[Federal Register Volume 68, Number 182 (Friday, September 19, 2003)]
[Notices]
[Pages 54888-54890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-23961]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-818, C-475-819]


Anti-Circumvention Inquiry of the Antidumping and Countervailing 
Duty Orders on Certain Pasta from Italy: Affirmative Final 
Determinations of Circumvention of Antidumping and Countervailing Duty 
Orders

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

ACTION: Affirmative Final Determinations of Circumvention of 
Antidumping and Countervailing Duty Orders.

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SUMMARY: On April 27, 2000, the Department of Commerce (the Department) 
self-initiated an anti-circumvention inquiry to determine whether an 
Italian producer of pasta is circumventing the antidumping and 
countervailing duty orders on certain pasta from Italy, issued July 24, 
1996. The period of inquiry is July 1, 1998 through June 30, 1999. On 
August 6, 2003, we preliminarily determined that certain pasta produced 
in Italy by Pastificio Fratelli Pagani S.p.A. (Pagani) and exported to 
the United States in packages of greater than five pounds, which are 
subsequently repackaged in the United States into packages of five 
pounds or less, constitutes circumvention of the antidumping and 
countervailing duty orders on certain pasta from Italy, within the 
meaning of section 781(a) of the Tariff Act of 1930, as amended (the 
Act), and 19 CFR 351.225(g). We invited interested parties to comment 
on our preliminary determinations. Interested parties did not submit 
case briefs or request a hearing. Consequently, our preliminary 
determinations remain unchanged for these final determinations.

EFFECTIVE DATE: September 19, 2003.

FOR FURTHER INFORMATION CONTACT: Zev Primor or Ronald Trentham, AD/CVD 
Enforcement, Office IV, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, D.C. 20230; telephone: (202) 482-4114 or (202) 482-6320.

SUPPLEMENTARY INFORMATION:

Scope of Antidumping and Countervailing Duty Orders

    Imports covered by these orders are shipments of certain non-egg 
dry pasta in packages of five pounds (2.27 kilograms) or less, whether 
or not enriched or fortified or containing milk or other optional 
ingredients such as chopped vegetables, vegetable purees, milk, gluten, 
diastasis, vitamins, coloring and flavorings, and up to two percent egg 
white. The pasta covered by this scope is typically sold in the retail 
market, in fiberboard or cardboard cartons, or polyethylene or 
polypropylene bags of varying dimensions.
    Excluded from the scope are refrigerated, frozen, or canned pastas, 
as well as all forms of egg pasta, with the exception of non-egg dry 
pasta containing up to two percent egg white. Also excluded are imports 
of organic pasta from Italy that are accompanied by the appropriate 
certificate issued by the Instituto Mediterraneo Di Certificazione, by 
Bioagricoop S.r.L., by QC&I International Services, by Ecocert Italia, 
by Consorzio per il Controllo dei Prodotti Biologici, by Associazione 
Italiana per l'Agricoltura Biologica, or Codex S.r.L.
    The merchandise subject to review is currently classifiable under 
item 1902.19.20 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheading is provided for convenience and 
customs purposes, the written description of the merchandise subject to 
these orders is dispositive.

Scope Rulings

    The Department has issued the following scope rulings to date:
    (1) On August 25, 1997, the Department issued a scope ruling that 
multicolored pasta, imported in kitchen display bottles of decorative 
glass that are sealed with cork or paraffin and bound with raffia, is 
excluded from the scope of the antidumping and countervailing duty 
orders. See Memorandum from Edward Easton to Richard Moreland, dated 
August 25, 1997, on file in the Central Records Unit (CRU) of the main 
Commerce Building, Room B-099.

[[Page 54889]]

    (2) On July 30, 1998, the Department issued a scope ruling, finding 
that multipacks consisting of six one-pound packages of pasta that are 
shrink-wrapped into a single package are within the scope of the 
antidumping and countervailing duty orders. See Letter from Susan H. 
Kuhbach, Acting Deputy Assistant Secretary for Import Administration, 
to Barbara P. Sidari, Vice President, Joseph A. Sidari Company, Inc., 
dated July 30, 1998, on file in the CRU.
    (3) On October 23, 1997, the petitioners filed a request that the 
Department initiate an anti-circumvention investigation against Barilla 
S.r.L. (Barilla). On October 5, 1998, the Department issued a final 
determination that, pursuant to section 781(a) of the Act, Barilla was 
circumventing the antidumping duty order by exporting bulk pasta from 
Italy which it subsequently repackaged in the United States into 
packages of five pounds or less for sale in the United States. See 
Anti-Circumvention Inquiry of the Antidumping Duty Order on Certain 
Pasta from Italy: Affirmative Final Determination of Circumvention of 
the Antidumping Duty Order, 63 FR 54672 (October 13, 1998) (Barilla 
Circumvention Inquiry).
    (4) On October 26, 1998, the Department self-initiated a scope 
inquiry to determine whether a package weighing over five pounds as a 
result of allowable industry tolerances may be within the scope of the 
antidumping and countervailing duty orders. On May 24, 1999, we issued 
a final scope ruling finding that, effective October 26, 1998, pasta in 
packages weighing up to (and including) five pounds four ounces, and so 
labeled, is within the scope of the antidumping and countervailing duty 
orders. See Memorandum from John Brinkmann to Richard Moreland, dated 
May 24, 1999, on file in the CRU.

Scope of the Anti-Circumvention Inquiry

    The product subject to this anti-circumvention inquiry is certain 
pasta produced in Italy by Pagani and exported to the United States in 
packages of greater than five pounds (2.27 kilograms) that meets all 
the requirements for the merchandise subject to the antidumping and 
countervailing duty orders, with the exception of packaging size, and 
which is repackaged into packages of five pounds (2.27 kilograms) or 
less after entry into the United States.

Background

    On August 30, 1999, we issued an antidumping questionnaire to 
Pagani for the third administrative review of the antidumping duty 
order, covering the period July 1, 1998 through June 30, 1999. In its 
October 1, 1999, questionnaire response, Pagani stated that it 
``exported sacks of non-subject bulk pasta for repackaging after 
importation.'' Based upon our verification of Pagani's questionnaire 
responses in the third administrative review, we initiated this 
inquiry. See Certain Pasta from Italy: Notice of Initiation of Anti-
circumvention Inquiry on the Antidumping and Countervailing Duty 
Orders, 65 FR 26179 (May 5, 2000) (Notice of Initiation). Since the 
initiation of this inquiry, the following events have occurred.
    On May 10, 2000, the Department issued a circumvention 
questionnaire to Pagani. We requested information with respect to 
Pagani's corporate structure, sales and shipment information, process 
of repackaging in the United States, value of merchandise repackaged in 
the United States, and pattern of trade and levels of imports.
    On June 14, 2000, Pagani responded to the Department's 
questionnaire. Pagani's response revealed that it did not have its own 
manufacturing or repackaging facility in the United States. Rather, all 
of the repackaging activity in the United States was conducted by an 
unaffiliated party. Section 781(a) of the Act sets forth the criteria 
the Department must examine when determining whether to include 
merchandise completed or assembled in the United States within the 
scope of an existing order. We determined it was necessary to collect 
information from the unaffiliated U.S. party participating in the 
repackaging operations to examine these criteria. Accordingly, on 
December 7, 2000, the Department issued a supplemental circumvention 
questionnaire to the unaffiliated U.S. repacker and a U.S. customer 
that participated in repackaging. In addition, on December 7, 2000, we 
issued a supplemental questionnaire to Pagani. On January 29, 2001, 
Pagani responded to the Department's supplemental questionnaire. We did 
not receive a response from the unaffiliated U.S. repacker or the U.S. 
customer.
    On August 6, 2003, we preliminarily determined that certain pasta 
produced in Italy by Pagani and exported to the United States in 
packages of greater than five pounds, which are subsequently repackaged 
in the United States into packages of five pounds or less, constitutes 
circumvention of the antidumping and countervailing duty orders on 
certain pasta from Italy. See Anti-Circumvention Inquiry of the 
Antidumping and Countervailing Duty Orders on Certain Pasta from Italy: 
Affirmative Preliminary Determinations of Circumvention of Antidumping 
and Countervailing Duty Orders, 68 FR 46571 (August 6, 2003) (Notice of 
Preliminary Determinations). We invited interested parties to comment 
on our preliminary determinations. Interested parties did not submit 
case briefs or request a hearing.

Analysis

    As detailed in the Notice of Preliminary Determinations, to make an 
affirmative determination of circumvention, the elements under section 
781(a)(1) of the Act must be satisfied, taking into account the factors 
under section 781(a)(2) and 781(a)(3) of the Act. For these final 
determinations, we adopt the analysis set forth in the Notice of 
Preliminary Determinations, and determine that during the period 
examined there was circumvention of the orders as a result of Pagani's 
repackaging. First, the merchandise repackaged and sold in the United 
States is within the same class or kind of merchandise that is subject 
to the order. Second, bulk pasta was exported to the United States and 
then assembled into smaller packages of five pounds or less after 
importation. Third, we find that the process of assembly or completion 
in the United States is minor and insignificant, since (A) the level of 
investment in the United States is minimal; (B) the level of research 
and development in the United States is non-existent; (C) the nature of 
the production process in the United States is minor relative to the 
entire process of pasta production; (D) the extent of the production 
facilities in the United States is limited; and (E) the value of the 
processing performed in the United States represents a small proportion 
of the value of the merchandise sold in the United States. See Notice 
of Preliminary Determinations, at 46574-46475. Fourth, the value of 
imported parts or components is a significant portion of the total 
value of the merchandise sold in the United States. Thus, we find 
affirmative evidence of circumvention in accordance with sections 
781(a)(1) and (2) of the Act.
    We next considered the factors required by section 781(a)(3) of the 
Act, in reaching our determinations. As explained in detail in the 
Notice of Preliminary Determinations, the facts concerning pattern of 
trade, sourcing, affiliation, and import trends indicate during the 
period under consideration there was circumvention of the pasta orders. 
Consequently, our statutory requirements lead us to find that during 
the period examined there was

[[Page 54890]]

circumvention of the orders as a result of the repackaging operation 
discussed above.

Certification Option

    Pagani certified that the U.S. repackaging operation, which began 
in the third quarter of 1997, was terminated for long cuts in 1999. 
With regard to short cuts, Pagani submitted a certification from the 
U.S. repacker stating that short cuts of pasta from Pagani were last 
invoiced on February 8, 2000. Thus, Pagani asserts that the repackaging 
operations have ceased.
    As discussed in the Notice of Preliminary Determinations, Pagani 
requested that the Department implement a certification scheme, whereby 
each of Pagani's unaffiliated U.S. customers would certify that it 
would resell all pasta purchased from Pagani in the packaging in which 
the pasta was delivered to the U.S. customer, and would not repack any 
pasta from packages greater than five pounds into packages of five 
pounds or less. According to Pagani, this scheme would enable the 
Department to exclude from the scope of the antidumping and 
countervailing duty orders bulk pasta that was not destined for 
repackaging after importation, e.g., bulk pasta shipped directly to 
institutional or food service users.
    For these final determinations, we determine to adopt the 
certification scheme proposed by Pagani. According to that scheme, 
Pagani and each of Pagani's unaffiliated customers who purchase bulk 
pasta would certify that the customer would not repackage any bulk 
pasta into packages of five pounds or less.

Suspension of Liquidation

    We have made affirmative final determinations that Pagani's 
activities for the repacking of bulk pasta into packages of five pounds 
or less for sale in the United States constitute circumvention. The 
merchandise subject to suspension of liquidation is pasta in packages 
of greater than five pounds as defined in the Scope of the Anti-
Circumvention Inquiry section of this notice, unaccompanied by the 
appropriate certification.
    In accordance with section 773(d) of the Act, the Department 
normally would direct the U.S. Bureau of Customs and Border Protection 
(BCBP) to suspend liquidation and to require a cash deposit of 
estimated duties, at the applicable rate, on all unliquidated entries 
of bulk pasta from Italy produced by Pagani, not accompanied by 
appropriate certification, that were entered, or withdrawn from 
warehouse, for consumption on or after April 27, 2000, the date of 
initiation of this anti-circumvention inquiry. However, due to 
cessation of Pagani's circumvention activity, the Department will not 
instruct BCBP to require such certification until such time as 
petitioner or other interested parties provide to the Department a 
reasonable basis to believe or suspect that the order is being again 
circumvented. If such information is provided, we will require 
certification only for the product(s) for which evidence is provided 
that such products are being used in the circumvention of the order. 
Normally we will require only the importer of record to certify to the 
end-use of the imported merchandise. If it later proves necessary for 
adequate implementation, we may also require Pagani to provide such 
certification on invoices accompanying shipments to the United States. 
See Notice of Final Determinations of Sales at Less Than Fair Value: 
Certain Large Diameter Carbon and Alloy Seamless Standard, Line and 
Pressure Pipe from Japan; and Certain Small Diameter Carbon and Alloy 
Seamless Standard, Line and Pressure Pipe from Japan and the Republic 
of South Africa, 65 FR 25907 (May 4, 2000).
    These affirmative final circumvention determinations are in 
accordance with section 781(a) of the Act and 19 CFR 351.225.

    Dated: September 12, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-23961 Filed 9-18-03; 8:45 am]
BILLING CODE 3510-DS-S