[Federal Register Volume 69, Number 149 (Wednesday, August 4, 2004)]
[Notices]
[Pages 47100-47110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17816]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-549-822]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value, Postponement of Final Determination, and Negative Critical 
Circumstances Determination: Certain Frozen and Canned Warmwater Shrimp 
From Thailand

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 Thailand are being, 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). In addition, we 
preliminarily determine that there is no reasonable basis to believe or 
suspect that critical circumstances exist with respect to the subject 
merchandise exported from Thailand.
    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: Irina Itkin or Elizabeth Eastwood, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-0656 or (202) 482-3874, 
respectively.

Preliminary Determination

    We preliminarily determine that certain frozen and canned warmwater 
shrimp from Thailand are being, 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. In addition, we 
preliminarily determine that there is no reasonable basis to believe or 
suspect that critical circumstances exist with respect to the subject 
merchandise exported from Thailand. The critical circumstances analysis 
for the preliminary determination is discussed below under the section 
``Critical Circumstances.''

Background

    Since the initiation of this investigation (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)), the following events have occurred.
    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 Thailand 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 four largest producers/
exporters of certain frozen and canned warmwater shrimp from Thailand 
as the mandatory respondents in this proceeding. See Memorandum to 
Louis Apple, Director Office 2, from the Team entitled: ``Antidumping 
Duty Investigation of Certain Frozen and Canned Warmwater Shrimp from 
Thailand--Selection of Respondents,'' dated February 20, 2004. We 
subsequently issued the antidumping questionnaire to Chanthaburi 
Seafoods Co., Ltd. (CSF), Thailand Fishery Cold Storage Public Co., 
Ltd. (TFC), Thai I-Mei Frozen Foods Co., Ltd. (Thai I-Mei), and the 
Union Frozen Products Co., Ltd. (UFP) on February 20, 2004. From 
February 11, 2004, through March 16, 2004, Andaman Seafood Co., Ltd. 
(AMS), CSF, and TFC provided information to the Department related to 
the affiliation of these companies and a U.S. importer, Rubicon 
Resources.
    During the period February through June 2004, various interested 
parties, including the petitioners,\1\ 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, dusted 
shrimp, battered shrimp, salad shrimp sold in counts of 250 pieces or 
higher, the species Macrobachium rosenbergii, organic shrimp, and 
peeled

[[Page 47101]]

shrimp used in breading.\2\ 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\ 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.
    \2\ 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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    On March 22, 2004, the Department determined that it was 
appropriate to treat AMS, CSF, and TFC as a single respondent (i.e., 
the Rubicon Group) for purposes of the investigation, in accordance 
with 19 CFR 351.401(f). See letter from Louis Apple, Director Office 2 
to the Rubicon Group, dated March 22, 2004.
    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 July 2004.
    On May 4 and 10, 2004, respectively, the petitioners alleged that 
UFP and the Rubicon Group made third country sales below the cost of 
production (COP) and, therefore, requested that the Department initiate 
a sales-below-cost investigation of these respondents.
    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 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 entitled: ``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 May 28, 2004, and June 2, 2004, respectively, the Department 
initiated a sales-below-cost investigation of UFP and the Rubicon Group 
and required the parties to respond to section D of the Department's 
questionnaire. See Memorandum to Louis Apple, Director Office 2, from 
the Team entitled: ``Petitioners'' Allegation of Sales Below the Cost 
of Production for Union Frozen Products Co., Ltd.'' 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 for Andaman Seafood Co., Ltd., Chanthaburi Seafoods Co., 
Ltd., and Thailand Fishery Cold Storage Public Co., Ltd.'' dated June 
2, 2004. We received original section D and supplemental section D 
responses in June and July 2004.
    On April 23, 2004, and June 15, 2004, the petitioners objected to 
the Rubicon Group's and UFP's use of Canada as their third country 
comparison markets, and they requested that the Department obtain sales 
data for these companies' second largest third country market, Japan. 
In July 2004, the Department determined that it is appropriate to use 
the third country market initially reported by the Rubicon Group and 
UFP (i.e., Canada). See Memorandum to Louis Apple, Director Office 2, 
from the Team entitled: ``Antidumping Duty Investigation of Certain 
Frozen and Canned Warmwater Shrimp from Thailand--Third-Country Market 
Selection for Two Respondents' dated July 28, 2004. (the Rubicon Group 
and UFP Third Country Comparison Market Selection Memorandum), for 
further discussion.
    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 Administration 
entitled: ``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 entitled: 
``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

[[Page 47102]]

(Scope Decision Memorandum III). See also ``Scope Comments'' section 
below.

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 10, 2004, the 
Rubicon Group and UFP 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.\4\ In accordance with 19 CFR 351.210(b), because (1) our 
preliminary determination is affirmative, (2) the Rubicon Group and UFP 
account 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.
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    \4\ We note that Thai I-Mei also requested a postponement of the 
final determination until not later than 60 days after the date of 
the publication of the preliminary determination in the Federal 
Register.
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Period of Investigation

    The period of investigation (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,\5\ deveined or not deveined, cooked or 
raw, or otherwise processed in frozen or canned form.
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    \5\ ``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 \6\ 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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    \6\ 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 classifiable 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 customs 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 at 69 FR 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 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

[[Page 47103]]

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 Thailand to the United States were made at LTFV, we 
compared the export price (EP) or constructed export price (CEP) to the 
normal value (NV), as described in the ``Export Price/Constructed 
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 and CEPs to NVs.
    For this preliminary determination, we have determined that the 
Rubicon Group and UFP did not have a viable home market during the POI. 
Therefore, as the basis for NV, we used third country sales to Canada 
for these companies when making comparisons in accordance with section 
773(a)(1)(C) of the Act. See the Rubicon Group and UFP Third Country 
Comparison Market Selection Memorandum.
    In addition, we have determined that Thai I-Mei did not have a 
viable home or third country market during the POI. Therefore, as the 
basis for NV, we used constructed value (CV) when making comparisons 
for Thai I-Mei in accordance with section 773(a)(4) of the Act.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the Rubicon Group and UFP in Canada 
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 country, where 
appropriate. Where there were no sales of identical merchandise in the 
third country 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. For Thai I-Mei, and where 
there were no sales of identical or similar merchandise, 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.\7\
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    \7\ 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 69 FR 42654 (July 16, 2004) and 
69 FR 42672 (July 16, 2004), respectively).
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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 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.

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

[[Page 47104]]

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.

Broken Shrimp/Mixed Seafood Products

    Two of the respondents in this case, the Rubicon Group and UFP, 
reported sales of broken shrimp in both their Canadian and U.S. 
markets. In addition, UFP reported sales of mixed seafood products in 
both markets. Because: (1) The matching criteria for this investigation 
do not currently account for broken shrimp or mixed seafood products; 
(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' 
databases, we have excluded these sales from our analysis 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/Constructed Export Price

A. The Rubicon Group

    In accordance with section 772(a) of the Act, we calculated EP for 
those sales where the merchandise was sold to the first unaffiliated 
purchaser in the United States prior to importation by the exporter or 
producer outside the United States. We based EP on the packed price to 
unaffiliated purchasers in the United States. Where appropriate, we 
made adjustments for billing adjustments and discounts. We made 
deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these included, where appropriate, foreign 
inland freight, foreign warehousing expenses, foreign inland insurance, 
foreign brokerage and handling expenses, ocean freight, marine 
insurance, U.S. brokerage and handling, gate charges, U.S. customs 
duties (including harbor maintenance fees and merchandise processing 
fees), U.S. inland insurance, U.S. inland freight expenses (i.e., 
freight from port to warehouse and freight from warehouse to the 
customer), container charges, customs inspection and storage fees, and 
U.S. warehousing expenses.
    In accordance with section 772(b) of the Act, we calculated CEP for 
those sales where the merchandise was first sold (or agreed to be sold) 
in the United States before or after the date of importation by or for 
the account of the producer or exporter, or by a seller affiliated with 
the producer or exporter, to a purchaser not affiliated with the 
producer or exporter. We used the earlier of shipment date from 
Thailand to the customer or the U.S. affiliate's invoice date as the 
date of sale for CEP sales, in accordance with our practice. See, e.g., 
Notice of Final Determination of Sales at Less Than Fair Value: 
Structural Steel Beams from Germany, 67 FR 35497 (May 20, 2002) (SS 
Beams from Germany) and accompanying Issues and Decision Memorandum at 
Comment 2.
    We based CEP on the packed delivered prices to unaffiliated 
purchasers in the United States. Where appropriate, we made adjustments 
for billing adjustments and discounts. We

[[Page 47105]]

made deductions for movement expenses, in accordance with section 
772(c)(2)(A) of the Act; these included, where appropriate, foreign 
inland freight, foreign warehousing expenses, foreign inland insurance, 
foreign brokerage and handling expenses, ocean freight, marine 
insurance, U.S. brokerage and handling, gate charges, U.S. customs 
duties (including harbor maintenance fees and merchandise processing 
fees), U.S. inland insurance, U.S. inland freight expenses (i.e., 
freight from port to warehouse and freight from warehouse to the 
customer), container charges, customs inspection and storage fees, and 
U.S. warehousing expenses. In accordance with section 772(d)(1) of the 
Act and 19 CFR 351.402(b), we deducted those selling expenses 
associated with economic activities occurring in the United States, 
including direct selling expenses (i.e., bank charges, advertising, 
imputed credit expenses, and repacking), and indirect selling expenses 
(including inventory carrying costs and other indirect selling 
expenses). Although the Rubicon Group reported imputed interest revenue 
related to accruals, we have not increased the reported gross unit 
price by this amount, in accordance with the Department's practice.
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by the Rubicon Group and its U.S. affiliate on 
their sales of the subject merchandise in the United States and the 
profit associated with those sales.

B. Thai I-Mei

    In accordance with section 772(b) of the Act, we calculated CEP for 
those sales where the merchandise was first sold (or agreed to be sold) 
in the United States before or after the date of importation by or for 
the account of the producer or exporter, or by a seller affiliated with 
the producer or exporter, to a purchaser not affiliated with the 
producer or exporter. We used the earlier of shipment date from 
Thailand to the customer or the U.S. affiliate's invoice date as the 
date of sale for CEP sales, in accordance with our practice. See e.g., 
SS Beams from Germany and accompanying Issues and Decision Memorandum 
at Comment 2.
    We based CEP on the packed delivered prices to unaffiliated 
purchasers in the United States. Where appropriate, we made adjustments 
for billing adjustments. We made deductions for movement expenses, in 
accordance with section 772(c)(2)(A) of the Act; these included, where 
appropriate, foreign inland freight, foreign warehousing expenses, 
foreign inland insurance, foreign brokerage and handling expenses, 
ocean freight, marine insurance, U.S. brokerage and handling, U.S. 
customs duties (including harbor maintenance fees and merchandise 
processing fees), U.S. inland insurance, U.S. inland freight expenses 
(i.e., freight from port to warehouse and freight from warehouse to the 
customer), and U.S. warehousing expenses. In accordance with section 
772(d)(1) of the Act and 19 CFR 351.402(b), we deducted those selling 
expenses associated with economic activities occurring in the United 
States, including direct selling expenses (i.e., imputed credit 
expenses), and indirect selling expenses (including inventory carrying 
costs and other indirect selling expenses).
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP profit rate using 
the expenses incurred by Thai I-Mei and its U.S. affiliate on their 
sales of the subject merchandise in the United States and the profit 
associated with those sales.

C. UFP

    In its U.S. and third country sales listings, UFP reported sales of 
frozen shrimp purchased from other countries and further processed in 
Thailand before exportation. Where we were able to identify these 
sales, we excluded them from our analysis because we find that the 
country of origin for these products is not Thailand.
    In accordance with section 772(a) of the Act, we calculated EP for 
those sales where the merchandise was sold to the first unaffiliated 
purchaser in the United States prior to importation by the exporter or 
producer outside the United States. We based EP on the packed price to 
unaffiliated purchasers in the United States. Where appropriate, we 
made adjustments for billing adjustments. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act; 
these included, where appropriate, foreign warehousing, foreign inland 
freight, foreign brokerage and handling expenses, and international 
freight (offset by destination delivery charge revenue).

Duty Drawback

    The Rubicon Group, Thai I-Mei, and UFP claimed a duty drawback 
adjustment based on their participation in the Thai government's Duty 
Compensation on Exported Goods Manufactured in the Kingdom. Such 
adjustments are permitted under section 772(c)(1)(B) of the Act.
    The Department will grant a respondent's claim for a duty drawback 
adjustment where the respondent has demonstrated that there is (1) a 
sufficient link between the import duty and the rebate, and (2) a 
sufficient amount of raw materials imported and used in the production 
of the final exported product. See Rajinder Pipe Ltd. v. United States, 
70 F. Supp. 2d 1350, 1358 (CIT 1999) (Rajinder Pipes). In Rajinder 
Pipes, the Court of International Trade upheld the Department's 
decision to deny a respondent's claim for duty drawback adjustments 
because there was not substantial evidence on the record to establish 
that part one of the Department's test had been met. See also Viraj 
Group, Ltd. v. United States, Slip Op. 01-104 (CIT August 15, 2001).
    In this investigation, the Rubicon Group, Thai I-Mei, and UFP have 
failed to demonstrate that there is a link between the import duty paid 
and the rebate received, and that imported raw materials are used in 
the production of the final exported product. Therefore, because they 
have failed to meet the Department's requirements, we are denying the 
respondents' requests for a duty drawback adjustment.
    The Rubicon Group has argued that, if the Department chooses not to 
grant it a duty drawback adjustment, the Department should make a 
circumstance of sale adjustment for the amounts it received as duty 
drawback. In support of this assertion, the Rubicon Group cites Certain 
Hot-Rolled Carbon Steel Flat Products From Thailand: Final Results and 
Partial Rescission of Antidumping Duty Administrative Review, 69 FR 
19388 (April 13, 2004) and accompanying Issues and Decision Memorandum 
at Comment 2 (Hot-Rolled Steel from Thailand). However, we find that 
Rubicon's reliance on Hot-Rolled Steel from Thailand is misplaced. That 
case merely stands for the proposition that when we make a duty 
drawback adjustment to EP, we will consider whether an increase in NV 
is warranted, as a circumstance of sale adjustment, in order to account 
for the effect of the duty drawback on home market sales. That case 
does not signify that in the absence of a duty drawback adjustment, we 
will make a circumstance of sale adjustment to NV.
    Finally, Thai I-Mei has argued that, if the Department chooses not 
to grant it a duty drawback adjustment, the Department should reduce 
its raw material costs by the amount of the duty drawback. As support 
for its proposed

[[Page 47106]]

methodology, Thai I-Mei cites Notice of Final Determination of Sales at 
Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip 
From India, 67 FR 34899 (May 12, 2002) and accompanying Issues and 
Decision Memorandum at Comment 3 (PET Film from India). However, we 
note that Thai I-Mei's reliance on that case is also misplaced because 
in PET Film from India, the respondent demonstrated that it used a 
portion of the duty drawback it received to pay import duties on raw 
materials used in the production of the subject merchandise. In this 
investigation, we find that Thai I-Mei is unable to tie the import duty 
paid to the rebate received, and thus any cost adjustment for duty 
drawback would be unwarranted.

Normal Value

A. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating 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.
    In this investigation, we determined that the Rubicon Group's and 
UFP's aggregate volume of home market sales of the foreign like product 
was insufficient to permit a proper comparison with U.S. sales of the 
subject merchandise. Therefore, we used sales to the Rubicon Group's 
and UFP's largest third country market (i.e., Canada) as the basis for 
comparison-market sales in accordance with section 773(a)(1)(C) of the 
Act and 19 CFR 351.404. Further, we determined that Thai I-Mei's 
aggregate volume of home and third country market sales of the foreign 
like product was insufficient to permit a proper comparison with U.S. 
sales of the subject merchandise. Therefore, we used CV as the basis 
for calculating NV for Thai I-Mei, in accordance with section 773(a)(4) 
of the Act.

B. Level of Trade

    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. Pursuant to 19 CFR 
351.412(c)(1), 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. See 19 CFR 351.412(c)(2). 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 LOT 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, as applicable, 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.
    We examined the chain of distribution and the selling activities 
associated with sales reported by the Rubicon Group to distributors/
wholesalers and retailers in the Canadian market. The Rubicon Group's 
sales to different customer categories did not differ from each other 
with respect to selling activities (i.e., sales forecasting/market 
research, sales promotion/trade shows/advertising, inventory 
maintenance, order processing/invoicing, freight and delivery 
arrangements, and direct sales personnel). Based on our overall 
analysis, we found that all of the Rubicon Group's sales in the 
Canadian market constituted one LOT.
    In the U.S. market, the Rubicon Group reported both EP and CEP 
sales to distributors/wholesalers, retailers, and food service industry 
customers. The Rubicon Group reported sales through two channels of 
distribution: (1) Direct sales from the Thai exporters to unaffiliated 
U.S. customers; and (2) sales made to the affiliated U.S. importer. 
According to the Rubicon Group, its Canadian and U.S. EP sales are at 
the same LOT and this LOT is more advanced than that of its CEP sales.
    We examined the selling activities performed for each channel. 
Specifically, for direct sales (i.e., EP sales), the Rubicon Group 
reported the following selling functions: sales forecasting/market 
research, sales promotion/trade shows/advertising, inventory 
maintenance, order processing/invoicing, freight and delivery 
arrangements, and direct sales personnel. For sales to the U.S. 
affiliate, the Rubicon Group reported the following selling functions: 
sales promotion/trade shows/advertising, inventory maintenance, order 
processing/invoicing, freight and delivery arrangements, and direct 
sales personnel. Regarding CEP sales, although the Rubicon Group 
reported that it performed fewer selling functions for sales to its 
U.S. affiliate, we do not find that these selling functions differ 
significantly from those performed for the direct sales.
    After analyzing the selling functions performed for each sales 
channel, we find that the distinctions in selling functions are not 
material. We acknowledge that the Rubicon Group provides sales 
forecasting/market research for sales to Canada and direct U.S. sales, 
but not for sales to its U.S. affiliate. However, we do not find that 
this difference, combined with the claimed difference in the levels of 
the common selling functions, amounts to a significant difference in 
the selling functions performed for the two channels of distribution. 
Further, we note that the Rubicon Group has reported a higher level of 
indirect selling expenses for sales made to Rubicon Resources. 
Therefore, we do not find that the U.S. LOT for CEP sales is less 
advanced than the LOT for Canadian sales.
    Based on the above analysis, we find that the Rubicon Group 
performed essentially the same selling functions when selling in both 
Canada and the United States (for both the EP and CEP sales). 
Therefore, we determine that these sales are at the same LOT and no LOT 
adjustment is warranted. Because we find that no difference in the LOT 
exists between markets, we have not granted a CEP offset to the Rubicon 
Group.
    UFP made sales to distributors through three channels of 
distribution

[[Page 47107]]

in the Canadian market and two channels of distribution in the U.S. 
market. UFP's two channels of distribution in the U.S. market are the 
same as two of the three channels of distribution in the Canadian 
market. Further, UFP sales through these two channels of distribution 
did not differ from each other with respect to selling activities 
(i.e., sales forecasting, sales promotion, order processing, sales and 
marketing support, freight and delivery, packing, and payment 
processing).
    Regarding UFP's third channel of distribution in the Canadian 
market, sales made through its affiliate Bright Sea, we note that UFP 
performs the same selling activities to sell to Bright Sea as it does 
to sell through its other sales channels. While Bright Sea also 
provides order and payment processing, we do not find these additional 
selling functions to be significant. Therefore, we find that all of 
UFP's sales channels are at the same LOT. Accordingly, all comparisons 
are at the same LOT for UFP and an adjustment pursuant to section 
773(a)(7)(A) is not warranted.
    With respect to Thai I-Mei, this exporter had no viable home or 
third country market during the POI. Therefore, we based NV on CV. When 
NV is based on CV, the NV LOT is that of the sales from which we derive 
SG&A expenses and profit. (See Notice of Preliminary Determination of 
Sales at Less Than Fair Value and Postponement of Final Determination: 
Fresh Atlantic Salmon from Chile, 63 FR 2664 (January 16, 1998)). In 
accordance with 19 CFR 351.412(d), the Department will make its LOT 
determination under paragraph (d)(2) of this section on the basis of 
sales of the foreign like product by the producer or exporter. Because 
we based the selling expenses and profit for Thai I-Mei on the 
weighted-average selling expenses incurred and profits earned by the 
other respondents in the investigation, we are able to determine the 
LOT of the sales from which we derived selling expenses and profit for 
CV.
    Thai I-Mei reported making sales through six channels of 
distribution in the United States; however, it stated that the selling 
activities it performed did not vary by channel of distribution.\8\ 
Thai I-Mei reported performing the following selling functions for 
sales to its U.S. affiliate: order input/processing, direct sales 
personnel, freight and delivery arrangements, and packing. We find that 
the Rubicon Group's and UFP's selling functions performed for third 
country sales are more significant than those performed by Thai I-Mei 
to sell to its U.S. affiliate. Therefore, we determine that the NV LOT 
for Thai I-Mei is more advanced than the LOT of Thai I-Mei's CEP sales. 
However, because the Rubicon Group and UFP only made sales at one LOT 
in their third country markets, and there is no additional information 
on the record that would allow for an LOT adjustment, no LOT adjustment 
is possible for Thai I-Mei. Because we find that the NV LOT is more 
advanced than the CEP LOT, we have preliminarily granted a CEP offset 
to Thai I-Mei.
---------------------------------------------------------------------------

    \8\ Thai I-Mei states that its U.S. affiliate, Ocean Duke, did 
not provide inventory maintenance for those sales which were shipped 
directly to the U.S. customer (i.e., two of the six sales channels).
---------------------------------------------------------------------------

C. Cost of Production Analysis

    Based on our analysis of the petitioners' allegation, we found that 
there were reasonable grounds to believe or suspect that the Rubicon 
Group's and UFP's sales of frozen and canned warmwater shrimp in the 
third country were made at prices below their COP. Accordingly, 
pursuant to section 773(b) of the Act, we initiated sales-below-cost 
investigations to determine whether the Rubicon Group's and UFP's sales 
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 for Andaman Seafood 
Co., Ltd., Chanthaburi Seafoods Co., Ltd., and Thailand Fishery Cold 
Storage Public Co., Ltd.,'' dated June 2, 2004, and Memorandum to Louis 
Apple, Director Office 2, from the Team entitled: ``Petitioners'' 
Allegation of Sales Below the Cost of Production for Union Frozen 
Products Co., Ltd.,'' 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 
the Rubicon Group, Thai I-Mei, and UFP except in the following 
instances.

A. The Rubicon Group

    1. We revised Rubicon Group's producer-specific G&A expense rates 
in order to exclude revenue offsets which did not relate to the general 
operations of the company.
    2. We revised Rubicon Group's producer-specific financial expense 
rates in order to include an interest income offset for one of the 
entities.
    3. For each of the six producers in the Rubicon Group, we deducted 
the total ``excludable'' costs from the cost of goods sold (COGS) 
denominators instead of a portion of them.
    See Memorandum from Gina Lee to Neal Halper, Director Office of 
Accounting, entitled: ``Cost of Production and Constructed Value 
Calculation Adjustments for the Preliminary Determination--the Rubicon 
Group,'' dated July 28, 2004.

B. Thai I-Mei

    1. We used the COGS shown on Thai I-Mei's fiscal year 2003 
financial statements net of packing expense and scrap offset as the 
denominator of the G&A and interest expense rate calculations.
    2. Thai I-Mei did not report direct packaging costs for certain 
control numbers. For these control numbers, we assigned the direct 
packaging costs for PE bags and film submitted by Thai I-Mei.
    3. Thai I-Mei did not provide the Department with cost data for all 
of its U.S. sales, as instructed in both the original questionnaire and 
in the Department's section D supplemental questionnaire issued on June 
16, 2004. Thai I-Mei's failure to provide this necessary information 
meets the requirements for application of adverse facts available set 
forth in Nippon Steel Corp. v. United States, 337 F. 3d 1373 (Fed. Cir. 
2003) (Nippon Steel). As stated by the Court of Appeals for the Federal 
Circuit during its discussion of section 776(a) of the Act in Nippon 
Steel, ``[t] he focus of subsection (a) is respondent's failure to 
provide information. The reason for the failure is of no moment. The 
mere failure of a respondent to furnish requested information--for any 
reason--requires Commerce to resort to other sources of information to 
complete the factual record on which it makes its determination.'' See 
Id. at 1381. In regard to the use of an adverse inference, section 
776(b) of the Act states that the Department may use an adverse 
inference if ``an interested party has failed to cooperate by not 
acting to the best of its ability to comply with a request for 
information. * * *'' In Nippon Steel, the Court set out two 
requirements for drawing an adverse inference under section 776(b) of 
the Act. First, the Department ``must make an objective showing that a 
reasonable and responsible importer would have known that the requested 
information was required to be kept and maintained under the applicable 
statutes, rules, and

[[Page 47108]]

regulations.'' See Nippon Steel, 337 F. 3d 1382-83. Next the Department 
must ``make a subjective showing that the respondent * * * has failed 
to promptly produce the requested information'' and that ``failure to 
fully respond is the result of the respondent's lack of cooperation in 
either: (a) Failing to keep and maintain all required records, or (b) 
failing to put forth its maximum efforts to investigate and obtain the 
requested information from its records.'' See Id. Because: (1) Thai I-
Mei reasonably should have known that the necessary information was 
required to be kept and maintained and it did not report this 
information; and (2) it failed to put forth its maximum effort as 
required by the Department's questionnaire, we find that Thai I-Mei's 
failure to provide complete cost information in this case clearly meets 
these standards. As facts available, we have applied the highest cost 
reported for any control number, in accordance with our practice. See 
Notice of Preliminary Determination of Sales at Less Than Fair Value 
and Postponement of Final Determination: Certain Cold-Rolled Carbon 
Steel Flat Products From Brazil, 67 FR 31200, 31202 (May 9, 2002).
    For further discussion of these adjustments, see Memorandum from Oh 
Ji to Neal Halper, Director Office of Accounting, entitled: ``Cost of 
Production and Constructed Value Calculation Adjustments for the 
Preliminary Determination--Thai I-Mei Frozen Foods Co., Ltd.,'' dated 
July 28, 2004.

C. UFP

    1. We revised UFP's G&A expense rate to include the ``Expense in 
previous accounting period,'' because we find this expense was recorded 
in the company's current year audited financial statements and 
represents a current period expense.
    See Memorandum from Ernest Gziryan to Neal Halper, Director Office 
of Accounting entitled: ``Cost of Production and Constructed Value 
Calculation Adjustments for the Preliminary Determination--The Union 
Frozen Products Co., Ltd.,'' 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, 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 do not disregard any below-cost sales 
of that product, because we determine that in such instances the below-
cost sales were not made in substantial quantities. Where 20 percent or 
more of the respondent's sales of a given product during the POI are at 
prices less than the COP, we determine that the below-cost sales 
represent substantial quantities within an extended period of time, in 
accordance with section 773(b)(1)(A) of the Act. In such cases, we also 
determine 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 Rubicon Group's and UFP's 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. Where there were no sales of any comparable 
product at prices above the COP, we used CV as the basis for 
determining NV.

D. Calculation of Normal Value Based on Comparison Market Prices

1. The Rubicon Group
    For the Rubicon Group, we calculated NV based on delivered prices 
to unaffiliated customers. We also made deductions for movement 
expenses, including inland freight (plant to warehouse and warehouse to 
port), warehousing, foreign inland insurance, gate charges, 
international freight, and foreign brokerage and handling under section 
773(a)(6)(B)(ii) of the Act.
    For third country price-to-EP comparisons, we made circumstance of 
sale adjustments for differences in credit expenses and commissions, 
pursuant to section 773(a)(6)(C) of the Act.
    For third country price-to-CEP comparisons, we made deductions for 
third country credit expenses, commissions, and repacking, pursuant to 
773(a)(6)(C) of the Act.
    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 sections 773(a)(6)(A) and (B) of 
the Act.
2. UFP
    For UFP, we calculated NV based on delivered prices to unaffiliated 
customers. We made adjustments, where appropriate, to the starting 
price for billing adjustments. We also made deductions for movement 
expenses, including foreign warehousing, foreign inland freight, 
foreign brokerage and handling expenses, and international freight 
(offset by destination delivery charge revenue), 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 credit expenses (offset by interest 
revenue), payment insurance, bank charges, discounting charges, 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 sections 773(a)(6)(A) and (B) of 
the Act.

E. Calculation of Normal Value Based on Constructed Value

    In accordance with section 773(a)(4) of the Act, for Thai I-Mei, we 
based NV on CV because there was no viable home or third country 
market.
    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of Thai I-Mei'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, 
SG&A and interest based on the methodology described in the 
``Calculation of COP'' section of this notice.
    Because Thai I-Mei does not have a viable comparison market, the 
Department cannot determine profit

[[Page 47109]]

under section 773(e)(2)(A) of the Act, which requires sales by the 
respondent in question in the ordinary course of trade in a comparison 
market. Likewise, because Thai I-Mei does not have sales of any product 
in the same general category of products as the subject merchandise, we 
are unable to apply alternative (i) of section 773(e)(2)(B) of the Act. 
Further, the Department cannot calculate profit based on alternative 
(ii) of this section because the other two respondents in this 
investigation do not have viable home markets and 19 CFR 351.405(b) 
requires a profit ratio under this alternative be based on home market 
sales. Therefore, we calculated Thai I-Mei's CV profit and selling 
expenses based on the third alternative, any other reasonable method, 
in accordance with section 773(e)(2)(B)(iii) of the Act. As a result, 
as a reasonable method, we calculated Thai I-Mei's CV profit and 
selling expenses as a weighted-average of the profit and selling 
expenses incurred by the two other respondents in this investigation. 
Specifically, we calculated the weighted-average profit and selling 
expenses incurred on third country sales by the Rubicon Group and UFP.
    Pursuant to alternative (iii), the Department has the option of 
using any other reasonable method, as long as the amount allowed for 
profit is not greater than the amount realized by exporters or 
producers ``in connection with the sale, for consumption in the foreign 
country, of merchandise that is in the same general category of 
products as the subject merchandise,'' the ``profit cap.'' We are 
unable to calculate the profit cap because the available data (i.e., 
the Rubicon Group and UFP data) are based solely on the third country 
sales, and thus cannot be used under 19 CFR 351.405(b). Therefore, as 
facts available we are applying option (iii), without quantifying a 
profit cap. See the Memorandum from Alice Gibbons to the file entitled, 
``Calculations Performed for Thai I-Mei Frozen Foods Co., Ltd. for the 
Preliminary Determination in the Investigation of Certain Frozen and 
Canned Warmwater Shrimp from Thailand'' dated July 28, 2004.
    For comparisons to CEP, we deducted from CV the weighted-average 
third country direct selling expenses. Finally, we made a CEP offset 
pursuant to section 773(a)(7)(B) of the Act and 19 CFR 351.412(f). We 
calculated the CEP offset as the lesser of the weighted-average third 
country indirect selling expenses or the indirect selling expenses 
deducted from the starting price in calculating CEP.

Currency Conversion

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

Critical Circumstances

    On May 19, 2004, the petitioners alleged that there is a reasonable 
basis to believe or suspect critical circumstances exist with respect 
to the antidumping investigations of certain frozen and canned 
warmwater shrimp from Thailand. In accordance with 19 CFR 
351.206(c)(2)(i), because the petitioners submitted critical 
circumstances allegations more than 20 days before the scheduled date 
of the preliminary determination, the Department must issue preliminary 
critical circumstances determinations not later than the date of the 
preliminary determination.
    Section 733(e)(1) of the Act provides that the Department will 
preliminarily determine that critical circumstances exist if there is a 
reasonable basis to believe or suspect that: (A)(i) There is a history 
of dumping and material injury by reason of dumped imports in the 
United States or elsewhere of the subject merchandise; or (ii) the 
person by whom, or for whose account, the merchandise was imported knew 
or should have known that the exporter was selling the subject 
merchandise at less than its fair value and that there was likely to be 
material injury by reason of such sales; and, (B) there have been 
massive imports of the subject merchandise over a relatively short 
period. Section 351.206(h)(1) of the Department's regulations provides 
that, in determining whether imports of the subject merchandise have 
been ``massive,'' the Department normally will examine: (i) The volume 
and value of the imports; (ii) seasonal trends; and (iii) the share of 
domestic consumption accounted for by the imports. In addition, section 
351.206(h)(2) of the Department's regulations provides that an increase 
in imports of 15 percent during the ``relatively short period'' of time 
may be considered ``massive.'' Section 351.206(i) of the Department's 
regulations defines ``relatively short period'' as normally being the 
period beginning on the date the proceeding begins (i.e., the date the 
petition is filed) and ending at least three months later. The 
regulations also provide, however, that if the Department finds that 
importers, exporters, or producers had reason to believe, at some time 
prior to the beginning of the proceeding, that a proceeding was likely, 
the Department may consider a period of not less than three months from 
that earlier time.
    In determining whether the relevant statutory criteria have been 
satisfied, we considered: (i) Exporter-specific shipment data requested 
by the Department; (ii) information presented by the respondents in 
their May 26, 2004, and June 14, 2004, submissions, and (iii) the ITC 
preliminary injury determination.
    To determine whether there is a history of injurious dumping of the 
merchandise under investigation, in accordance with section 
733(e)(1)(A)(i) of the Act, the Department normally considers evidence 
of an existing antidumping duty order on the subject merchandise in the 
United States or elsewhere to be sufficient. See Preliminary 
Determination of Critical Circumstances: Steel Concrete Reinforcing 
Bars From Ukraine and Moldova, 65 FR 70696 (November 27, 2000). With 
regard to imports of certain frozen and canned warmwater shrimp from 
Thailand, the petitioners make no specific mention of a history of 
dumping for Thailand. We are not aware of any antidumping order in the 
United States or in any country on certain frozen and canned warmwater 
shrimp from Thailand. For this reason, the Department does not find a 
history of injurious dumping of the subject merchandise from Thailand 
pursuant to section 733(e)(1)(A)(i) of the Act.
    To determine whether the person by whom, or for whose account, the 
merchandise was imported knew or should have known that the exporter 
was selling the subject merchandise at less than its fair value and 
that there was likely to be material injury by reason of such sales in 
accordance with 733(e)(1)(A)(ii) of the Act, the Department normally 
considers margins of 25 percent or more for EP sales, or 15 percent or 
more for CEP transactions, sufficient to impute knowledge of dumping. 
See Preliminary Determination of Sales at Less Than Fair Value: Certain 
Cut-to-Length Carbon Steel Plate from the People's Republic of China, 
62 FR 31972, 31978 (October 19, 2001).
    For the Rubicon Group, Thai I-Mei, and UFP, we preliminarily 
determine that there is not a sufficient basis to find that importers 
should have known that the exporter was selling the subject merchandise 
at less than its fair value and that there was likely to be material 
injury by reason of such sales pursuant to section 733(e)(1)(A)(ii) of 
the Act, because the calculated margins were not 25 percent or more for 
EP sales, or 15 percent or more for CEP sales. Because

[[Page 47110]]

the knowledge criterion has not been met, we have not addressed the 
second criterion of whether or not imports were massive in the 
comparison period when compared to the base period.
    Regarding the companies subject to the ``all others'' rate, it is 
the Department's normal practice to conduct its critical circumstances 
analysis for these companies based on the experience of investigated 
companies. See Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Steel Concrete Reinforcing Bars From Turkey, 62 FR 9737, 
9741 (March 4, 1997). However, the Department does not automatically 
extend an affirmative critical circumstances determination to companies 
covered by the ``all others'' rate. See Notice of Final Determination 
of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in 
Coils from Japan, 64 FR 30574 (June 8, 1999) (Stainless Steel from 
Japan). Instead, the Department considers the traditional critical 
circumstances criteria with respect to the companies covered by the 
``all others'' rate. Consistent with Stainless Steel from Japan, the 
Department has, in this case, applied the traditional critical 
circumstances criteria to the ``all others'' category for the 
antidumping investigation of shrimp from Thailand.
    The dumping margin for the ``all others'' category in the instant 
case, 6.39 percent, does not exceed the 15/25 percent thresholds 
necessary to impute knowledge of dumping. Therefore, we do not find 
that importers knew or should have known that there would be material 
injury from the dumped merchandise.
    In summary, we find that there is no reasonable basis to believe or 
suspect importers had knowledge of dumping and the likelihood of 
material injury with respect to certain frozen and canned warmwater 
shrimp from Thailand. Given the analysis summarized above, and 
described in more detail in the Critical Circumstances Memo, we 
preliminarily determine that critical circumstances do not exist for 
imports of certain frozen and canned warmwater shrimp produced in and 
exported from Thailand.
    We will make a final determination concerning critical 
circumstances for all producers and exporters of subject merchandise 
from Thailand when we make our final dumping determinations in this 
investigation, which will be 135 days after publication of the 
preliminary dumping determination.

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 
U.S. Customs and Border Protection (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 or 
CEP, as indicated in the chart below. These suspension-of-liquidation 
instructions will remain in effect until further notice. The weighted-
average dumping margins are as follows:

------------------------------------------------------------------------
                                               Weighted-
                                                average       Critical
            Exporter/manufacturer                margin    circumstances
                                               percentage
------------------------------------------------------------------------
The Rubicon Group...........................         5.56            No
Thai I-Mei..................................         5.91            No
UFP.........................................        10.25            No
All Others..................................         6.39            No
------------------------------------------------------------------------

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 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. 04-17816 Filed 8-3-04; 8:45 am]
BILLING CODE 3510-DS-P