65 
FR 33803, 33803 (May 25, 2000)). In the instant case, we have 
preliminarily determined that the margins for the three mandatory 
respondents, Inner Mongolia, Kunshan, and Zhejiang, are 44.00, 37.51, 
and 36.98 percent, respectively. We have preliminarily determined that 
the margin for each of the four cooperative respondents for which we 
only examined the separate rates portion of the questionnaire, (High 
Hope, Shanghai Eswell, Anhui, and Henan) is 39.76 percent. Furthermore, 
the margin preliminarily assigned to the PRC-wide entity (the remaining 
exporters) is 183.80 percent. Therefore, we have

[[Page 24107]]

imputed knowledge of dumping to importers of the subject merchandise 
from each of the seven cooperating exporters and to the importers of 
subject merchandise from all other producers/exporters in the PRC.
    In determining whether there is a reasonable basis to believe or 
suspect that an importer knew or should have known that there was 
likely to be material injury by reason of dumped imports, the 
Department normally will look to the preliminary injury determination 
of the International Trade Commission (ITC). If the ITC finds a 
reasonable indication of present material injury to the relevant U.S. 
industry, the Department will determine that a reasonable basis exists 
to impute importer knowledge that there was likely to be material 
injury by reason of dumped imports. In this case, the ITC has found 
that a reasonable indication of present material injury due to dumping 
exists for subject imports of honey from the PRC. See Honey from the 
PRC, 65 FR 69573 (November 17, 2000). As a result, the Department has 
determined that there is a reasonable basis to believe or suspect that 
importers of honey from the PRC from all exporters knew or should have 
known that there was likely to be material injury by reason of dumped 
imports of the subject merchandise from the PRC.

Massive Imports

    In determining whether there are ``massive imports'' over a 
``relatively short period,'' pursuant to section 733(e)(1)(B) of the 
Act, the Department normally compares the import volume of the subject 
merchandise for at least three months immediately preceding the filing 
of the petition (i.e., the ``base period''), and a comparable period of 
at least three months following the filing of the petition (i.e., the 
``comparison period''). However, as stated in section 351.206(i) of the 
Department's regulations, if the Secretary finds that importers, 
exporters, or producers had reason to believe, at some time prior to 
the beginning of the proceeding, that a proceeding was likely, then the 
Secretary may consider a time period of not less than three months from 
that earlier time. Imports normally will be considered massive when 
imports during the comparison period have increased by 15 percent or 
more compared to imports during the base period.
    In this case, the petition was filed on September 29, 2000. On 
April 2, 2001, Inner Mongolia, Kunshan, Zhejiang, High Hope, Shanghai 
Eswell, Anhui, and Henan provided monthly shipment data for February 
1999 through February 2001 for exports of subject merchandise to the 
United States. Thus, we were able to obtain exporter-specific shipment 
data for a period encompassing 5 months prior to and 5 months after the 
filing of the petition. On an exporter-specific basis, we then compared 
Inner Mongolia's, Kunshan's, Zhejiang's, High Hope's, Shanghai 
Eswell's, Anhui's, and Henan's monthly shipments from May 2000 through 
September 2000 to their monthly shipments from October 2000 through 
February 2001. Additionally, we compared the exporter-specific monthly 
shipments from May 1999 through September 1999 to monthly shipments 
from October 1999 to February 2000 to determine whether any increases 
between the base and comparison periods in 2000 could be attributable 
to others factors, including seasonal trends.
    Pursuant to 19 CFR 351.206(h) we will not consider imports to be 
massive unless imports in the comparison period have increased by at 
least 15 percent over imports in the base period. We find that of the 
seven companies examined, imports of honey from High Hope and Zhejiang 
showed post-filing increases of at least 15 percent over the base 
period for which no other factors appear to be responsible. While 
imports from Inner Mongolia in the comparison period in 2000/2001 were 
also more than 15 percent greater than those in the base period, we 
also found a similar increase during the fall/winter of 1999/2000 when 
compared to the spring/summer base period in 1999. This leads us to 
conclude that the increase in imports from Inner Mongolia in the 
comparison period in 2000/2001 was attributable to factors other than 
the filing of the petition, such as seasonality. Imports from Kushan, 
Shanghai Eswell, Anhui, and Henan did not show an increase of more than 
15 percent during the post-filing comparison period. Therefore, the 
Department did not find critical circumstances with respect to these 
exporters.
    Because the PRC-wide entity failed to respond to our initial 
antidumping questionnaire, the Department, pursuant to section 776(a) 
of the Act has based its critical circumstances determination on the 
facts available. Further, because this entity did not act to the best 
of its ability to respond to the Department's questionnaires, we have, 
pursuant to section 776(b) of the Act, used an adverse inference in 
selecting from the facts available. We used U.S. Customs import 
statistics to determine whether there were additional imports during 
the base and the comparison periods not accounted for in the shipment 
data for the seven exporters named above. We found that there were such 
shipments but we were unable to distinguish the distribution of 
individual exporters in the data. Therefore, because we have no 
independent means by which to determine import levels for the PRC-wide 
entity, we have made an adverse inference and preliminarily determined 
that critical circumstances exists for the PRC-wide entity. See Memo to 
Richard Weible regarding Preliminary Affirmative and Negative 
Determinations of Critical Circumstances, May 4, 2001 (CC Memo).
    In their April 2, 2001 submission, respondents argue that, when 
analyzing their export data, the Department must take into 
consideration two factors that they claim significantly influenced the 
recent export patterns of honey from the PRC. First, they argue that 
substantial uncertainty existed concerning exports of honey from the 
PRC during the summer of 2000 because of the Department's delay in 
completing an administrative review of the Agreement underway during 
that time period. This market confusion was then further increased by 
the uncertainty over the amount of quota and reference prices that 
could potentially apply to honey exports on and after August 1, 2000. 
As a result, respondents argue, exporters either ceased or 
significantly decreased their exports to the United States during the 
summer. Any subsequent increase in exports, they argue, is accordingly 
due to this abnormal period of suppressed exports. Second, the 
Department must also consider that many honey exporters export less 
honey during July, August, and September, they argue, because they are 
busy during those months purchasing and processing honey for export 
later in the year.
    With respect to the first argument, our initial comparison of 
export levels in the 2000 base period and the 1999 base period shows 
that High Hope's and Zhejiang's exports and exports for the PRC-wide 
entity during the 2000 base period were not ``suppressed.'' With 
respect to the second argument, a comparison of the 2000 data for July, 
August, and September and for October, November, and December with the 
1999 data for the same months for these entities does not initially 
appear to support the claim that exports of honey are normally lower 
during those months. See CC Memo. However, we will verify the data with 
respect to this issue and consider these arguments further for purposes 
of the final determination of critical circumstances.
    In summary, we find that there is a reasonable basis to believe or 
suspect that importers had knowledge of

[[Page 24108]]

dumping and the likelihood of material injury with respect to imports 
of honey from the PRC, and that there have been massive imports of 
honey from High Hope, Zhejiang, and the PRC-wide entity over a 
relatively short period of time. As a result, we preliminarily 
determine that critical circumstances exist for imports of honey from 
High Hope, Zhejiang, and the PRC-wide entity, in accordance with 
section 733(e)(2) of the Act. Because we did not find that massive 
imports, within the meaning of 19 CFR 351.206(h), existed for Inner 
Mongolia, Kunshan, Shanghai Eswell, Anhui, and Henan, we preliminarily 
determine that critical circumstances do not exist for imports of honey 
from these companies. See CC Memo.

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
all information relied upon in making our final determination.

Final Critical Circumstances Determination

    We will make a final determination concerning critical 
circumstances for the PRC when we make our final determination 
regarding sales at LTFV in this investigation, which will be no later 
than 135 days after the publication of this notice in the Federal 
Register.

Suspension of Liquidation

    In accordance with section 733(e)(2) of the Act, for High Hope, 
Zhejiang, and the PRC-wide entity, the Department will direct the 
Customs Service to suspend liquidation of all entries of subject 
merchandise from the PRC that are entered, or withdrawn from warehouse, 
for consumption on or after the date which is 90 days prior to the date 
of publication of this notice in the Federal Register. For the 
remaining companies (i.e., Inner Mongolia, Kunshan, Shanghai Eswell, 
Anhui, and Henan), the Department will direct the Customs Service to 
suspend liquidation of all entries of subject merchandise from the PRC 
that are entered, or withdrawn from warehouse, for consumption on or 
after the date of publication of this notice in the Federal Register. 
The Customs Service shall require a cash deposit or posting of a bond 
equal to the estimated preliminary dumping margin indicated in the 
chart below. This suspension of liquidation will remain in effect until 
further notice.
    The margin in the preliminary determination is as follows:

------------------------------------------------------------------------
                                        Margin
       Exporter/ manufacturer         (percent)  Critical  circumstances
------------------------------------------------------------------------
Inner Mongolia......................      44.00  No.
Kunshan.............................      37.51  No.
Zhejiang............................      36.98  Yes.
High Hope...........................      39.76  Yes.
Shanghai Eswell.....................      39.76  No.
Anhui...............................      39.76  No.
Henan...............................      39.76  No.
PRC-wide Entity.....................     183.80  Yes.
------------------------------------------------------------------------

Disclosure

    The Department will disclose calculations performed within five 
days of this determination to the parties to the proceeding in this 
investigation in accordance with 19 CFR 351.224(b).

International Trade Commission Notification

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

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the verification reports. Rebuttal 
briefs must be filed within five days after the deadline for submission 
of case briefs. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes. 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.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs, 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW., Washington, DC 20230. In the event that the Department 
receives requests for hearings from parties to more than one honey 
case, the Department may schedule a single hearing to encompass all 
those cases. Parties should confirm by telephone the time, date, and 
place of the hearing 48 hours before the scheduled time. Interested 
parties who wish to request a hearing, or participate if one is 
requested, must submit a written request within 30 days of the 
publication of this notice. Oral presentations will be limited to 
issues raised in the briefs. We will make our final determination no 
later than 75 days after the date of publication of this preliminary 
determination.
    This determination is issued and published in accordance with 
sections 733(d) and 777(i)(1) of the Act. Effective January 20, 2001, 
Bernard T. Carreau is fulfilling the duties of the Assistant Secretary 
for Import Administration.

    Dated: May 4, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary, Import Administration.
[FR Doc. 01-11940 Filed 5-10-01; 8:45 am]
BILLING CODE 3510-DS-P