[Federal Register Volume 66, Number 194 (Friday, October 5, 2001)]
[Notices]
[Pages 51010-51015]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-25100]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-837]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Greenhouse Tomatoes From Canada

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

ACTION: Notice of preliminary determination of sales at less than fair 
value.

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SUMMARY: We preliminarily determine that greenhouse tomatoes from 
Canada are being, or are likely to be, sold in the United States at 
less-than-fair-value prices as provided in section 733 of the Tariff 
Act of 1930, as amended. The estimated margins of sales at less than 
fair value are shown in the ``Suspension of Liquidation'' section of 
this notice.

EFFECTIVE DATE: October 5, 2001.

FOR FURTHER INFORMATION CONTACT: Mark Ross or Minoo Hatten, AD/CVD 
Enforcement 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone; (202) 482-
4794 or (202) 482-1690, respectively.

SUPPLEMENTARY INFORMATION:

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. In addition, unless otherwise indicated, 
all citations to the Department of Commerce's (the Department's) 
regulations refer to 19 CFR part 351 (April 2000).

Background

    Since the initiation of this investigation (Initiation of 
Antidumping Duty Investigation: Greenhouse Tomatoes From Canada, 66 FR 
20630 (April 24, 2001) (Initiation Notice)), the following events have 
occurred:
    On May 14, 2001, the United States International Trade Commission 
(ITC) preliminarily determined that there is a reasonable indication 
that an industry in the United States is materially injured by reason 
of imports of greenhouse tomatoes from Canada. See ITC Investigation 
No. 731-TA-925 (Publication No. 3224).
    Since it was not practicable to examine all known producers/
exporters of subject merchandise, in accordance with section 777A(c)(2) 
of the Act and 19 CFR 351.204(c)(2), on May 15, 2001, we selected the 
five largest producers/exporters of greenhouse tomatoes from Canada as 
the mandatory respondents in this investigation. For further 
discussion, see the ``Selection of Respondents'' memorandum dated May 
15, 2001, from Laurie Parkhill, Director, Office 3, to Richard W. 
Moreland, Deputy Assistant Secretary, Group I.
    On May 16, 2001, we received a request from the Canadian Embassy on 
behalf of Westmoreland Sales, Golden Jem Produce Inc., and MCN Acres 
Ltd. to treat these companies as voluntary respondents in this 
investigation. On May 24, 2001, these potential voluntary respondents 
were provided with a copy of the questionnaire and specific written 
guidance on the Department's criteria for including a voluntary 
respondent in the investigation. We have not received a response to our 
questionnaire from any voluntary respondents.
    On May 24, 2001, we issued the antidumping questionnaire to 
mandatory respondents BC Hot House Foods, Inc., Red Zoo Marketing 
(a.k.a. Produce Distributors, Inc.), Veg Gro Sales, Inc. (a.k.a. K & M 
Produce Distributors, Inc.), J-D Marketing, Inc., and Mastronardi 
Produce Ltd. In the cover letter of the questionnaire, we informed the 
mandatory respondents that we had initiated a cost-of-production (COP) 
inquiry in this case. These respondents did not produce the subject 
merchandise. Therefore, consistent with our policy regarding COP 
investigations, it became necessary to select producers which supplied 
the five respondents in order to gather COP information for this 
investigation. We requested comments regarding the selection of the COP 
respondents and on May 31, 2001, and June 21, 2001, we received 
comments from interested parties regarding the selection COP 
respondents. On June 29, 2001, the Department identified the COP 
respondents. See the ``Identification of Cost-of-Production 
Respondents'' memorandum dated June 29, 2001, from Laurie Parkhill, 
Director, Office 3, to Richard W. Moreland, Deputy Assistant Secretary, 
Group I. After identifying the appropriate companies for cost reporting 
and issuing questionnaires to these companies, we discovered that two 
of them were only resellers of greenhouse tomatoes and not growers. 
Therefore, we requested COP data from the growers which supplied these 
resellers. See the July 13 and July 19, 2001, letters from Laurie 
Parkhill, Director, Office 3, to counsel for Veg Gro Sales, Inc., and 
J-D Marketing, Inc., respectively.
    During June, July, August, and September of 2001, the five 
mandatory respondents submitted their responses to the Department's 
original and supplemental questionnaires.
    On August 10, 2001, pursuant to section 733(c)(1)(A) of the Act and 
19 CFR 351.205(e), the petitioners made a timely request to postpone 
the preliminary determination. We granted this request on August 15, 
2001, and postponed the preliminary determination until no later than 
September 24, 2001 (see Antidumping Duty Investigation Covering 
Greenhouse Tomatoes from Canada: Notice of Postponement of Preliminary 
Determination, 66 FR 43838, August 21, 2001). On September 27, 2001, 
the Department postponed the due date for the preliminary determination 
until no later than October 1, 2001. See Antidumping Duty Investigation 
On Greenhouse Tomatoes from Canada: Notice of Postponement of 
Preliminary Determination, 66 FR 49344, September 27, 2001.
    On several occasions the petitioners submitted comments arguing 
that the cost respondents for BC Hot House Foods, Inc., are 
unrepresentative of the other growers that supplied the

[[Page 51011]]

respondent with greenhouse tomatoes during the period of investigation 
(POI). See, e.g., the petitioners' July 11, August 3, and September 7, 
2001, submissions. The petitioners requested that we use the weighted-
average yield figure for all of the growers that supplied BC Hot House 
Foods, Inc., during the POI to adjust the COP data submitted by the 
cost respondents. For this preliminary determination, we have not made 
any such adjustment to the COP data. For further discussion, see the 
``Representativeness of Cost Data Submitted for BC Hot House Foods, 
Inc.'' memorandum dated October 1, 2001, from Mark Ross, Acting Program 
Manager, to Laurie Parkhill, Director, Office 3.

Period of Investigation

    The POI is January 1, 2000, through December 31, 2000.

Scope of Investigation

    The merchandise subject to this investigation consists of all fresh 
or chilled tomatoes grown in greenhouses in Canada, e.g., common round 
tomatoes, cherry tomatoes, plum or pear tomatoes, and cluster or ``on-
the-vine'' tomatoes. Specifically excluded from the scope of this 
investigation are all field-grown tomatoes.
    The merchandise subject to this investigation may enter under item 
numbers 0702.00.2000, 0702.00.2010, 0702.00.2030, 0702.00.2035, 
0702.00.2060, 0702.00.2065, 0702.00.2090, 0702.00.2095, 0702.00.4000, 
0702.00.4030, 0702.00.4060, 0702.00.4090, 0702.00.6000, 0702.00.6010, 
0702.00.6030, 0702.00.6035, 0702.00.6060, 0702.00.6065, 0702.00.6090, 
and 0702.00.6095 of the Harmonized Tariff Schedule of the United States 
(HTSUS). These subheadings may also cover products that are outside the 
scope of this investigation, i.e., field-grown tomatoes. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
our written description of the scope of this investigation is 
dispositive.
    In accordance with our regulations, we set aside a period of time 
for parties to raise issues regarding product coverage and encouraged 
all parties to submit comments within 20 calendar days of publication 
of the Initiation Notice (66 FR 20630). On May 14, 2001, BC Vegetable 
Greenhouse I, L.P. (BCVG), filed comments requesting that the scope be 
limited to include only hydroponic tomatoes and expressly exclude 
``heirloom'' and ``organic'' tomatoes grown in greenhouses. On May 21, 
2001, the petitioners filed comments opposing BCVG's request to limit 
the scope. After considering the respondent's request and the 
petitioners' objections, we determined that the scope of this 
investigation should remain as published in the Initiation Notice. Our 
analysis of this scope issue is detailed in the memorandum from Laurie 
Parkhill, Director, Office 3, to Richard W. Moreland, Deputy Assistant 
Secretary, Group I, dated July 30, 2001, entitled ``Request to Limit 
Scope of Investigation.''

Facts Available

    Red Zoo Marketing sold subject merchandise to an affiliated U.S. 
importer, Colasanti Produce & Plants, Inc. (Colasanti). Colasanti 
reported that it was unable to report specific sales of the subject 
merchandise because it ``does not keep data according to separate, 
individual products.'' See Colasanti's response dated July 25, 2001, at 
page C-1. Moreover, Colasanti stated that ``there is no separate data 
for tomatoes, only for produce, which encompasses tomatoes and hundreds 
of other products.'' Ibid. As a result, Colasanti was unable to report 
sales in the manner we requested. Because Colasanti did not report its 
sales to its unaffiliated customers, the use of facts available in 
determining the margin for Colasanti's sales is warranted.
    Based on Colasanti's representations of itself as a small grocery 
store and the fact that it does not keep records that would allow it to 
report its sales data in the manner we require, we preliminarily 
determine that Red Zoo Marketing and Colasanti responded to our 
questionnaire to the best of their ability. There is no evidence on the 
record to suggest that either Red Zoo Marketing or Colasanti did not 
cooperate to the best of its ability. Red Zoo Marketing and Colasanti 
did not report these sales because it was impossible for them to do so 
based on their records. We intend to verify this assertion.
    Because we preliminarily determine that Red Zoo Marketing and 
Colasanti responded to the best of their ability, we have determined 
the margin for sales through Colasanti using non-adverse facts 
available. This facts-available rate is the weighted-average margin we 
have calculated for Red Zoo Marketing based on its sales to all other 
customers. Because this facts-available rate is based on Red Zoo 
Marketing's own record data, it is not necessary to corroborate this 
information. We have applied facts available by excluding Red Zoo 
Marketing's sales to Colasanti from Red Zoo Marketing's U.S. sales 
database.

Product Comparisons

    Pursuant to section 771(16) of the Act, all products produced by 
the respondents that are within the definition of the scope of the 
investigation and were sold in the home market during the POI fall 
within the definition of the foreign like product. On May 2, 2001, we 
solicited comments from interested parties regarding product-matching 
criteria and matching hierarchy. The interested parties submitted 
comments on this issue on May 14, 16, and 18, 2001, and September 18, 
2001. As part of their comments on the product-matching criteria and 
matching hierarchy, certain mandatory respondents also commented that 
the Department should average prices across grades and sizes within a 
particular type when making product comparisons.\1\
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    \1\ On September 27, 2001, the petitioners submitted information 
and argument in support of using monthly weighted-average prices and 
not annual-average prices for the margin calculations. This 
information was received too late for us to consider for this 
preliminary determination. We will review this information and 
evaluate the appropriateness of this methodology for the final 
determination.
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    For this preliminary determination we have not averaged prices 
across grades and sizes within a particular type for product 
comparisons. Instead, for calculating average prices, we have relied on 
four criteria (i.e., type, color, size, and grade) to establish 
distinct ``models'' which we then used to match U.S. sales of subject 
merchandise to identical home-market sales of the foreign like product. 
Based on our overall analysis of the greenhouse-tomato industry, we 
determined that the type, color, size, and grade of tomatoes correspond 
to physical differences and associated commercial differences that are 
important for product-matching and obtaining a reasonable comparison of 
prices.
    We have also determined that it is not appropriate to compare 
prices of products that do not have the same type, color, size, and 
grade because these are significant physical characteristics which will 
affect the price comparability of these products. We can not account 
for these differences by means of a traditional difference-in-
merchandise adjustment. Specifically, the respondents in this 
investigation have reported that their methods of tracking costs and 
the nature of producing greenhouse tomatoes does not allow them to 
distinguish costs by grade, size, or color. See, e.g., page 5 of the 
September 18, 2001, comments from the Ontario respondents and page D-1 
of the August 6, 2001, response of BC

[[Page 51012]]

Hot House Foods, Inc., to our COP questionnaire. In accordance with 19 
CFR 351.411, we generally will make a reasonable allowance for 
differences in physical characteristics by considering differences in 
variable costs associated with the physical differences. Since the 
respondents have reported that they cannot report costs that 
distinguish between factors other than type, we have matched sales of 
subject merchandise to home-market sales of identical type, color, 
size, and grade, but not to home-market sales of similar 
merchandise.\2\ This methodology is consistent with that taken in other 
antidumping proceedings which involved foreign like product with 
significant differences for which we could not account 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 Tomatoes from Mexico, 61 FR 56608, 56610 
(November 1, 1996), and Notice of Preliminary Determination of Sales at 
Less Than Fair Value and Postponement of Final Determination; Fresh 
Atlantic Salmon from Chile, 63 FR 2664, 2666 (January 16, 1998).
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    \2\ We will examine this issue further at verification and make 
modifications as necessary for the final determination.
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Fair Value Comparisons

    To determine whether sales of greenhouse tomatoes to the United 
States were made at less-than-fair-value prices, we compared the export 
price or constructed export price (CEP) to the normal value. In 
accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI 
weighted-average export prices and CEPs to normal values. Any company-
specific changes to the export-price, CEP, and normal-value 
calculations are discussed in each company's individual preliminary 
determination analysis memorandum from analyst to file dated October 1, 
2001, and described in the ``Company-Specific Changes to Normal Value 
and U.S. Price'' section of this notice.

Export Price

    We calculated export price, in accordance with section 772(a) of 
the Act, for those sales where the merchandise was sold to the first 
unaffiliated purchaser in the United States prior to importation by the 
exporter or producer outside the United States or to an unaffiliated 
purchaser for exportation to the United States, based on the facts of 
the record. We calculated export price based on packed FOB or delivered 
prices to unaffiliated purchasers in the United States. We identified 
the correct starting price by accounting for billing adjustments (e.g., 
the adjustments for damage, quality, or condition claims) and making 
deductions for early-payment discounts and rebates, where applicable. 
We also made deductions for movement expenses in accordance with 
section 772(c)(2)(A) of the Act. These included, where appropriate, 
foreign inland freight, foreign brokerage and handling, foreign 
warehousing expenses, and U.S. inland freight expenses.

Constructed Export Price

    We calculated the CEP, in accordance with section 772(b) of the 
Act, for sales made to the first unaffiliated purchaser that took place 
after importation into the United States. We based the CEP on the 
packed, delivered prices to unaffiliated purchasers in the United 
States. We identified the correct starting price by accounting for 
billing adjustments (e.g., the adjustments for damage, quality, or 
condition claims) and making deductions for early-payment discounts and 
rebates, where applicable. We also made deductions for movement 
expenses in accordance with section 772(c)(2)(A) of the Act. These 
included foreign inland freight, foreign brokerage and handling, 
foreign warehousing expenses, and U.S. inland freight expenses. In 
accordance with section 772(d)(1) of the Act, we deducted those selling 
expenses associated with economic activities occurring in the United 
States, including direct selling expenses (commissions, credit 
expenses), inventory carrying costs, U.S. repacking expenses, and 
indirect selling expenses. Finally, where applicable we made an 
adjustment for CEP profit in accordance with section 772(d)(3) of the 
Act.

Normal Value

    A. Home-Market Viability
    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating normal 
value (i.e., whether the aggregate volume of home-market sales of the 
foreign like product is equal to or greater than five percent of the 
aggregate volume of U.S. sales), we compared each respondent's volume 
of home-market sales of the foreign like product to its volume of U.S. 
sales of the subject merchandise in accordance with section 
773(a)(1)(B) of the Act. Since each respondent's aggregate volume of 
home-market sales of the foreign like product was greater than five 
percent of the volume of U.S. sales of the subject merchandise, we 
determined that the home market was viable for all respondents.

B. Affiliated-Party Transactions and Arm's-Length Test

    The Department's standard practice with respect to the use of home-
market sales to affiliated parties for normal value is to determine 
whether such sales are at arm's-length prices. Therefore, in accordance 
with that practice, we performed an arm's-length test for the two 
mandatory respondents that reported home-market sales to affiliates 
(i.e., Red Zoo Marketing and J-D Marketing, Inc.).
    We excluded from our analysis sales respondents made to affiliated 
customers in the home market which were not at arm's-length prices 
because we considered them to be outside the ordinary course of trade. 
See 19 CFR 351.102(b). To test whether these sales were made at arm's-
length prices, we compared the prices of sales to affiliated and 
unaffiliated customers net of all movement charges, direct selling 
expenses, discounts, rebates, and packing expenses. Where the price to 
the affiliated party was on average 99.5 percent or more of the price 
to the unaffiliated parties, we determined that sales made to the 
affiliated party were at arm's length. See 19 CFR 351.403(c).

C. Cost-of-Production Analysis

    Based on our analysis of an allegation contained in the petition, 
we found that there were reasonable grounds to believe or suspect that 
sales of greenhouse tomatoes in the home market were made at prices 
below their COP. Accordingly, pursuant to section 773(b) of the Act, we 
initiated a countrywide sales-below-cost-investigation to determine 
whether sales were made at prices below their respective COP (see 
Initiation Notice, 66 FR 20630).
1. Calculation of the Cost of Production
    In accordance with section 773(b)(3) of the Act, we calculated the 
COP based on the sum of the cost of materials and fabrication for the 
foreign like product, plus an amount for general and administrative 
expenses (G&A), including interest expenses, and home-market packing 
costs.\3\
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    \3\ On September 14, 2001, BC Hot House Foods, Inc., submitted 
information on alleged startup costs incurred during the POI. We 
received this information too late to be considered for this 
preliminary determination. We will review this information and 
evaluate the appropriateness of such an adjustment for the final 
determination.
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2. Test of Home-Market Sales Prices
    In determining whether to disregard home-market sales made at 
prices less

[[Page 51013]]

than their COP, we examined, in accordance with sections 773(b)(1)(A) 
and (B) of the Act, whether such sales were made (1) within an extended 
period of time in substantial quantities, and (2) at prices which did 
not permit the recovery of all costs within a reasonable period of 
time. Because greenhouse tomatoes are a highly perishable agricultural 
product, pursuant to the Statement of Administrative Action 
accompanying the URAA, H.R. Doc. 103-316, Vol. 1 (1994) (SAA), at 832 
and section 773(b)(2)(C)(ii) of the Act, to determine whether below-
cost sales were made in substantial quantities within an extended 
period of time, we compared the weighted-average per-unit price of a 
given product sold in the home market during the POI to the weighted-
average per-unit COP of that product over the POI. In accordance with 
section 773(b)(2)(B) of the Act, we have determined that the POI is an 
extended period of time. Where a respondent's weighted-average per-unit 
price of a given product was greater than or equal to the respective 
weighted-average COP, we did not disregard any below-cost sales of that 
product, because we determine that in such instances the below-cost 
sales were not made in ``substantial quantities.'' Where a respondent's 
weighted-average per-unit price of a given product was less than the 
respective weighted-average COP, we found that below-cost sales were 
made within an extended period of time in substantial quantities within 
the meaning of section 773(b)(2)(C)(ii) of the Act.
    Pursuant to section 773(b)(2)(D) of the Act, we examined whether 
individual transactions made at prices found to be below cost permitted 
the recovery of all costs within a reasonable period of time. Where the 
analysis described above resulted in a determination that the below-
cost sales of these perishable products were made in ``substantial 
quantities'' over an ``extended period of time,'' we also determined 
that individual below-cost sales were not at prices sufficient to 
recover costs within a reasonable period of time. Where sales of a 
given product were made (1) within an extended period of time in 
substantial quantities, and (2) at prices which did not permit the 
recovery of all costs within a reasonable period of time, we identified 
individual below-cost transactions by comparing the individual 
transaction prices to the respective weighted-average COP.
3. Results of the COP Test
    For all respondents we have disregarded individual below-cost 
transactions and used the remaining above-cost sales as the basis for 
determining normal value, in accordance with section 773(b)(1) of the 
Act.

D. Calculation of Constructed Value

    Section 773(a)(4) of the Act provides that, where normal value 
cannot be based on comparison-market sales, normal value may be based 
on constructed value. Accordingly, for all five respondents, when home-
market sales of comparison products were not available, either because 
there were no sales of a comparable product or we disregarded all sales 
of the comparable product as a result of the COP test, we based normal 
value on constructed value.
    In accordance with sections 773(e)(1) and (e)(2)(A) of the Act, we 
calculated constructed value based on the sum of the cost of materials 
and fabrication for the foreign like product plus amounts for selling 
expenses, G&A, including interest, profit, and U.S. packing costs. We 
calculated the cost of materials and fabrication based on the 
methodology described in the ``Calculation of the Cost of Production'' 
section of this notice. In accordance with section 773(e)(2)(A) of the 
Act, we based selling expenses, G&A, and profit on the amounts incurred 
and realized by the mandatory respondents and the cost respondents in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade for consumption in the foreign country.

A. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate normal value based on sales 
in the comparison market at the same level of trade as the export-price 
or CEP transaction. Sales are made at different levels of trade if they 
are made at different marketing stages (or their equivalent). See 19 
CFR 351.412(c)(2). Substantial differences in selling activities are a 
necessary, but not sufficient, condition for determining that there is 
a difference in the stages of marketing. Id.; see also Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate From South Africa, 62 FR 61731, 61732 (November 19, 
1997). In order to determine whether the comparison-market sales were 
at different stages in the marketing process than the U.S. sales, we 
reviewed the distribution system in each market (i.e., the chain of 
distribution),\4\ including selling functions, class of customer (or 
customer category), and the level of selling expenses for each type of 
sale.
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    \4\ The marketing process in the United States and home markets 
begins with the producer and extends to the sale of the final user 
or consumer. The chain of distribution between the two may have many 
or few links, and the respondents' sales occur somewhere along this 
chain. In performing this evaluation, we considered the narrative 
respondent to determine where in the chain of distribution the sale 
occurs.
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    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for the export-price and home-market sales (i.e., 
normal value based on either home-market or third-country prices \5\), 
we consider the starting prices before any adjustments. For CEP sales, 
we consider only the selling activities reflected in the price after 
the deduction of expenses and profit under section 772(d) of the Act. 
See Micron Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 
(Fed. Cir. 2001).
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    \5\ Where normal value is based on constructed value, we 
determined the normal-value level of trade based on the level of 
trade of the sales from which we derive selling expenses, G&A, and 
profit for constructed value, where possible.
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    When the Department is unable to match U.S. sales to sales of the 
foreign like product in the comparison market at the same level of 
trade as the export price or CEP, the Department may compare the U.S. 
sale to sales at a different level of trade in the comparison market. 
In comparing the export-price or CEP sales to sales of the foreign like 
product at a different level of trade in the comparison market, where 
available data make it practicable, we make a level-of-trade adjustment 
under section 773(a)(7)(A) of the Act. Finally, for CEP sales only, if 
a normal-value level of trade is more remote from the factory than the 
CEP level of trade and we are unable to make a level-of-trade 
adjustment, we shall grant a CEP offset, as provided in section 
773(a)(7)(B) of the Act. See Notice of Final Determination of Sales at 
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from 
South Africa, 62 FR 61731 (November 19, 1997).
    We obtained information from each respondent regarding the 
marketing stages involved in making the reported home-market and U.S. 
sales, including a description of the selling activities performed by 
the respondents for each channel of distribution. Detailed company-
specific level-of-trade findings are discussed in detail in the 
company-specific preliminary determination analysis memoranda and 
described below.
    With respect to Red Zoo Marketing, Veg Gro Sales, Inc., J-D 
Marketing, Inc., and Mastronardi, we found that each performed similar 
selling functions for

[[Page 51014]]

all of its home-market channels of distribution such that, in each 
case, we found one level of trade in the home market. In addition, each 
company performed similar selling functions for their channels of 
distribution such that in each case we found one level of trade in the 
United States. For all four respondents, we found that each companies 
single home-market level of trade is the same as its single U.S. level 
of trade. Therefore, it was not necessary to make a level-of-trade 
adjustment.
    For BC Hot House Foods, Inc., based on differences in customer 
categories and selling activities among its home-market channels of 
distribution, we determined that the sales were made at two levels of 
trade. Similarly, we found two levels of trade for BC Hot House Foods, 
Inc.'s export-price and CEP sales to the U.S. market. Where possible, 
we matched export-price and CEP sales to sales at the same level of 
trade in the home market and made no level-of-trade adjustment. Where 
we matched export-price sales or CEP sales to home-market sales at a 
different level of trade, in accordance with section 773(a)(7)(A) of 
the Act, we determined whether there was a pattern of consistent price 
differences between these different levels of trade in the home market. 
Based on an analysis of the price differences between the two home-
market levels of trade, we found that there was a pattern of consistent 
price differences, and we calculated a level-of-trade adjustment for 
the differences.

F. Calculation of Normal Value Based On Home-Market Prices

    We calculated normal value based on packed, ex-distribution 
warehouse or delivered prices to unaffiliated customers or prices to 
affiliated customers that we determined to be at arm's length. To 
identify the correct starting price, we accounted for billing 
adjustments, where appropriate. We made deductions, where applicable, 
for early-payment discounts and other discounts and rebates. We also 
made adjustments for inland freight and warehousing expense, where 
appropriate, in accordance with section 773(a)(6)(B)(iii) of the Act. 
In addition, we made adjustments under section 773(a)(6)(C)(iii) of the 
Act and 19 CFR 351.410 for differences in circumstances of sale for 
commissions, imputed credit expenses, and other direct selling 
expenses. We also made adjustments, in accordance with 19 CFR 
351.410(e), for indirect selling expenses incurred on home-market or 
U.S. sales where commissions were granted on sales in one market but 
not in the other. We also added U.S. packing costs and deducted home-
market packing costs in accordance with sections 773(a)(6)(A) and (B) 
of the Act, respectively. Finally, where appropriate, we made an 
adjustment for differences in level of trade under section 773(a)(7)(A) 
of the Act and 19 CFR 351.412(b)-(e).

G. Calculation of Normal Value Based on Constructed Value

    For comparisons of price to constructed value, we made adjustments 
to constructed value in accordance with section 773(a)(8) of the Act. 
Where we compared constructed value to CEP, we made circumstances-of-
sale adjustments by deducting HM direct selling expenses. Where we 
compared constructed value to EP, we made circumstances-of-sale 
adjustments by deducting HM direct selling expenses and adding U.S. 
direct selling expenses. Finally, we made an adjustment for differences 
in level of trade under section 773(a)(7)(A) of the Act and 19 CFR 
351.412(b)(e).

Company-Specific Changes to Normal Value and U.S. Price

    We relied on data submitted by the respondents except as discussed 
in our company-specific preliminary determination analysis memoranda. 
Any company-specific changes to the export-price, CEP, and normal-value 
calculations are described below.
    We relied on COP data submitted by the cost respondents except as 
discussed in our company-specific preliminary calculation memoranda. We 
have calculated a simple-average cost in situations where a respondent 
reported more than one cost for the same product. See Fresh Kiwifruit 
From New Zealand: Notice of Final Determination of Sales at Less Than 
Fair Value, 56 FR 60092 (November 27, 1991), and Live Cattle From 
Canada: Notice of Final Determination of Sales at Less Than Fair Value, 
64 FR 56738, 56751-52 (October 21, 1999).
    For all the cost respondents, we revised the calculations of the 
financial-expense rate. In addition, for some cost respondents, we 
revised the G&A rate, variable-overhead calculation, and fixed-overhead 
calculation.

Red Zoo Marketing

    We excluded Red Zoo Marketing's home-market zero-priced sample 
sales. We revised the calculation of the cost of manufacture to 
disallow the claimed energy-cost adjustment, the claimed amortization 
adjustments for a new trough system, and the claimed depreciation 
adjustment. In addition, we segregated the reported costs by type of 
tomato (e.g., cherry, roma). Finally, we recalculated the ratios of the 
G&A expense and interest expense to reflect the revised cost of 
manufacturing.

BC Hot House Foods, Inc.

    We reallocated the advertising costs that BC Hot House Foods, Inc., 
reported for its sales of subject merchandise and we calculated an 
amount for credit expenses on certain U.S. transactions for which the 
respondent had not received payment. We revised the calculation of G&A 
expenses to include head-office management fees. Additionally, in the 
absence of audited consolidated financial statements, we recalculated 
the interest-expense rates based on the financial statements of the 
selected cost respondents.

Veg Gro Sales, Inc.

    We excluded from our analysis home-market and U.S. sales of 
greenhouse tomatoes that were reported as grown in countries other than 
Canada. In addition, we excluded all zero-priced U.S. sample 
transactions from our analysis.
    We revised the calculation of the cost of manufacture to disallow 
certain claimed adjustments. With regard to both cost respondents for 
Veg Gro Sales, Inc., we revised the calculation of variable overhead 
costs to include all heating costs incurred during the POI. We also 
revised the calculation of fixed overhead to include all depreciation 
charges incurred during the POI. For one of Veg Gro Sales, Inc.'s cost 
respondents, we revised the fixed-overhead calculation to include the 
excluded costs for renting a cooler. We adjusted G&A expenses to 
include management fees and we revised the calculation of the 
financial-expense rate to include short-term interest income received 
from affiliates and all long-term interest expenses incurred by the 
company.
    For the other Veg Gro Sales, Inc., cost respondent, we revised the 
G&A rate calculation to include shareholders' life-insurance premiums. 
We also revised this cost respondent's financial-expense rate to 
exclude imputed short-term interest income and include all long-term 
interest expense experienced by the company.
    Because we did not receive information concerning the G&A and 
financial expenses experienced by the exporting company, Veg Gro Sales, 
Inc., we calculated a rate which reflects these G&A and financial 
expenses.

Mastronardi

    We did not include home-market sales for which we had no cost 
information and removed all zero-priced

[[Page 51015]]

sample transactions from our analysis. We recalculated packing expenses 
and credit expenses for certain U.S. sales. We excluded sales of 
greenhouse tomatoes produced outside of Canada. We did not include U.S. 
sales transactions for which we had no cost information, which 
represented less than one percent of Mastronardi's U.S. sales, and 
removed all zero-priced sample transactions from our analysis.
    We revised the calculation of variable overhead costs to include 
all heating costs incurred during the POI. We included the total cost 
of the plastic covers recorded as a general repair and maintenance 
expense in the normal books and records of the company in the G&A 
expense-rate calculation. We revised the denominator in the financial 
expense rate calculation to reflect the total cost of goods sold 
incurred by the consolidated entity.

J-D Marketing, Inc.

    We assigned a customer relationship for J-D Marketing, Inc.'s home-
market affiliate in order to perform the arm's-length test. We did not 
include home-market sales for which we had no cost information and 
removed all zero-priced sample transactions from our analysis.
    We recalculated packing expenses and credit expenses for certain 
U.S. sales. We did not include U.S. sales for which we had no cost 
information, which represented less than one percent of J-D's marketing 
Inc.'s U.S. sales, and we removed all zero-priced sample transactions 
from our analysis of U.S. sales.
    We revised the calculation of variable overhead costs to include 
all heating costs incurred during the POI. We revised the calculation 
of fixed overhead costs to include all depreciation charges incurred 
during the POI. We adjusted G&A expenses to include the total executive 
salaries and exclude an adjustment for reimbursements from expenses 
paid on behalf of owners. We also adjusted the company's interest-
expense rate to include all interest expenses incurred by the company 
and to include total cost of goods sold in the denominator.

Currency Conversion

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

Verification

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

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
the Customs Service to suspend liquidation of all imports of subject 
merchandise except for exports by J-D Marketing, Inc., that are 
entered, or withdrawn from warehouse, for consumption on or after the 
date of publication of this notice in the Federal Register. We will 
instruct the Customs Service to require a cash deposit or the posting 
of a bond equal to the weighted-average amount by which the normal 
value exceeds the export price or CEP, as indicated in the chart below. 
These suspension-of-liquidation instructions will remain in effect 
until further notice. The weighted-average dumping margins are as 
follows:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                      Exporter/grower                           margin
                                                              percentage
------------------------------------------------------------------------
BC Hot House Foods, Inc....................................        50.75
Red Zoo Marketing (a.k.a. Produce Distributors, Inc.)......        23.17
Veg Gro Sales, Inc. (a.k.a. K & M Produce Distributors,             2.45
 Inc.).....................................................
J-D Marketing, Inc.........................................         0.00
Mastronardi Produce Ltd....................................         5.54
All Others.................................................        32.36
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our preliminary determination. If our final antidumping 
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.

Disclosure

    We will disclose the calculations used in our analysis to parties 
in this proceeding in accordance with 19 CFR 351.224(b).

Public Comment

    Case briefs or other written comments in at least ten copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than one week after the issuance of the Department's verification 
reports. 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. In accordance with section 774 of the Act, 
we will hold a public 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 an interested party. If a 
request for a hearing is made, the hearing will be tentatively held 
three days after the deadline for submission of the rebuttal briefs at 
the U.S. Department of Commerce, 14th Street and Constitution Avenue, 
NW, Washington, D.C., 20230. Parties should confirm by telephone the 
time, date, and place of the hearing 48 hours before the scheduled 
time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain the following information: (1) The party's name, address, and 
telephone number; (2) the number of participants; and (3) a list of the 
issues to be discussed. Oral presentations will be limited to issues 
raised in the briefs. We will make our final determination no later 
than 75 days after the date of this preliminary determination.
    This determination is issued and published pursuant to sections 
733(f) and 777(i)(1) of the Act.

    Dated: October 1, 2001.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 01-25100 Filed 10-4-01; 8:45 am]
BILLING CODE 3510-DS-P