[Federal Register Volume 69, Number 149 (Wednesday, August 4, 2004)]
[Notices]
[Pages 47091-47100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17815]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-331-802]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Certain Frozen and 
Canned Warmwater Shrimp From Ecuador

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 certain frozen and canned 
warmwater shrimp from Ecuador are being sold, or are likely to be sold, 
in the United States at less than fair value, as provided in section 
733(b) of the Tariff Act of 1930, as amended (the Act). Interested 
parties are invited to comment on this preliminary determination. 
Because we are postponing the final determination, we will make our 
final determination not later than 135 days after the date of 
publication of this preliminary determination in the Federal Register.

EFFECTIVE DATE: August 4, 2004.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Terre Keaton, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-4136, or (202) 482-1280, 
respectively.

Preliminary Determination

    We preliminarily determine that certain frozen and canned warmwater 
shrimp from Ecuador are being sold, or are likely to be sold, in the 
United States at less than fair value (LTFV), as provided in section 
733 of the Act. The estimated margins of sales at LTFV are shown in the 
``Suspension of Liquidation'' section of this notice.

Background

    Since the initiation of this investigation the following events 
have occurred. See Initiation of Antidumping Duty Investigations: 
Certain Frozen and Canned Warmwater Shrimp from Brazil, Ecuador, India, 
Thailand, the People's Republic of China and the Socialist Republic of 
Vietnam, 69 FR 3876 (January 27, 2004) (Initiation Notice).
    On February 17, 2004, the United States International Trade 
Commission (ITC) preliminarily determined that there is a reasonable 
indication that imports of certain frozen and canned warmwater shrimp 
from Ecuador are materially injuring the United States industry. See 
ITC Investigation Nos. 731-TA-1063-1068 (Publication No. 3672).
    On February 20, 2004, we selected the three largest producers/
exporters of certain frozen and canned warmwater shrimp from Ecuador as 
the mandatory respondents in this proceeding. See Memorandum to Louis 
Apple, Director Office 2, from The Team dated February 20, 2004. We 
subsequently issued the antidumping questionnaire to Exporklore S.A. 
(Exporklore), Exportadora De Alimentos S.A. (Expalsa), and Promarisco 
S.A. (Promarisco) on February 20, 2004.
    During the period February through June 2004, various interested 
parties, including the petitioners, submitted comments on the scope of 
this and the concurrent investigations of certain frozen and canned 
warmwater shrimp concerning whether the following products are covered 
by the scope of the investigations: a certain seafood mix,

[[Page 47092]]

dusted shrimp, battered shrimp, salad shrimp sold in counts of 250 
pieces or higher, the species Macrobachium Rosenbergii, organic shrimp, 
and peeled shrimp used in breading.\1\ In addition, the Louisiana 
Shrimp Alliance (LSA), an association of domestic shrimp harvesters and 
processors, requested that the Department expand the scope to include 
fresh (never frozen) shrimp. See ``Scope Comments'' section of this 
notice.
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    \1\ Specifically, Ocean Duke Corporation (Ocean Duke), an 
importer and wholesaler of the subject merchandise, requested that 
the following products be excluded from the scope of this and the 
concurrent investigations on certain frozen and canned warmwater 
shrimp: (1) ``dusted shrimp,'' (2) ``battered shrimp,'' and (3) 
``seafood mix.'' Another importer, Rubicon Resources LLP, supported 
Ocean Duke's request regarding dusted and battered shrimp. Eastern 
Fish Company and Long John Silver's, Inc. also requested that dusted 
and battered shrimp be excluded from the scope of the 
investigations. Furthermore, the Seafood Exporters' Association of 
India requested that the Department find that warmwater salad shrimp 
in counts of 250 pieces or higher are not within the scope, and that 
the species Machrobachium Rosenbergii is a separate class or kind of 
merchandise. Also, Exportadora de Alimentos S.A., one of the 
respondents in the Ecuador case, requested that the Department find 
that farm-raised organic shrimp is not covered by the scope of the 
investigations. Finally, the American Breaded Shrimp Processors 
Association, comprised of importers of peeled shrimp which they 
consume in the production of breaded shrimp products, requested that 
peeled shrimp imported for the sole purpose of breading be excluded 
from the scope of the investigations.
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    We received section A questionnaire responses from the three 
respondents in March 2004, and section B and C questionnaire responses 
in April 2004. We issued and received responses to our supplemental 
questionnaires from April through June 2004.
    On April 29, 2004, the petitioners \2\ alleged that Exporklore, 
Expalsa and Promarisco made third country sales below the cost of 
production (COP) and, therefore, requested that the Department initiate 
a sales-below-cost investigation of each of the three respondents. On 
May 28, 2004, the Department initiated a sales-below-cost investigation 
of each of the three respondents, and required them to respond to 
section D of the Department's questionnaire. See Memoranda to Louis 
Apple, Director Office 2, from The Team Re: Petitioners' Allegation of 
Sales Below the Cost of Production by Explorkore S.A., Exportadora de 
Alimentos S.A., and Promarisco S.A. Ltd., dated May 28, 2004. With 
respect to Exporklore, Expalsa and Promarisco, we received original 
section D responses and revised sales databases in June 2004, and 
supplemental section D responses in July 2004.
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    \2\ The petitioners in this investigation are the Ad Hoc Shrimp 
Trade Alliance (an ad hoc coalition representative of U.S. producers 
of frozen and canned warmwater shrimp and harvesters of wild-caught 
warmwater shrimp), Versaggi Shrimp Corporation and Indian Ridge 
Shrimp Company.
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    On May 18, 2004, pursuant to sections 733(c)(1)(B) and (c)(2) of 
the Act and 19 CFR 351.205(f), the Department determined that the case 
was extraordinarily complicated and postponed the preliminary 
determination until no later than July 28, 2004. See Notice of 
Postponement of Preliminary Determinations of Antidumping Duty 
Investigations: Certain Frozen and Canned Warmwater Shrimp from Brazil 
(A-351-838), Ecuador (A-331-802), India (A-533-840), Thailand (A-549-
822), the People's Republic of China (A-570-893), and the Socialist 
Republic of Vietnam (A-503-822), 69 FR 29509 (May 24, 2004).
    On May 21, 2004, the Department denied the LSA's request to amend 
the scope to include fresh (never frozen) shrimp. See Memorandum from 
Jeffrey A. May, Deputy Assistant Secretary, AD/CVD Enforcement Group I, 
and Joseph A. Spetrini, Deputy Assistant Secretary AD/CVD Enforcement 
Group III, to James J. Jochum, Assistant Secretary for Import 
Administration Re: Antidumping Investigations on Certain Frozen and 
Canned Warmwater Shrimp from Brazil, Ecuador, India, the People's 
Republic of China, Thailand and the Socialist Republic of Vietnam: 
Scope Determination Regarding Fresh (Never Frozen) Shrimp, dated May 
21, 2004 (Scope Decision Memorandum I).
    On June 7, 2004, the Department determined that a particular market 
situation existed in Ecuador that rendered the home market 
inappropriate for use as the comparison market for normal value (NV) 
purposes. Therefore, the Department determined it appropriate to use 
third country sales as the basis for NV. See June 7, 2004 Memorandum to 
Louis Apple, Director Office 2, from The Team Re: Home Market as 
Appropriate Comparison Market. Also, on June 7, 2004, after taking into 
account Promarisco's and the petitioners' claims, the Department found 
it appropriate to select Spain as the third country comparison market 
for Promarisco. See June 7, 2004 Memorandum to Louis Apple, Director 
Office 2, from The Team Re: Selection of Third Country Market for 
Promarisco (Third Country Comparison Market Selection Memorandum). The 
petitioners objected to the Department's third country comparison 
market selection decision for Promarisco on June 10, 2004, and filed 
additional comments on this topic in June and July 2004. Promarisco 
responded to these comments in submissions filed in June and July 2004.
    On June 4, 2004, Expalsa and Promarisco requested that the 
Department allow them to report their costs of production based on 
their fiscal year rather than the period of investigation (POI) because 
their fiscal years ended within three months of the POI. On June 9, 
2004, they each provided information that the Department requested in a 
June 4, 2004, letter addressing the impact of such a period shift on 
their cost reporting. On June 14, 2004, the Department denied the 
respondents' requests because it appeared, based on the information 
they provided, that shifting the cost reporting period would materially 
impact the antidumping duty analysis. See June 14, 2004, Letter to 
Warren Connelly, Counsel for Respondents, from Neal Halper, Director, 
Office of Accounting.
    Pursuant to the Department's solicitation, on June 7, 2004, various 
interested parties, including the petitioners, submitted comments on 
the issue of whether product comparisons and margin calculations in 
this and the concurrent investigations of certain frozen and canned 
warmwater shrimp should be based on data provided on an ``as sold'' 
basis or data converted to a headless, shell-on (HLSO) basis.\3\ 
Additional comments were subsequently submitted on June 15 and 25, 
2004. See ``Product Comparison Comments'' section below.
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    \3\ Specifically, the Department received comments from the 
following interested parties, in addition to the petitioners, on 
June 7: the Brazilian Shrimp Farmers' Association and Central de 
Industrializacao e Distribuicao de Alimentos Ltda.; Empresa De 
Armazenagem Frigorifica Ltda.; Camara Nacional de Acuacultura 
(National Chamber of Aquaculture) of Ecuador; the Rubicon Group 
(comprised of Andaman Seafood Co., Ltd. Chanthaburi Seafoods Co., 
Ltd. And Thailand Fishery Cold Storage Public Co., Ltd.), Thai I-Mei 
Frozen Foods Co., Ltd. and its affiliated reseller Ocean Duke; the 
Seafood Exporters of India and its members Devi Sea Foods Ltd., 
Hindustan Lever Limited, and Nekkanti Seafoods Limited ; the VASEP 
Shrimp Committee and its members; and Shantou Red Garden Foodstuff 
Co., Ltd. In addition to addressing the ``as sold'/HLSO issue, some 
of these parties also commented on the significance of species and 
container weight in the Department's product characteristic 
hierarchy.
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    On July 2, 2004, the Department made preliminary scope 
determinations with respect to the following shrimp products: Ocean 
Duke's seafood mix, salad shrimp sold in counts of 250 pieces or 
higher, Macrobrachium rosenbergii, organic shrimp, peeled shrimp used 
in breading, dusted shrimp and battered shrimp. See Memorandum from 
Edward C. Yang, Vietnam/NME Unit Coordinator, Import Administration to 
Jeffrey A. May, Deputy Assistant Secretary for Import

[[Page 47093]]

Administration Re: Antidumping Investigation on Certain Frozen and 
Canned Warmwater Shrimp from Brazil, Ecuador, India, Thailand, the 
People's Republic of China and the Socialist Republic of Vietnam: Scope 
Clarifications: (1) Ocean Duke's Seafood Mix; (2) Salad Shrimp Sold in 
Counts of 250 Pieces or Higher; (3) Macrobrachium rosenbergii; (4) 
Organic Shrimp; and (5) Peeled Shrimp Used in Breading, dated July 2, 
2004 (Scope Decision Memorandum II); and Memorandum from Edward C. 
Yang, Vietnam/NME Unit Coordinator, Import Administration to Jeffrey A. 
May, Deputy Assistant Secretary for Import Administration Re: 
Antidumping Investigation on Certain Frozen and Canned Warmwater Shrimp 
from Brazil, Ecuador, India, Thailand, the People's Republic of China 
and the Socialist Republic of Vietnam: Scope Clarification: Dusted 
Shrimp and Battered Shrimp, dated July 2, 2004 (Scope Decision 
Memorandum III). See also ``Scope Comments'' section below.
    The petitioners and respondents each submitted comments in July 
2004 on various company-specific issues for consideration in the 
preliminary determination. In addition, Expalsa and Exporklore 
submitted new information on July 16, July 21, and July 23, 2004, 
respectively, including revised sales and COP data bases for 
Exporklore. Except for minor, readily-identifiable data corrections, we 
have not relied on this information for the preliminary determination 
because there was insufficient time to analyze it prior to the 
preliminary determination.

Postponement of Final Determination

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for extension of provisional 
measures from a four-month period to not more than six months.
    Pursuant to section 735(a)(2) of the Act, on June 22, 2004, the 
respondents requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not later than 135 days after the date of the 
publication of the preliminary determination in the Federal Register, 
and extend the provisional measures to not more than six months. In 
accordance with 19 CFR 351.210(b), because (1) our preliminary 
determination is affirmative, (2) the respondent(s) account(s) for a 
significant proportion of exports of the subject merchandise, and (3) 
no compelling reasons for denial exist, we are granting the 
respondents' request and are postponing the final determination until 
no later than 135 days after the publication of this notice in the 
Federal Register. Suspension of liquidation will be extended 
accordingly.

Period of Investigation

    The POI is October 1, 2002, through September 30, 2003. This period 
corresponds to the four most recent fiscal quarters prior to the month 
of the filing of the petition (i.e., December 2003).

Scope of Investigation

    The scope of this investigation includes certain warmwater shrimp 
and prawns, whether frozen or canned, wild-caught (ocean harvested) or 
farm-raised (produced by aquaculture), head-on or head-off, shell-on or 
peeled, tail-on or tail-off,\4\ deveined or not deveined, cooked or 
raw, or otherwise processed in frozen or canned form.
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    \4\ ``Tails'' in this context means the tail fan, which includes 
the telson and the uropods.
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    The frozen or canned warmwater shrimp and prawn products included 
in the scope of the investigation, regardless of definitions in the 
Harmonized Tariff Schedule of the United States (HTSUS), are products 
which are processed from warmwater shrimp and prawns through either 
freezing or canning and which are sold in any count size.
    The products described above may be processed from any species of 
warmwater shrimp and prawns. Warmwater shrimp and prawns are generally 
classified in, but are not limited to, the Penaeidae family. Some 
examples of the farmed and wild-caught warmwater species include, but 
are not limited to, whiteleg shrimp (Penaeus vannemei), banana prawn 
(Penaeus merguiensis), fleshy prawn (Penaeus chinensis), giant river 
prawn (Macrobrachium rosenbergii), giant tiger prawn (Penaeus monodon), 
redspotted shrimp (Penaeus brasiliensis), southern brown shrimp 
(Penaeus subtilis), southern pink shrimp (Penaeus notialis), southern 
rough shrimp (Trachypenaeus curvirostris), southern white shrimp 
(Penaeus schmitti), blue shrimp (Penaeus stylirostris), western white 
shrimp (Penaeus occidentalis), and Indian white prawn (Penaeus 
indicus).
    Frozen shrimp and prawns that are packed with marinade, spices or 
sauce are included in the scope of the investigation. In addition, food 
preparations, which are not ``prepared meals,'' that contain more than 
20 percent by weight of shrimp or prawn are also included in the scope 
of the investigation.
    Excluded from the scope are (1) breaded shrimp \5\ and prawns 
(1605.20.10.20); (2) shrimp and prawns generally classified in the 
Pandalidae family and commonly referred to as coldwater shrimp, in any 
state of processing; (3) fresh shrimp and prawns whether shell-on or 
peeled (0306.23.00.20 and 0306.23.00.40); (4) shrimp and prawns in 
prepared meals (1605.20.05.10); and (5) dried shrimp and prawns.
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    \5\ Pursuant to our scope determination on battered shrimp, we 
find that breaded shrimp includes battered shrimp as discussed in 
the ``Scope Comments'' section below. See Scope Memorandum III.
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    The products covered by this scope are currently classified under 
the following HTSUS subheadings: 0306.13.00.03, 0306.13.00.06, 
0306.13.00.09, 0306.13.00.12, 0306.13.00.15, 0306.13.00.18, 
0306.13.00.21, 0306.13.00.24, 0306.13.00.27, 0306.13.00.40, 
1605.20.10.10, 1605.20.10.30, and 1605.20.10.40. These HTSUS 
subheadings are provided for convenience and for U.S. Customs and 
Border Protection (CBP) purposes only and are not dispositive, but 
rather the written description of the scope of this investigation is 
dispositive.

Scope Comments

    In accordance with the preamble to 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. (See Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997) 
and Initiation Notice, 69 FR at 3877.) Throughout the 20 days and 
beyond, the Department received many comments and submissions regarding 
a multitude of scope issues, including: (1) Fresh (never frozen) 
shrimp, (2) Ocean Duke's seafood mix, (3) salad shrimp sold in counts 
of 250 pieces or higher, (4) Macrobrachium rosenbergii, (5) organic 
shrimp, (6) peeled shrimp used

[[Page 47094]]

in breading, (7) dusted shrimp and (8) battered shrimp.
    On May 21, 2004, the Department determined that the scope of this 
and the concurrent investigations remains unchanged, as certain frozen 
and canned warmwater shrimp, without the addition of fresh (never 
frozen) shrimp. See Scope Decision Memorandum I. On July 2, 2004, the 
Department made scope determinations with respect to Ocean Duke's 
seafood mix, salad shrimp sold in counts of 250 pieces or higher, 
Macrobrachium rosenbergii, organic shrimp and peeled shrimp used in 
breading. See Scope Decision Memorandum II. Based on the information 
presented by interested parties, the Department determined that Ocean 
Duke's seafood mix is excluded from the scope of this and the 
concurrent investigations; however, salad shrimp sold in counts of 250 
pieces or higher, Macrobrachium rosenbergii, organic shrimp and peeled 
shrimp used in breading are included within the scope of these 
investigations. See Scope Decision Memorandum II at 33.
    Additionally, on July 2, 2004, the Department made a scope 
determination with respect to dusted shrimp and battered shrimp. See 
Scope Decision Memorandum III. Based on the information presented by 
interested parties, the Department preliminarily finds that while 
substantial evidence exists to consider battered shrimp to fall within 
the meaning of the breaded shrimp exclusion identified in the scope of 
these proceedings, there is insufficient evidence to consider that 
shrimp which has been dusted falls within the meaning of ``breaded'' 
shrimp. However, there is sufficient evidence for the Department to 
consider excluding this merchandise from the scope of these proceedings 
provided an appropriate description can be developed. See Scope 
Decision Memorandum III at 18. To that end, along with the previously 
solicited comments regarding breaded and battered shrimp, the 
Department solicits comments from interested parties which enumerate 
and describe a clear, administrable definition of dusted shrimp. See 
Scope Decision Memorandum III at 23.

Fair Value Comparisons

    To determine whether sales of certain frozen and canned warmwater 
shrimp from Ecuador to the United States were made at LTFV, we compared 
the export price (EP) to the NV, as described in the ``Export Price'' 
and ``Normal Value'' sections of this notice, below. In accordance with 
section 777A(d)(1)(A)(I) of the Act, we compared POI weighted-average 
EPs to NVs.
    As discussed below under the ``Home Market Viability and Comparison 
Market Selection'' section, we have determined that a particular market 
situation existed in Ecuador that rendered the home market 
inappropriate for use as the comparison market for NV purposes. 
Therefore, as the basis for NV, we used third country sales to Italy 
(Exporklore and Expalsa) and Spain (Promarisco) when making comparisons 
in accordance with section 773(a)(1)(C) of the Act.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the respondents in the third countries 
during the POI that fit the description in the ``Scope of 
Investigation'' section of this notice to be foreign like products for 
purposes of determining appropriate product comparisons to U.S. sales. 
We compared U.S. sales to sales made in the third countries, where 
appropriate. Where there were no sales of identical merchandise in the 
third countries made in the ordinary course of trade to compare to U.S. 
sales, we compared U.S. sales to sales of the most similar foreign like 
product made in the ordinary course of trade. Where there were no sales 
of identical or similar merchandise made in the ordinary course of 
trade, we made product comparisons using CV.
    In making the product comparisons, we matched foreign like products 
based on the physical characteristics reported by the respondents in 
the following order of importance: processed form, cooked form, head 
status, count size (on an ``as sold'' basis), shell status, vein 
status, tail status, other shrimp preparation, frozen form, flavoring, 
container weight, presentation, species, and preservative.

Product Comparison Comments

As Sold v. HLSO Methodology

    We received comments from various interested parties concerning 
whether to perform product comparisons and margin calculations using 
data provided on an ``as sold'' basis or on data converted to an HLSO 
basis.\6\
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    \6\ In this notice, we address only those comments pertaining to 
market-economy dumping calculation methodology. Any comments 
pertaining to non-market-economy dumping calculation methodology are 
separately addressed in the July 2, 2004, preliminary determinations 
in the antidumping duty investigations of certain frozen and canned 
warmwater shrimp from the People's Republic of China and the 
Socialist Republic of Vietnam. See Notice of Preliminary 
Determination of Sales at Less Than Fair Value, Partial Affirmative 
Preliminary Determination of Critical Circumstances and Postponement 
of Final Determination: Certain Frozen and Canned Warmwater Shrimp 
From the People's Republic of China, 69 FR 42654 (July 16, 2004), 
and Notice of Preliminary Determination of Sales at Less Than Fair 
Value, Negative Preliminary Determination of Critical Circumstances 
and Postponement of Final Determination: Certain Frozen and Canned 
Warmwater Shrimp From the Socialist Republic of Vietnam, 69 FR 42672 
(July 16, 2004).
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    The petitioners argue that using a consistent HLSO equivalent 
measure permits accurate product comparisons and margin calculations 
whereas the ``as sold'' measures do not. In particular, the petitioners 
emphasize that it is necessary to translate the actual sold volumes 
(weights) and count sizes to a uniform unit of measure that takes into 
account the various levels of processing of the different shrimp 
products sold and the allegedly large difference in value between the 
shrimp tail meat and other parts of the shrimp that may constitute ``as 
sold'' weight or count size, such as the head or shell. The 
petitioners' contention is premised upon their belief that the shrimp 
tail meat is the value-driving component of the shrimp.
    The respondents disagree, maintaining generally that using HLSO-
equivalent data violates the antidumping duty law and significantly 
distorts product comparisons and margin calculations. In particular, 
they argue that: (1) Shrimp is sold based on its actual size and form, 
not on an HLSO basis, and it is the Department's practice to use actual 
sales/cost data in its margin analysis; (2) the rates used to convert 
price, quantity and expense data to an HLSO basis are uncertain as they 
are not maintained by the respondents in the ordinary course of 
business, and are generally based on each individual company's 
experience rather than any accepted industry-wide standard; and (3) the 
HLSO methodology introduces a significant distortion through the 
incorrect assumption that the value of the product varies solely in 
direct proportion to the change in weight resulting from production 
yields, when in fact the value of the product depends also on other 
factors such as quality and form.
    Our analysis of the company responses shows that: (1) no respondent 
uses HLSO equivalents in the normal course of business, for either 
sales or cost purposes; and (2) there is no reliable or consistent HLSO 
conversion formula for all forms of processed shrimp across all 
companies, as each company defined its conversion factors differently 
and derived these factors

[[Page 47095]]

based on its own production experience. Therefore, we preliminarily 
determine it is appropriate to perform product comparisons and margin 
calculations using data ``as sold.'' This approach is in accordance 
with our normal practice and precludes the use of conversion rates, the 
accuracy of which is uncertain. Given the variety and overlap of the 
``as sold'' count size ranges reported by the respondents, we also 
preliminarily determine that it is appropriate to standardize product 
comparisons across respondents by fitting the ``as sold'' count sizes 
into the count size ranges specified in the questionnaire. See 
Memorandum to the File entitled ``Exportadora de Alimentos S.A. 
Preliminary Determination Notes and Margin Calculation'' dated July 28, 
2004 (Expalsa Memo); Memorandum to the File entitled ``Exporklore S.A., 
Preliminary Determination Notes and Margin Calculation'' dated July 28, 
2004; and ``Promarisco, S.A. Preliminary Determination Notes and Margin 
Calculation'' dated July 28, 2004 for a further discussion of our 
reclassification of count sizes.

Product Characteristics Hierarchy

    We also received comments from various interested parties regarding 
the significance of the species and container weight criteria in the 
Department's product comparison hierarchy.
    Various parties requested that the species criterion be ranked 
higher in the Department's product characteristic hierarchy--as high as 
the second most important characteristic, rather than the thirteenth--
based on their belief that species is an important factor in 
determining price. One party provided industry publications indicating 
price variations according to species type. Another party requested 
further that the Department revise the species categories specified in 
the Department's questionnaire to reflect characteristics beyond color 
(i.e., whether the shrimp was farm-raised or wild-caught). In addition, 
several parties requested that container weight, the eleventh 
characteristic in the Department's product characteristic hierarchy, be 
eliminated altogether as a product matching criterion, as they believe 
it is commercially insignificant and relates to packing size or form, 
rather than the physical attributes of the product.
    With respect to the arguments regarding the species criterion, the 
petitioners disagree, maintaining that there is no credible evidence 
that species drives pricing to such a significant extent that buyers 
consider it more important than product characteristics such as head 
and cooked status. Rather, the petitioners contend that once shrimp is 
processed (e.g., cooked, peeled, etc.), the species classification 
becomes essentially irrelevant. Therefore, the petitioners assert that 
while species type has some, not entirely insignificant effect on 
shrimp prices, it is appropriately captured in the Department's product 
matching hierarchy. Furthermore, with respect to the container weight 
criterion, the petitioners assert that, while the shrimp inside the 
container may be identical, in many cases the size of the container is 
an integral part of the product and an important determinant of the 
markets and channels through which shrimp can be sold. For this reason, 
the petitioners maintain that the Department should continue to include 
container weight as a product matching characteristic.
    Regarding the species criterion, we have not changed the position 
of this criterion in the product characteristic hierarchy for the 
preliminary determination. We agree that the physical characteristic of 
species type may impact the price or cost of processed shrimp. For that 
reason, we included species type as one of the product matching 
criteria. However, based on our review of the record evidence, we find 
that other physical characteristics of the subject merchandise, such as 
head status, count size, shell status, and frozen form, appear to be 
more significant in setting price or determining cost. The information 
provided by the parties, which suggests that price may be affected in 
some cases by species type, does not provide sufficient evidence that 
species type is more significant than the remaining physical 
characteristics of the processed shrimp. Therefore, we find an 
insufficient basis to revise the ranking of the physical 
characteristics established in the Department's questionnaire for the 
purpose of product matching.
    With respect to differentiating between species types beyond the 
color classifications identified in the questionnaire, we do not find 
that such differentiations reflect meaningful differences in the 
physical characteristics of the merchandise. In particular, we note 
that whether shrimp is farm-raised or wild-caught is not a physical 
characteristic of the shrimp, but rather a method of harvesting. 
Therefore, we have not accepted the additional species classifications 
proposed by the respondents. Accordingly, in those cases where the 
respondents reported additional species classifications for their 
processed shrimp products, we reclassified the products into one of the 
questionnaire color classifications. We made an exception for the 
shrimp identified as ``scampi'' (or Macrobrachium rosenbergii) and 
``red ring'' (or Aristeus alcocki), where appropriate, because they 
represent species distinct from those associated by color in the 
Department's questionnaire. Regarding this exception, we note that 
while scampi and red ring are sufficiently distinct for product 
matching purposes, they are not so distinct as to constitute a separate 
class or kind of merchandise (see Scope Memorandum II). We also made an 
exception for the shrimp identified as ``mixed'' (e.g., ``salad'' 
shrimp), where appropriate, because there is insufficient information 
on the record to classify these products according to the questionnaire 
color classifications.
    Regarding the container weight criterion, we have included it as 
the eleventh criterion in the product characteristic hierarchy because 
we view the size or weight of the packed unit as an integral part of 
the final product sold to the customer, rather than a packing size or 
form associated with the shipment of the product to the customer. 
Moreover, we find it appropriate, where possible (other factors being 
equal), to compare products of equivalent container weight (e.g., a 
one-pound bag of frozen shrimp with another one-pound bag of frozen 
shrimp, rather than a five-pound bag), as the container weight may 
impact the per-unit selling price of the product.

Grade and ``Input Materials''

    Expalsa contends that the Department should include grade and input 
material as product matching characteristics for its sales because it 
states that these factors have a significant effect on both prices and 
costs in its normal course of business. We have not incorporated these 
characteristics in our matching criteria because no party in this or 
any of the concurrent investigations has provided evidence of 
consistent industry-wide standards for reporting shrimp grade. Each 
company or customer appears to have its own grade specifications. 
Accordingly, we have no basis to establish a consistent method of 
classifying shrimp by grade. Further, we are not convinced that input 
material, a characteristic which Expalsa uses to distinguish processed 
shrimp products consisting of ``non-standard mixes'' of shrimp (i.e., 
shrimp of mixed grades and mixed sizes), is a proper physical 
characteristic to be considered as a product matching criterion. 
Instead, the input material appears to be a factor related to 
calculating the direct material

[[Page 47096]]

costs for each product. Moreover, because we are not considering grade 
to be a matching criterion for the preliminary determination, the input 
material issue is moot with respect to grade. With respect to the mixed 
size aspect of this issue, we have reclassified the count size ranges 
reported by the respondents into the count size ranges specified in the 
questionnaire, as noted above in the ``Product Comparison Comments'' 
section of the notice. However, we may examine Expalsa's claims further 
at verification for consideration in our final determination.

Substandard Quality Shrimp

    Each of the respondents in this investigation reported sales of 
substandard quality shrimp, such as ``broken shrimp'' or ``shrimp 
meat'', in their sales to the U.S. market, but none to their respective 
third country markets. Because: (1) the matching criteria for this 
investigation do not currently account for substandard quality shrimp; 
(2) no interested parties have provided comments on the appropriate 
methodology to match these sales; and (3) the quantity of such sales 
does not constitute a significant percentage of the respondents' 
respective databases, we have excluded these sales from our analysis, 
where possible, for purposes of the preliminary determination. 
Nonetheless, we are seeking comments from interested parties regarding 
our treatment of these sales for consideration in the final 
determination.

Export Price

    In accordance with section 772(a) of the Act, for all three 
respondents, we used EP methodology for sales in which 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.
    We made company-specific adjustments as follows.

Exporklore

    In accordance with section 772(a) of the Act, we based EP on the 
packed FOB or C&F price to unaffiliated purchasers in the United 
States. We adjusted the starting price for billing adjustments 
associated with the sale, where appropriate. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act; 
these expenses included, where appropriate, international freight, 
foreign inland freight, foreign inland insurance, and foreign brokerage 
and handling expenses.
    Some of Exporklore's U.S. sales were sold on a glazed-weight basis 
(i.e., the reported sales quantity included the weight of frozen 
water). Where appropriate, we converted the data in the U.S. market to 
a net-weight equivalent basis.

Expalsa

    In accordance with section 772(a) of the Act, we based EP on the 
packed FOB or C&F price to unaffiliated purchasers in the United 
States. We adjusted the starting price, where appropriate, for certain 
billing adjustments and freight revenue associated with the sale. We 
made deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these expenses included, where appropriate, 
foreign inland freight, brokerage and handling fees and international 
freight.
    The reported expense amount identified as ``total export charge'' 
in the U.S. sales listing that includes brokerage and handling fees 
also includes inspection fees and other expenses which may be 
considered selling expenses rather than movement expenses. However, as 
Expalsa did not separate the brokerage and handling charges from the 
other expenses included in the reported amount, we have treated the 
entire amount as movement expenses for purposes of the preliminary 
determination.
    Expalsa reported three types of billing adjustments for certain 
U.S. sales, each of which was paid or credited in 2004, after the 
filing of the petition, although Expalsa claimed that the basis for the 
adjustment was established during the POI. As stated in Final 
Determination of Sales at Less Than Fair Value: Large Newspaper 
Printing Presses from Germany, 61 FR 38166, 38181 (July 23, 1996) (LNPP 
from Germany), the Department is cautious in accepting price 
adjustments which occur after receipt of a petition so as to discourage 
potential manipulation of potential dumping margins. Based on our 
analysis of the information on the record at this time, we find that 
Expalsa has demonstrated that the basis for a price adjustment was 
established prior to the filing of the petition for only one of the 
three reported types of billing adjustments. Accordingly, we have 
disallowed two of the billing adjustments for purposes of the 
preliminary determination, but we will examine all three billing 
adjustments further at verification for consideration in the final 
determination. See Expalsa Memo for additional information as Expalsa 
has claimed proprietary treatment for the factual details surrounding 
these adjustments.

Promarisco

    In accordance with section 772(a) of the Act, we based EP on the 
packed FOB, C&F, or CIF prices to unaffiliated purchasers in the United 
States. We made deductions from the starting price for movement 
expenses in accordance with section 772(c)(2)(A) of the Act; these 
expenses included, where appropriate, foreign inland freight, foreign 
inland insurance, international freight, and marine insurance.
    Promarisco reported as billing adjustments two sets of price 
revisions made after the petition in this investigation was filed. As 
discussed above, and consistent with LNPP from Germany, we have 
disallowed those post-petition price adjustments because the 
information on the record at this time fails to demonstrate that the 
basis for these adjustments was established prior to the filing of the 
petition. However, we will examine them further at verification for 
consideration in the final determination. See Promarisco Memo for 
additional information as Promaricso has claimed proprietary treatment 
for the factual details surrounding these adjustments.

Normal Value

A. Home Market Viability and Comparison Market Selection

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
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 the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1)(C) of the Act.
    As noted above, the Department determined that a particular market 
situation existed in Ecuador that rendered the home market 
inappropriate for use as the comparison market for NV purposes. 
Therefore, the Department determined it appropriate to use third 
country sales as the basis for NV for all three respondents. For a 
detailed discussion of this issue, see June 7, 2004, Memorandum to 
Louis Apple, Director Office 2, from The Team Re: Home Market as 
Appropriate Comparison Market. Therefore, we used sales to the 
respondent's most appropriate third country market as the basis for 
comparison-market sales in accordance with section 773(a)(1)(C) of the 
Act and 19 CFR 351.404. As discussed above and in the Third Country 
Comparison Market Selection

[[Page 47097]]

Memorandum, we used Italy for Expalsa and Exporklore, and Spain for 
Promarisco.
    With respect to the selection of Spain as the comparison market for 
Promarisco, the petitioners filed additional comments in June 2004, 
objecting to the Department's decision to select Spain, rather than 
Japan, as the most appropriate third country comparison market. 
Specifically, the petitioners claimed that the Department erred in 
concluding that Promarisco's sales to Spain were more similar to its 
U.S. sales than its Japanese sales. According to the petitioners, the 
Department did not accurately account for the petitioners' product 
comparison analysis in determining the ``most similar'' comparison 
market. In response, Promarisco filed additional comments supporting 
the Department's decision.
    The petitioners' subsequent comments offer no basis to compel us to 
alter our decision. The Department considered the petitioners' product 
comparison analysis along with its own product comparison analysis in 
selecting Promarisco's third country comparison market. However, as we 
emphasized in the Third Country Comparison Market Selection Memorandum, 
we considered all of the criteria under 19 CFR 351.404(e) in 
determining the appropriate third country comparison market. That is, 
we considered: (1) Whether the foreign like product exported to a 
particular third country is more similar to the subject merchandise 
exported to the United States than is the foreign like product exported 
to other third countries; (2) whether the volume of sales to a 
particular third country is larger than the volume of sales to other 
third countries; and (3) other factors as the Secretary considers 
appropriate. After analyzing the available information in terms of all 
three criteria, we determined that Spain is the appropriate comparison 
market. Based on the preliminary determination results, and after 
review of the additional comments submitted by the petitioners and 
Promarisco, we continue to hold that Spain is the appropriate 
comparison market.
    The petitioners argue that, based on the product matching 
characteristics, the Japanese market offers the ``most similar'' 
comparisons to U.S. sales compared to the Spanish market. As we 
indicated in the Third Country Comparison Market Selection Memorandum, 
we agree with the petitioners that there is a high proportion of 
identical or similar product matches when comparing Japanese sales to 
U.S. sales. We also noted that the Spanish market also offered a high 
proportion of matches to U.S. sales. Our analysis at that time showed 
identical or similar product matches of Spanish sales to U.S. sales of 
at least ninety-eight percent of U.S. sales; this preliminary 
determination results in one-hundred percent identical or similar 
product matches of Spanish sales to U.S. sales.
    We have no basis to dispute the petitioners' contention that we 
would also find a significant proportion of product matches from 
Japanese sales. However, similarity of foreign like product is only one 
of the three criteria for determining the appropriate third country 
market under 19 CFR 351.404(e). The petitioners' June 2004 comments do 
not address the criterion of sales volume. In the Third Country 
Comparison Market Selection Memorandum, we did not specifically address 
which of the two markets was the larger in terms of sales volume. We 
stated that both the Spanish and Japanese markets is sufficiently large 
for purposes of serving as the comparison market. Subsequent to this 
Memorandum, as discussed above, the Department has determined to 
perform product comparisons and margin calculations using data on an 
``as sold'' basis. We note that the volume of Promarisco's sales to 
Spain is greater, on an ``as sold'' basis, than Promarisco's sales to 
Japan during the POI.
    Finally, we note that the petitioners did not address the 
Department's analysis of the third criterion under 19 CFR 
351.404(e)(3), the ``other factors the Secretary considers 
appropriate.'' As we explained in the Third Country Comparison Market 
Selection Memorandum, Promarisco reported that its Japanese customers 
require a higher level of quality and freshness than do its U.S. 
customers and its Spanish customers. Promarisco also reported that the 
harvesting, transportation, handling and processing procedures 
associated with the sale of subject merchandise in Japan are more 
stringent than are the same processes associated with the sale of this 
merchandise in the United States.
    Based on a consideration of all three criteria under 19 CFR 
351.404(e), we continue to find that Spain is the more appropriate 
third-country market for Promarisco. Nevertheless, we intend to verify 
all factual representations made by Promarisco on this topic; any 
misrepresentations may result in the use of adverse facts available 
under section 776(b) of the Act.

B. Level of Trade Analysis

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the EP or CEP. The NV LOT is that of 
the starting-price sales in the comparison market or, when NV is based 
on CV, that of the sales from which we derive selling, general and 
administrative expenses (SG&A) and profit. For EP, the U.S. LOT is also 
the level of the starting-price sale, which is usually from exporter to 
importer. For CEP, it is the level of the constructed sale from the 
exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the level of 
trade of the export transaction, we make an LOT adjustment under 
section 773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV 
level is more remote from the factory than the CEP level and there is 
no basis for determining whether the difference in levels between NV 
and CEP affects price comparability, we adjust NV under section 
773(a)(7)(B) of the Act (the CEP offset provision). 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).
    In this investigation, we obtained information from each respondent 
regarding the marketing stages involved in making the reported third 
country (Italy or Spain) and U.S. sales, including a description of the 
selling activities performed by each respondent for each channel of 
distribution. Company-specific LOT findings are summarized below.
Exporklore
    Exporklore made sales to wholesalers/distributors through the same 
channel of distribution in both the United States and Italy. As 
described in its questionnaire response, Exporklore performs identical 
selling functions in the United States and Italy. Therefore, these 
sales channels are at the same LOT. Accordingly, all comparisons are at 
the same LOT for Exporklore and an adjustment pursuant to section 
773(a)(7)(A) is not warranted.

[[Page 47098]]

Expalsa
    Expalsa made sales to distributors through the same channel of 
distribution in both the U.S. and Italy. As described in its 
questionnaire response, Expalsa performs identical selling functions in 
the United States and Italy. Therefore, these sales channels are at the 
same LOT. Accordingly, all comparisons are at the same LOT for Expalsa 
and an adjustment pursuant to section 773(a)(7)(A) is not warranted.
Promarisco
    Promarisco made sales to food processors and distributors through 
the same channel of distribution in both the United States and Spain. 
As described in its questionnaire response, Promarisco performs the 
identical selling functions in the United States and Spain. Therefore, 
these sales channels are at the same LOT. Accordingly, all comparisons 
are at the same LOT for Promarisco and an adjustment pursuant to 
section 773(a)(7)(A) is not warranted.

C. Cost of Production Analysis

    Based on our analysis of the petitioners' allegations, we found 
that there were reasonable grounds to believe or suspect that the 
respondents' sales of frozen and canned warmwater shrimp in the third 
countries were made at prices below their respective COPs. Accordingly, 
pursuant to section 773(b) of the Act, we initiated sales-below-cost 
investigations to determine whether sales by Expalsa, Exporklore, and 
Promarisco were made at prices below their respective COPs. See 
Memorandum to Louis Apple, Director Office 2, from The Team entitled 
``Petitioners'' Allegation of Sales Below the Cost of Production by 
Expalsa'' dated May 28, 2004; Memorandum to Louis Apple, Director 
Office 2, from The Team entitled ``Petitioners'' Allegation of Sales 
Below the Cost of Production by Exporklore'' dated May 28, 2004; and 
Memorandum to Louis Apple, Director Office 2, from The Team entitled 
``Petitioners'' Allegation of Sales Below the Cost of Production by 
Promarisco'' dated May 28, 2004.
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated 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), interest expenses, and third country packing costs. See 
``Test of Third Country Sales Prices'' section below for treatment of 
third country selling expenses. We relied on the COP data submitted by 
Exporklore, Expalsa and Promarisco except in the following instances:
Exporklore

    1. We adjusted Exporklore's reported direct labor costs to disallow 
the offset taken for co-packing revenues.
    2. We adjusted Exporklore's reported costs for shrimp harvested 
from affiliated farms to reflect the higher of transfer price, market 
price or the affiliate's COP in accordance with section 773(f)(3) of 
the Act.
    3. We revised Exporklore's reported COP by re-allocating the raw 
shrimp costs among products sold in the U.S., third country and 
domestic markets.
    4. We adjusted Exporklore's reported costs for affiliated payroll 
service commissions to reflect the higher of market or transfer price 
in accordance with section 773(f)(2) of the Act.
    5. We revised Exporklore's G&A expense rate to exclude offshore 
expenses from the cost of sales denominator used to calculate the rate.
    6. We revised Exporklore's financial expense rate to include the 
change in currency adjustment from the financial statements and to 
exclude offshore expenses from the cost of sales denominator used to 
calculate the rate.
    See Memorandum to Neal Halper from Heidi Schriefer entitled ``Cost 
of Production and Constructed Value Calculation Adjustments for the 
Preliminary Determination--Exporklore, S.A.'' dated July 28, 2004.
Expalsa
    1. We adjusted the reported costs for shrimp harvested from 
affiliated farms to reflect the higher of transfer price, market price, 
or the affiliate's COP in accordance with section 773(f)(3) of the Act.
    2. We adjusted the fixed overhead expenses to reflect the costs for 
the POI rather than the calendar year 2003.
    See Memorandum to Neal Halper from Nancy Decker entitled ``Cost of 
Production and Constructed Value Calculation Adjustments for the 
Preliminary Determination--Exportadora de Alimentos, S.A.'' dated July 
28, 2004 (Expalsa Cost Memo).
Promarisco
    1. We adjusted Promarisco's reported costs for affiliated shrimp 
purchases to reflect the higher of market or transfer price in 
accordance with section 773(f)(2) of the Act. See Memorandum to Neal 
Halper from Taija A. Slaughter entitled ``Cost of Production and 
Constructed Value Calculation Adjustments for the Preliminary 
Determination--Promarisco S.A.'' dated July 28, 2004.
2. Test of Third Country Sales Prices
    On a product-specific basis, we compared the adjusted weighted-
average COP to the third country sales of the foreign like product, as 
required under section 773(b) of the Act, in order to determine whether 
the sale prices were below the COP. The prices were exclusive of any 
applicable billing adjustments, movement charges, discounts, and direct 
and indirect selling expenses. In determining whether to disregard 
third country market sales made at prices less 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 permitted the recovery 
of all costs within a reasonable period of time.
3. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of the respondent's sales of a given product during the POI are 
at prices less than the COP, we did not disregard any below-cost sales 
of that product, because we determined that in such instances the 
below-cost sales were not made in substantial quantities. Where 20 
percent or more of the respondent's sales of a given product during the 
POI were at prices less than the COP, we determined that the below-cost 
sales represented substantial quantities within an extended period of 
time, in accordance with section 773(b)(1)(A) of the Act. In such 
cases, we also determined whether such sales were made at prices which 
would not permit recovery of all costs within a reasonable period of 
time, in accordance with section 773(b)(1)(B) of the Act.
    We found that, for certain specific products, more than 20 percent 
of the respondents' respective third country sales during the POI were 
at prices less than the COP and, in addition, the below-cost sales did 
not provide for the recovery of costs within a reasonable period of 
time. We therefore excluded these sales and used the remaining sales, 
if any, as the basis for determining NV, in accordance with section 
773(b)(1) of the Act as the basis for determining NV. Where there were 
no sales of any comparable product at prices above the COP, we used CV 
as the basis for determining NV.

[[Page 47099]]

D. Calculation of Normal Value Based on Comparison Market Prices

Exporklore
    We calculated NV based on FOB or C&F prices to unaffiliated 
customers. We made deductions, where appropriate, from the starting 
price for rebates. We also made deductions for movement expenses, 
including foreign inland freight, foreign inland insurance, brokerage 
and handling, and international freight, under section 773(a)(6)(B)(ii) 
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 imputed credit and inspection fees. 
Furthermore, we made adjustments for differences in costs attributable 
to differences in the physical characteristics of the merchandise in 
accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. 
We also deducted third country packing costs and added U.S. packing 
costs in accordance with section 773(a)(6)(A) and (B) of the Act.
    Some of Exporklore's Italian sales were sold on a glazed-weight 
basis (i.e., the reported sales quantity included the weight of frozen 
water). Where appropriate, we converted the data in the Italian market 
to a net-weight equivalent basis.
Expalsa
    We calculated NV based on FOB or C&F prices to unaffiliated 
customers. We made deductions, where appropriate, from the starting 
price for rebates and billing adjustments. We also made deductions for 
movement expenses, including inland freight and international freight, 
under section 773(a)(6)(B)(ii) 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 imputed credit, 
testing and inspection expenses, bank fees, and other direct selling 
expenses. Furthermore, we made adjustments for differences in costs 
attributable to differences in the physical characteristics of the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 
19 CFR 351.411. We also deducted third country packing costs and added 
U.S. packing costs in accordance with section 773(a)(6)(A) and (B) of 
the Act.
    Expalsa reported freight expenses associated with the shipment and 
return of cancelled sales to Italy as a direct selling expense. Expalsa 
is unable to determine with certainty the ultimate destination of this 
merchandise (see June 2, 2004, submission at page SB-14). When expenses 
cannot be associated with a sale to the first unaffiliated customer, 
the Department will normally treat them as indirect selling expenses to 
the selling market and entity of the originating sale (i.e., the market 
for which the expenses were incurred, and the corporate entity which 
incurred the expenses). See Notice of Final Determination of Sales at 
Not Less Than Fair Value: Certain Color Television Receivers From 
Malaysia, 69 FR 20592 (April 16, 2004), Issues and Decision Memorandum 
at Comment 2. Accordingly, we have reclassified the freight expenses at 
issue as indirect selling expenses in the Italian market, the market of 
the originating sales. In addition, we recalculated these expenses by 
allocating them over all Italian sales made during the POI because 
Expalsa had incorrectly allocated them over calendar year 2003 sales. 
See Expalsa Memo.
Promarisco
    We calculated NV based on CIF, C&F or FOB prices to unaffiliated 
customers. We made deductions from the starting price for movement 
expenses, including inland freight, inland insurance, marine insurance, 
and international freight under section 773(a)(6)(B)(ii) 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 
imputed credit expenses, testing expenses, inspection fees, and 
commissions. Furthermore, we made adjustments for differences in costs 
attributable to differences in the physical characteristics of the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 
19 CFR 351.411. We also deducted third country packing costs and added 
U.S. packing costs in accordance with section 773(a)(6)(A) and (B) of 
the Act.
    Promarisco reported a bonus paid to its unaffiliated agent in the 
Spanish market several months after the filing of the petition in the 
instant investigation. Although Promarisco claims that the bonus 
applied to sales made during the POI, the information on the record at 
this time does not adequately demonstrate that the basis for this claim 
was established prior to the filing of the petition. As discussed above 
for similar claimed adjustments, we are disallowing the bonus as an 
adjustment to price for the preliminary determination but will examine 
it further at verification.

E. Calculation of Normal Value Based on Constructed Value

    In accordance with section 773(a)(4) of the Act, for Expalsa, we 
based NV on CV in those instances where there were no comparable sales 
in the Italian third country market made in the ordinary course of 
trade.
    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of the respondent's cost of materials and fabrication 
for the foreign like product, plus amounts for SG&A, profit, and U.S. 
packing costs. We calculated the cost of materials and fabrication, G&A 
and interest based on the methodology described in the ``Calculation of 
COP'' section of this notice. For further details, see Expalsa Cost 
Memo.
    For comparisons to EP, we made circumstances-of-sale adjustments by 
deducting third country direct selling expenses and adding U.S. direct 
selling expenses.

Currency Conversion

    As all three respondents reported their prices, expenses, and costs 
in U.S. dollars, no currency conversions were required in our margin 
calculations.

Verification

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

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
CBP to suspend liquidation of all imports of subject merchandise 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 CBP to require a cash deposit or the posting of a 
bond equal to the weighted-average amount by which the NV exceeds EP, 
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/Manufacturer                        margin
                                                              percentage
------------------------------------------------------------------------
Exporklore S.A.............................................         9.35
Exportadora De Alimentos S.A...............................         6.08
Promarisco S.A.............................................         6.77
All Others.................................................         7.30
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final

[[Page 47100]]

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 for this investigation must be submitted to the 
Department no later than seven days after the date of the final 
verification report issued in this proceeding. Rebuttal briefs must be 
filed five days from the deadline date for case briefs. A list of 
authorities used, a table of contents, and an executive summary of 
issues should accompany any briefs submitted to the Department. 
Executive summaries should be limited to five pages total, including 
footnotes. Section 774 of the Act provides that the Department 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 in this investigation, the hearing will tentatively be 
held two days after the rebuttal brief deadline date at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 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: (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 135 days after 
the publication of this notice in the Federal Register.
    This determination is published pursuant to sections 733(f) and 
777(I) of the Act.

    Dated: July 28, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-17815 Filed 8-3-04; 8:45 am]
BILLING CODE 3510-DS-P