[Federal Register Volume 67, Number 147 (Wednesday, July 31, 2002)]
[Notices]
[Pages 49669-49673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19342]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-831]


Fresh Garlic from the People's Republic of China: Preliminary 
Results of Antidumping Duty New Shipper Review and Intent to Rescind in 
Part

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

ACTION: Notice of Preliminary Results of Antidumping Duty New Shipper 
Review and Intent to Rescind in Part.

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SUMMARY: In response to requests from interested parties, the 
Department of Commerce is conducting a new shipper review of the 
antidumping duty order on fresh garlic from the People's Republic of 
China. The review covers Jinan Yipin Corporation, Ltd., and Shandong 
Heze International Trade and Developing Company. The period of review 
is November 1, 2000, through October 31, 2001.
    We have preliminarily determined that Jinan Yipin Corporation, 
Ltd., has made sales in the United States at prices below normal value. 
With respect to Shandong Heze International Trade and Developing 
Company, we intend to rescind the antidumping duty new shipper 
review.We invite interested parties to comment on these preliminary 
results. Parties who submit comments are requested to submit with each 
argument (1) a statement of the issue and (2) a brief summary of the 
argument.

[[Page 49670]]


EFFECTIVE DATE: July 31, 2002.

FOR FURTHER INFORMATION CONTACT: Jennifer Moats or Brian Ellman, Office 
of AD/CVD Enforcement 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C., 20230; telephone: (202) 
482-5047 and (202) 482-4852, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to 19 CFR Part 351 (April 2001).

Background

    On January 7, 2002, the Department of Commerce (the Department) 
published in the Federal Register the Notice of Initiation of New 
Shipper Antidumping Duty Reviews: Fresh Garlic From the People's 
Republic of China (67 FR 715). The Department issued antidumping 
questionnaires to Jinan Yipin Corporation, Ltd. (Jinan Yipin), and 
Shandong Heze International Trade and Developing Company (Shandong 
Heze).\1\
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    \1\ A new shipper review of the antidumping duty order on fresh 
garlic from the People's Republic of China was also initiated for 
Huaiyang Hongda Dehydrated Vegetable Company. We rescinded this new 
shipper review, however, for the November 1, 2000, through October 
31, 2001, period of review and initiated a review for the period 
from November 1, 2001, through April 30, 2002 (see Notice of 
Rescission of New Shipper Antidumping Duty Review and Initiation of 
Antidumping Duty New Shipper Review, 67 FR 44594 (July 3, 2002)).
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    During the period March through July 2002, the Department received 
responses to sections A, C, and D of the Department's original and 
supplemental questionnaires from Jinan Yipin and Shandong Heze.
    On May 16, 2002, we requested publicly available information for 
valuing the factors of production and comments on surrogate-country 
selection. We received comments from the petitioners and Jinan Yipin on 
May 30, 2002. On July 15, 2002, and July 16, 2002, we completed a 
verification at Jinan Yipin's U.S. sales office. We intend to verify 
the factors-of-production information upon which we will rely in 
completing our final results of review.

Scope of the Order

    The products covered by this antidumping duty order are all grades 
of garlic, whole or separated into constituent cloves, whether or not 
peeled, fresh, chilled, frozen, provisionally preserved, or packed in 
water or other neutral substance, but not prepared or preserved by the 
addition of other ingredients or heat processing. The differences 
between grades are based on color, size, sheathing, and level of decay.
    The scope of this order does not include the following: (a) garlic 
that has been mechanically harvested and that is primarily, but not 
exclusively, destined for non-fresh use; or (b) garlic that has been 
specially prepared and cultivated prior to planting and then harvested 
and otherwise prepared for use as seed.
    The subject merchandise is used principally as a food product and 
for seasoning. The subject garlic is currently classifiable under 
subheadings 0703.20.0010, 0703.20.0020, 0703.20.0090, 0710.80.7060, 
0710.80.9750, 0711.90.6000, and 2005.90.9700 of the Harmonized Tariff 
Schedule of the United States (HTSUS). Although the HTSUS subheadings 
are provided for convenience and customs purposes, our written 
description of the scope of this order is dispositive. In order to be 
excluded from the antidumping duty order, garlic entered under the 
HTSUS subheadings listed above that is (1) mechanically harvested and 
primarily, but not exclusively, destined for non-fresh use or (2) 
specially prepared and cultivated prior to planting and then harvested 
and otherwise prepared for use as seed must be accompanied by 
declarations to the Customs Service to that effect.

Separate Rates

    In proceedings involving non-market-economy (NME) countries, the 
Department begins with a presumption that all companies within the 
country are subject to government control and thus should be assigned a 
single antidumping rate unless an exporter can affirmatively 
demonstrate an absence of government control, both in law (de jure) and 
in fact (de facto), with respect to its exports. In these reviews, both 
Jinan Yipin and Shandong Heze have requested separate company-specific 
rates.
    To establish whether a company is sufficiently independent in its 
export activities from government control to be entitled to a separate, 
company-specific rate, the Department analyzes the exporting entity in 
an NME country 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, 20589 (May 6, 1991) (Sparklers), and amplified by 
the Final Determination of Sales at Less Than Fair Value: Silicon 
Carbide from the People's Republic of China, 59 FR 22585, 22586 - 22587 
(May 2, 1994) (Silicon Carbide).
    The Department's separate-rate test is unconcerned, in general, 
with macroeconomic/ border-type controls (e.g., export licenses, 
quotas, and minimum export prices), particularly if these controls are 
imposed to prevent dumping. The test focuses, rather, on controls over 
the investment, pricing, and output decision-making process at the 
individual firm level. See, e.g., 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).
    Jinan Yipin and Shandong Heze provided separate-rate information in 
their responses to our original and supplemental questionnaires. 
Accordingly, we performed a separate-rates analysis to determine 
whether these exporters are independent from government control (see 
Notice of Final Determination of Sales at Less Than Fair Value: 
Bicycles From the People's Republic of China, 61 FR 56570 (April 30, 
1996)).
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 and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) any other 
formal measures by the government decentralizing control of companies.
    Jinan Yipin has 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'' and the ``Company Law of the 
People's Republic of China.'' The Department has analyzed these laws 
and found that they establish an absence of de jure control. See, e.g., 
Preliminary Results of New Shipper Review: Certain Preserved Mushrooms 
From the People's Republic of China, 66 FR 30695, 30696 (June 7, 2001). 
We have no information in this proceeding

[[Page 49671]]

which would cause us to reconsider this determination.
    Shandong Heze placed only one document on the record relevant to 
our analysis of de jure control, a copy of the ``Foreign Trade Law of 
the People's Republic of China.'' Also, Shandong Heze did not provide 
the Department with information to substantiate its business license, 
such as the regulated-commodities listings, as evidence of the lack of 
de jure government control. See Shandong Heze International Trade and 
Developing Company-Separate Rates Analysis and Deficient Submissions 
Memorandum, dated July 22, 2002. Therefore, we find that Shandong Heze 
did not demonstrate the absence of de jure control in this case.
2. Absence of De Facto Control
    Typically the Department considers four factors in evaluating 
whether a respondent is subject to de facto governmental control of its 
export functions: (1) whether the export prices are set by, or subject 
to, the approval of a governmental authority; (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 its 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. See Silicon Carbide at 22587.
    As stated in previous cases, there is some evidence that certain 
enactments of the People's Republic of China (PRC) central government 
have not been implemented uniformly among different sectors and/or 
jurisdictions in the PRC. See Silicon Carbide at 22586 - 22587. 
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.
    According to Jinan Yipin, it is a private limited-liability company 
owned by a group of private investors. Jinan Yipin has also asserted 
the following: (1) There is no government participation in setting 
export prices; (2) its managers have authority to bind sales contracts; 
(3) it does not have to notify any government authorities of its 
management selection; and (4) there are no restrictions on the use of 
its export revenue and it is responsible for financing its own losses. 
Furthermore, our analysis of Jinan Yipin's questionnaire responses 
reveals no other information indicating the existence of government 
control. Consequently, we preliminarily determine that Jinan Yipin has 
met the criteria for the application of a separate rate.
    Although Shandong Heze has made statements that it no longer has a 
relationship with any level of the government in the PRC, Shandong Heze 
has not provided an adequate explanation to support its independence 
from government control. Therefore, we preliminarily determine that 
Shandong Heze has not met the criteria for the application of a 
separate rate.

Intent to Rescind in Part

    The PRC is an NME, and in NME cases we presume that all entities 
are subject to government control for purposes of the antidumping law 
unless those entities prove affirmatively that they are free from de 
jure and de facto government control of their export activities. See 
Sparklers and Silicon Carbide. Without adequate documentation of this 
independence, we find that Shandong Heze is not entitled to a separate 
rate. Consequently, Shandong Heze's belated acknowledgement of its 
recent government ownership and its failure to document its 
independence from the government adequately does not support its 
contention that it is a new shipper and that it is not part of the PRC-
wide entity. As such, we intend to rescind the review of Shandong Heze.

Fair Value Comparisons

    To determine whether sales of fresh garlic to the United States by 
Jinan Yipin were made at less than fair value, we compared constructed 
export price to normal value, as described in the ``Constructed Export 
Price'' and ``Normal Value'' sections of this notice below.

Constructed Export Price

    In accordance with section 772(b) of the Act, we used constructed 
export price (CEP) methodology because the first sale to an 
unaffiliated purchaser occurred after importation of the merchandise 
into the United States. We calculated CEP based on prices from Jinan 
Yipin's U.S. subsidiary to unaffiliated customers. We made deductions, 
where appropriate, from the gross unit price to account for foreign 
inland freight, international freight, customs duties, and brokerage 
and handling. Because certain domestic charges, such as those for 
foreign inland freight, were provided by NME companies, we valued those 
charges based on surrogate rates from India. See the Factors Valuation 
for the Preliminary Results of the New Shipper Review Memorandum, dated 
July 24, 2002 (FOP Memorandum).

Normal Value

1. Surrogate Country
    When investigating imports from an NME country, section 773(c)(1) 
of the Act directs the Department to base normal value (NV), in most 
circumstances, on the NME producer's factors of production valued in a 
surrogate market-economy country or countries considered to be 
appropriate by the Department. In accordance with section 773(c)(4) of 
the Act, in valuing the factors of production, the Department shall 
use, to the extent practicable, the prices or costs of factors of 
production in one or more market-economy countries that are at a level 
of economic development comparable to that of the NME country and are 
significant producers of comparable merchandise. The sources of the 
surrogate factor values are discussed under the ``Factor Valuations'' 
section below.
    The Department has determined that India, Pakistan, Indonesia, Sri 
Lanka, and the Philippines are countries comparable to the PRC in terms 
of economic development. See Memorandum from Jeffrey May to Laurie 
Parkhill, dated February 28, 2002. In addition to being among the 
countries comparable to the PRC in economic development, India is a 
significant producer of the subject merchandise. We used India as the 
surrogate country and, accordingly, have calculated NV using Indian 
prices to value the PRC producer's factors of production, when 
available and appropriate. We have obtained and relied upon publicly 
available information wherever possible. See Memorandum from Jason 
Carver to Mark Ross regarding Selection of a Surrogate Country, dated 
July 24, 2002. In accordance with 19 CFR 351.301(c)(3)(ii), for the 
final results of a new shipper review, interested parties may submit 
publicly available information to value the factors of production 
within 20 days after the date of publication of these preliminary 
results of new shipper review.
2. Factors of Production
    Section 773(c)(1) of the Act provides that the Department shall 
determine the NV using a factors-of-production methodology if (1) the 
merchandise is exported from an NME country and (2) the information 
does not permit the calculation of NV using home-market prices, third- 
country prices, or constructed value under section 773(a)

[[Page 49672]]

of the Act. Factors of production include the following elements: (1) 
hours of labor required, (2) quantities of raw materials employed, (3) 
amounts of energy and other utilities consumed, and (4) representative 
capital costs. We used factors of production reported by the respondent 
for materials, energy, labor, and packing. We valued all the input 
factors using publicly available information, as discussed in the 
``Surrogate Country'' and ``Factor Valuations'' sections of this 
notice. In accordance with 19 CFR 351.408(c)(1), where a producer 
sources an input from a market economy and pays for it in market-
economy currency, the Department employs the actual price paid for the 
input to calculate the factors-based NV. See also Lasko Metal Products 
v. United States, 437 F.3d 1442, 1445-1446 (CAFC 1994). Therefore, 
where Jinan Yipin had market-economy inputs and paid for these inputs 
in a market-economy currency, we used the actual prices paid for those 
inputs in our calculations.
3. Factor Valuations
    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by the respondent for the 
period of review (POR). To calculate NV, we multiplied the reported 
per-unit factor quantities by publicly available Indian 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 
make them delivered prices. For a detailed description of all surrogate 
values used for respondents. See the FOP Memorandum.
    We added to Indian import surrogate values a surrogate freight cost 
using the reported distance from the domestic supplier to the factory. 
This adjustment is in accordance with the decision in Sigma Corporation 
v. United States, 117 F. 3d 1401, 1407-08 (CAFC 1997).
    For those Indian rupee values not contemporaneous with the POR, we 
adjusted for inflation using wholesale price indices published in the 
International Monetary Fund's International Financial Statistics for 
India. For those U.S. dollar-denominated values not contemporaneous 
with the POR, we adjusted for inflation using producer price indices 
published on the Federal Reserve Bank website (www.dallasfed.org/htm/data/data/wsop03sa.tab.htm).
    Except as noted below, we valued raw-material inputs using the 
weighted-average unit import values derived from the Monthly Trade 
Statistics of Foreign Trade of India--Volume II--Imports (Indian Import 
Statistics) for the time period April 2001 through September 2001. 
Where POR-specific Indian Import Statistics were not available, we used 
Indian Import Statistics from an earlier period (i.e., April 2001 
through June 2001). Surrogate-value data or sources to obtain such data 
were obtained from the respondent, the petitioners, and Department 
research.
    Furthermore, we valued water based on data from the Asian 
Development Bank's Second Water Utilities Data Book: Asian and Pacific 
Region (published in 1997). We valued electricity based on data from 
the International Energy Agency: Energy Prices & Taxes: 2000 1st 
Quarter. We valued diesel fuel using data from the International Energy 
Agency for the time period January 2000 through April 2000.
    The inputs Jinan Yipin reported for packing were mesh bags, 
cartons, and packing belts. We used Indian Import Statistics data for 
the April 2001 through September 2001 period to value these inputs.
    To value truck rates, we used freight costs from the February 14, 
2000, publication of.
    To value factory overhead, selling, general and administrative 
expenses, and profit, we used rates based on financial information from 
the 1999-2000 annual reports of Himalaya International Ltd., Flex 
Foods, and Agro Dutch, Indian producers of preserved mushrooms. We 
based the value of the garlic sprouts on the building depreciation in 
the aforementioned financial information.
    For labor, consistent with 19 CFR 351.408(c)(3), we used the PRC 
regression-based wage rate at the Import Administration's home page, 
Import Library, Expected Wages of Selected NME Countries, revised in 
May 2000 (see http://ia.ita.doc.gov/wages). The source of the wage-rate 
data on the Import Administration's web site is the 1999 Yearbook of 
Labour Statistics, International Labor Organization (Geneva: 1999), 
Chapter 5B: Wages in Manufacturing.

Preliminary Results of the Review

    We preliminarily determine that the following dumping margin exists 
for the period November 1, 2000, through October 31, 2001:

------------------------------------------------------------------------
                                                        Weighted-average
              Manufacturer and Exporter                percentage margin
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Jinan Yipin Corporation, Limited.....................              15.26
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    The Department will disclose calculations performed in connection 
with these preliminary results of review within five days of the date 
of publication of this notice in accordance with 19 CFR 351.224(b). 
Case briefs regarding our intent to rescind the review of Shandong Heze 
must be submitted within 15 days of the date of publication of this 
notice. Case briefs regarding Jinan Yipin must be submitted no later 
than seven days after the issuance of the last verification report. 
Rebuttal briefs, limited to issues raised in the case briefs, must be 
filed within five days after the deadline for submission of case 
briefs. Parties who submit argument in these proceedings are requested 
to submit with the argument: 1) a statement of the issue, 2) a brief 
summary of the argument with an electronic version included, and 3) a 
table of authorities.
    Pursuant to 19 CFR 351.310 of the Department's regulations, any 
interested party may request a hearing within 30 days of the date of 
publication of this notice. Any hearing, if requested, will be held 
approximately 37 days after the publication of this notice or the first 
workday thereafter. In accordance with 19 CFR 351.309(c)(ii), issues 
raised in hearings will be limited to those raised in the case and 
rebuttal briefs.
    The Department will publish the final results of this new shipper 
review, including the results of its analysis of issues raised in any 
such written briefs, within 90 days of publication of these preliminary 
results. See 19 CFR 351.214(i)(1) of the Department's regulations.

Assessment Rates

    Upon completion of this new shipper review, the Department will 
determine, and the Customs Service will assess, antidumping duties on 
all appropriate entries. The Department will issue appropriate 
appraisement instructions directly to the Customs Service upon 
completion of these reviews. To calculate the amount of duties to be 
assessed with respect to CEP sales, we divided the total dumping 
margins for the reviewed sales by the total entered value of those 
reviewed sales for each importer/customer. If these preliminary results 
are adopted in our final results of this new shipper review, we will 
direct the Customs Service to assess the resulting percentage margin 
against the entered customs values for the subject

[[Page 49673]]

merchandise on each of the importer's/customer's entries during the 
review period.

Cash-Deposit Requirements

    The following cash-deposit requirements will be effective upon 
publication of the final results of this new shipper review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(1) of the Act: (1) for subject 
merchandise manufactured and exported by Jinan Yipin, the cash-deposit 
will be that established in the final results of this review except if 
the rate is less than .50 percent and therefore de minimis within the 
meaning of 19 CFR 351.106(c)(1), in which case the cash-deposit rate 
will be zero; (2) for all other PRC exporters, including Shandong Heze, 
the rate will continue to be the PRC country-wide rate, which is 376.67 
percent; and (3) for all other non-PRC exporters of subject merchandise 
from the PRC, the cash-deposit rate will be the rate applicable to the 
PRC supplier of that exporter. These deposit requirements, when 
imposed, shall remain in effect until publication of the final results 
of the next administrative review.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    We are issuing and publishing these preliminary results of review 
in accordance with sections 751(a)(2)(B) and 777(i)(1) of the Act.

    Dated: July, 24, 2002
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 02-19342 Filed 7-30-02; 8:45 am]
BILLING CODE 3510-DS-S