[Federal Register Volume 67, Number 209 (Tuesday, October 29, 2002)]
[Notices]
[Pages 65947-65951]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27514]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-845, A-122-847]


Notice of Initiation of Antidumping Duty Investigations: Certain 
Durum Wheat and Hard Red Spring Wheat From Canada

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

ACTION: Initiation of antidumping duty investigations.

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EFFECTIVE DATE: October 29, 2002.

FOR FURTHER INFORMATION CONTACT: Jarrod Goldfeder at (202) 482-0189 or 
Judith Wey Rudman at (202) 482-0192, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230.

Initiation of Investigations

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's 
(``the Department's'') regulations are references to the provisions 
codified at 19 CFR part 351 (2002).

The Petitions

    On September 13, 2002, the Department received petitions filed in 
proper form by the North Dakota Wheat Commission (hard red spring 
wheat), the Durum Growers Trade Action Committee (durum wheat), and the 
U.S. Durum Growers Association (durum wheat) (collectively, ``the 
petitioners'').\1\ The Department received petition supplements from 
September 24 through October 21, 2002.
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    \1\ In the September 13, 2002 petitions, the petitioners 
identified the North Dakota Wheat Commission as a petitioner for 
both the durum wheat and hard red spring wheat petitions. However, 
in a petition supplement dated September 24, 2002, the petitioners 
informed the Department that, with respect to the petition on durum 
wheat, the petitioners were replacing the North Dakota Wheat 
Commission with the Durum Growers Trade Action Committee.
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    In accordance with section 732(b)(1) of the Act, the petitioners 
allege that imports of durum wheat and hard red spring wheat from 
Canada are being, or are likely to be, sold in the United States at 
less than fair value within the meaning of section 731 of the Act and 
that such imports are materially injuring, or threatening material 
injury to, an industry in the United States.
    The Department finds that the petitioners filed these petitions on 
behalf of the respective domestic industries because they are 
interested parties as defined in section 771(9)(E) and (F) of the Act, 
and they have demonstrated sufficient industry support with respect to 
each of the antidumping investigations that they are requesting the 
Department to initiate. See infra, ``Determination of Industry Support 
for the Petitions.''

[[Page 65948]]

Scope of Investigations

    For purposes of these investigations, the products covered are (1) 
durum wheat and (2) hard red spring wheat.
1. Durum Wheat
    Imports covered by this investigation are all varieties of durum 
wheat from Canada. This includes, but is not limited to, a variety 
commonly referred to as Canada Western Amber Durum. The merchandise 
subject to this investigation is currently classifiable under the 
following Harmonized Tariff Schedule of the United States (``HTSUS'') 
subheadings: 1001.10.00.10, 1001.10.00.91, 1001.10.00.92, 
1001.10.00.95, 1001.10.00.96, and 1001.10.00.99. Although the HTSUS 
subheadings are provided for convenience and customs purposes, our 
written description of the scope of this proceeding is dispositive.
2. Hard Red Spring Wheat
    Imports covered by this investigation are all varieties of hard red 
spring wheat from Canada. This includes, but is not limited to, 
varieties commonly referred to as Canada Western Red Spring, Canada 
Western Extra Strong, and Canada Prairie Spring Red. The merchandise 
subject to this investigation is currently classifiable under the 
following HTSUS subheadings: 1001.90.10.00, 1001.90.20.05, 
1001.90.20.11, 1001.90.20.12, 1001.90.20.13, 1001.90.20.14, 
1001.90.20.16, 1001.90.20.19, 1001.90.20.21, 1001.90.20.22, 
1001.90.20.23, 1001.90.20.24, 1001.90.20.26, 1001.90.20.29, 
1001.90.20.35, and 1001.90.20.96. Although the HTSUS subheadings are 
provided for convenience and customs purposes, our written description 
of the scope of this proceeding is dispositive.
    As discussed in the preamble to the Department's regulations (see 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27323 (May 19, 1997)), we are setting aside a period for parties to 
raise issues regarding product coverage. The Department encourages all 
parties to submit such comments within 20 days of publication of this 
notice. Parties should submit any comments on the file of each (durum 
wheat and hard red spring wheat) investigation. Comments should be 
addressed to Import Administration's Central Records Unit, Room 1870, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230. The period of scope consultations is intended to 
provide the Department with ample opportunity to consider all comments 
and consult with parties prior to the issuance of our preliminary 
determinations.

Determination of Industry Support for the Petitions

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that the Department's industry support determination, which is 
to be made before the initiation of an investigation, be based on 
whether a minimum percentage of the relevant industry supports the 
petition. A petition meets this requirement if the domestic producers 
or workers who support the petition account for: (1) At least 25 
percent of the total production of the domestic like product; and (2) 
more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act 
provides that, if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the Department shall either 
poll the industry or rely on other information in order to determine if 
there is support for the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the Act directs the 
Department to look to producers and workers who account for production 
of the domestic like product. The International Trade Commission 
(``ITC''), which is responsible for determining whether ``the domestic 
industry'' has been injured, must also determine what constitutes a 
domestic like product in order to define the industry. While both the 
Department and the ITC must apply the same statutory definition 
regarding the domestic like product (section 771(10) of the Act), they 
do so for different purposes and pursuant to separate and distinct 
authority. In addition, the Department's determination is subject to 
limitations of time and information. Although this may result in 
different definitions of the domestic like product, such differences do 
not render the decision of either agency contrary to the law.\2\
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    \2\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefore from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product that is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    The domestic like products referred to in these petitions are the 
domestic like products defined in the Scope of Investigations section, 
above. Based upon our review of the petitioners' claims, we have 
accepted the petitioners' definitions of the domestic like products. 
For further discussion, see the October 23, 2002, Memorandum from the 
Team to Richard W. Moreland, ``Domestic Like Product and Industry 
Support'' (``Like Product/Industry Support Memo''), which is on file in 
the Central Records Unit (``CRU''), Room B-099 of the main Department 
of Commerce building.
    On October 3, 2002, the Department extended the deadline for the 
initiation determinations to no later than October 23, 2002, in order 
to establish whether the petitions are supported by the respective 
domestic industries, pursuant to section 732(c)(1)(B) of the Act. See 
October 3, 2002, Memorandum to Faryar Shirzad from Richard W. Moreland, 
``Extension of Deadline for Determining Industry Support.'' The 
Department has determined that, pursuant to section 732(c)(4)(A) of the 
Act, the petitions contain adequate evidence of industry support. See 
the October 23, 2002, Import Administration AD/CVD Enforcement 
Initiation Checklist (``Initiation Checklist'') and the Like Product/
Industry Support Memo, both of which are on file in the CRU.
    We determine that the petitioners have demonstrated industry 
support representing over 50 percent of total production of the 
domestic like products. Therefore, the domestic producers or workers 
who support the petitions account for at least 25 percent of the total 
production of the domestic like products, and the requirements of 
section 732(c)(4)(A)(i) of the Act are met. The Department received no 
opposition to the petitions.
    Accordingly, we determine that these petitions are filed on behalf 
of the respective domestic industries within the meaning of section 
732(b)(1) of the Act.

[[Page 65949]]

Export Price (``EP'') and Normal Value (``NV'')

    The following are descriptions of the allegations of sales at less 
than fair value upon which the Department based its decision to 
initiate these investigations. A more detailed description of these 
allegations is provided in the Initiation Checklist. Should the need 
arise to use any of this information as facts available under section 
776 of the Act in our preliminary or final determinations, we may re-
examine the information and revise the margin calculations, as 
appropriate.

Export Price

    For export price (``EP'') comparisons to home market prices and 
third country prices, the petitioners based EP on monthly average unit 
values (``AUVs'') of durum wheat and hard red spring wheat derived from 
official U.S. import data for the period July 1, 2001 through June 30, 
2002. We adjusted the petitioners' calculations of EP for comparisons 
to CV to include the entire period July 2001 through June 2002. We 
further adjusted the calculation of EP for hard red spring wheat to 
correct for certain errors in the petitioners' calculations.
    For EP comparisons to home market prices, the petitioners based EP 
on AUVs for Canadian western amber durum wheat with vitreous kernel 
content greater than 84 percent (HTSUS 1001.10.00.91) for durum wheat, 
and AUVs for 1 red spring wheat with a protein content of 
greater than 13.9 percent but less than or equal to 14.2 percent (HTSUS 
1001.90.2016) for hard red spring wheat. For EP comparisons to third 
country prices, the petitioners based EP on AUVs for Canadian western 
amber durum wheat with vitreous kernel content greater than 84 percent 
(HTSUS 1001.10.00.91) for durum wheat, and AUVs for Canadian western 
red spring wheat with a protein level greater than 14.2 percent (HTSUS 
1001.90.20.10) for hard red spring wheat. For EP comparisons to CV, the 
petitioners included in their calculation of EP AUVs for all of the 
HTSUS categories included in the scope listed above.\3\ The petitioners 
made no adjustments to EP. For further discussion, see Initiation 
Checklist.
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    \3\ The petitioners excluded seed wheats from the U.S. price 
calculation. These wheats are classified by the HTSUS subheadings: 
1001.90.10.00 and 1001.10.00.10. In addition they excluded a broader 
HTSUS category which includes other non-hard red spring wheats 
(i.e., 1001.90.20.96).
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Normal Value

    Section 773(a)(1)(C)(iii) of the Act provides that the Department 
will use third-country prices for purposes of calculating NV if ``the 
particular market situation in the exporting country does not permit a 
proper comparison with the export price or constructed export price.'' 
The petitioners assert that the markets for durum wheat and hard red 
spring wheat in Canada constitute a ``particular market situation'' 
within the meaning of section 773(a)(1)(C)(iii) and, therefore, prices 
in the home market are inappropriate for purposes of calculating NV. 
The petitioners cite to the Statement of Administrative Action which 
states that, while ``particular market situation'' is not defined, the 
Department may be satisfied that one exists ``where * * * there is 
government control over pricing to such an extent that home market 
prices cannot be considered to be competitively set.'' SAA at 822.
    The petitioners contend that, as a monopoly seller, the CWB 
conducts a nonmarket operation. In support of its argument, the 
petitioners cite to the ITC's Section 332 Investigation report which 
stated that ``all wheat destined for either domestic human consumption 
or for export must be marketed by or through the CWB.'' (See Wheat 
Trading Practices: Competitive Conditions Between U.S. and Canadian 
Wheat, Investigation No. 332-429, USITC Publication No. 3465 at 3-1 
(Dec. 2001) (``ITC Report'')). The petitioners further cite to the 
statement by the ITC that ``although the CWB states that it is a 
`commercial entity,' it is immune from the usual commercial threats to 
a corporation's survival.'' (See ITC Report at Chapter 3, pp. 13-16). 
According to the ITC's findings, ``the Board is in all significant 
respects an arm of the Government of Canada, with government approval 
and backing of its borrowing and other financing, which reduces its 
costs and insulates it from the commercial risks faced by large and 
small U.S. grain traders.'' (See ITC Report at Chapter 3, pp. 13-16) 
The petitioners assert that the ITC has found that the CWB is a 
government-backed entity with powers conferred upon it by the Canadian 
Government under the Canadian Wheat Board Act.
    In further support of its claim that the CWB operates as a 
monopoly, the petitioners cite to the findings of the U.S. Trade 
Representative (''USTR'') in its 301 investigation. In that 
investigation, USTR stated that ``the Government of Canada grants the 
Canadian Wheat Board (CWB) special monopoly rights and privileges which 
disadvantage U.S. wheat farmers and undermine the integrity of the 
trading system.'' See USTR Affirmative Finding in Response to North 
Dakota Wheat Commission Petition (``USTR Report''), (February 15, 2002) 
at 2. Like the ITC, USTR also found that the CWB is ``insulated from 
commercial risks because the Canadian government guarantees its 
financial operations, including its borrowing, credit sales to foreign 
buyers and initial payments to farmers.'' See USTR Report at 2.
    According to the petitioners, because the CWB operates as a 
monopoly in the Canadian market without effective competition from 
imports, the CWB administratively sets prices for durum wheat and hard 
red spring wheat in Canada, rendering the home market inappropriate for 
purposes of determining an actual market price. In short, as the only 
seller in Canada, the CWB operates in Canada free from any competition 
from domestic sellers. The Canadian Government restricts imports of 
durum wheat and red spring wheat into Canada, thereby exercising 
complete control over the Canadian market and insulating the CWB from 
foreign competition as well.
    Finally, the petitioners cite to prior cases in which the 
Department has used third-country sales as the basis for normal value 
due to a particular market situation. (See Initiation of Antidumping 
Duty Investigations: Spring Table Grapes from Chile and Mexico, 66 FR 
26831, 26834 (May 15, 2001) and Notice of Final Determination of Sales 
at Less Than Fair Value: Fresh Atlantic Salmon from Chile 63 FR 31411 
(June 9, 1988)). The petitioners assert that, in making its particular 
market situation determination in those cases, the Department relied on 
factors, some of which are also present in this case, such as: the home 
market industry is export oriented, the home market is incidental to 
the Canadian wheat industry, and domestically-sold wheat has 
perfunctory marketing and distribution.
    Based on the above, we have determined information reasonably 
available to the petitioners indicates the existence of a particular 
market situation which renders price comparisons between home market 
and U.S. prices inappropriate for purposes of determining whether to 
initiate the antidumping investigations on durum wheat and hard red 
spring wheat. In the course of these investigations, the Department 
will examine further the issue of particular market situation and, if 
necessary, the proper comparison market to be examined in each 
investigation.
    While asserting the existence of a particular market situation 
which renders price comparisons between home market and U.S. prices

[[Page 65950]]

inappropriate, the petitioners have, as a possible alternative, 
provided EP to home market price comparisons.

Price-to-Price Comparisons Based on Home Market Prices

    For durum wheat, the petitioners based NV on average monthly 
domestic prices of the CWB's sales of 1 milling grade Canadian 
western amber durum. For hard red spring wheat, the petitioners based 
NV on average monthly domestic prices of the CWB's sales of milling 
grade 1 Canadian western red spring, 14 percent protein. These 
prices were derived from a publicly available source on the internet. 
The home market prices were then converted from Canadian dollars to 
U.S. dollars and compared to U.S. AUVs.
    Based on EP to home market price comparisons, the petitioners 
calculated dumping margins for durum wheat ranging from 3.2 to 23.2 
percent, with a weighted-average margin of 13.3 percent. The 
petitioners calculated dumping margins for hard red spring wheat 
ranging from 0 to 25.6 percent, with a weighted-average margin of 7.6 
percent.

Price-to-Price Comparisons Based on Third Country Prices

    The petitioners calculated NV based on AUVs of Japanese imports of 
the subject merchandise from Canada. The AUVs were obtained from the 
Japanese Customs Agency's Web site, http://www.customs.go.jp. Since the 
AUVs reported by the Japanese Customs Agency were reported in yen per 
metric ton, the petitioners converted the prices from yen to U.S. 
dollars by applying the average POI exchange rate found at http://ia.ita.doc.gov/exchange/Japan.txt. After converting the Japanese prices 
to U.S. dollars per metric ton, the petitioners subtracted amounts for 
insurance and freight. Freight rates were obtained from the USDA's 
Grain Transportation Prospects and from discussions with an official at 
the USDA. A quote for insurance rates was obtained from an insurance 
company, Marsh, Inc. The net Japanese AUVs were then compared to U.S. 
AUVs.
    Based on EP to third country price comparisons, the petitioners 
calculated dumping margins for durum wheat ranging from 26.5 to 48.2 
percent, with a weighted-average margin of 40.2 percent. The 
petitioners calculated dumping margins for hard red spring wheat 
ranging from 18.2 to 86.6 percent, with a weighted-average margin of 
44.8 percent.

Price-to-CV Comparisons

    Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the 
petitioners also based NV on CV. In accordance with section 773(e) of 
the Act, the petitioners calculated CV as the cost of manufacture 
(``COM''), selling, general and administrative (``SG&A'') expenses and 
profit. To calculate COM, the petitioners based direct expenses and 
depreciation expenses on publicly available data.
1. Durum Wheat
    We revised the petitioners' calculation of COM for Alberta by 
applying yields that were from the same public source as the production 
expenses for that province. For Saskatchewan, we revised the COM by 
applying calculated, weighted-average yields by soil type based on 
additional, publicly available information. To calculate SG&A, the 
petitioners relied upon amounts reported in the CWB's 2001 annual 
report. Consistent with 773(e)(2) of the Act, the petitioners included 
in CV an amount for profit. For profit, the petitioners relied upon 
publicly available data.
    Comparing EP to the adjusted CV, we found no additional evidence to 
support the petitioners' claim that durum wheat from Canada is being 
dumped in the United States.
2. Hard Red Spring Wheat
    To calculate COM, the petitioners based direct expenses and 
depreciation expenses on publicly available data. We revised the 
petitioners' calculation of COM for Alberta by applying yields that 
were from the same public source as the production expenses for that 
province. For Saskatchewan, we revised COM by applying calculated, 
weighted-average yields by soil type based on additional, publicly 
available information. To calculate SG&A, the petitioners relied upon 
amounts reported in the CWB's 2001 annual report. Consistent with 
773(e)(2) of the Act, the petitioners included in CV an amount for 
profit. For profit, the petitioners relied upon publicly available 
data.
    Based on a comparison of EP to the adjusted CV, we calculated a 
margin of 13.26 percent for hard red spring wheat.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of durum wheat and hard red spring wheat from 
Canada are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

    The petitioners allege that the U.S. industries producing the 
domestic like products are being materially injured, or are threatened 
with material injury, by reason of the imports of the subject 
merchandise sold at less than NV. The petitioners contend that each 
industry's injured condition is evident in the declining trends in 
domestic prices, production volume and value, market share, income and 
wages, net sales volume and value, and, for durum wheat, the increasing 
U.S. inventory levels. The petitioners further allege threat of injury 
due to increased import volumes and import penetration, because of 
excess production capacity in Canada, and because inventory levels in 
Canada exceed its demand for wheat. The allegations of injury and 
causation are supported by relevant evidence including U.S. Customs 
import data, reports from the ITC and United States Department of 
Agriculture, statistics compiled by the Canadian Wheat Board and 
Statistics Canada, as well as independent academic and economic 
studies.
    We have assessed the allegations and supporting evidence regarding 
material injury and causation, and we have determined that these 
allegations are properly supported by accurate and adequate evidence 
and meet the statutory requirements for initiation (see Initiation 
Checklist).

Initiation of Antidumping Investigations

    Based upon our examination of the petitions on durum wheat and hard 
red spring wheat from Canada, we have found that they meet the 
requirements of section 732 of the Act. Therefore, we are initiating 
antidumping duty investigations to determine whether imports of durum 
wheat and hard red spring wheat from Canada are being, or are likely to 
be, sold in the United States at less than fair value. Unless this 
deadline is extended pursuant to section 733(c)(1) of the Act, we will 
make our preliminary determinations no later than 140 days after the 
date of this initiation.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of each petition has been provided to the 
representatives of the Government of Canada. We will attempt to provide 
a copy of the public version of each petition to each exporter named in 
the petitions, as provided for under 19 CFR 351.203(c)(2).

[[Page 65951]]

ITC Notification

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

Preliminary Determinations by the ITC

    The ITC will determine no later than November 18, 2002, whether 
there is a reasonable indication that imports of durum and hard red 
spring wheat from Canada are causing material injury, or threatening to 
cause material injury, to a U.S. industry. A negative ITC determination 
will result in the investigations being terminated; otherwise, these 
investigations will proceed according to statutory and regulatory time 
limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: October 23, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-27514 Filed 10-28-02; 8:45 am]
BILLING CODE 3510-DS-P