[Federal Register Volume 75, Number 218 (Friday, November 12, 2010)]
[Notices]
[Pages 69415-69423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28571]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-831]


Fresh Garlic From the People's Republic of China: Preliminary 
Results of New Shipper Reviews and Preliminary Rescission, in Part

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

SUMMARY: The Department of Commerce (Department) is conducting new 
shipper reviews (NSRs) of Jinxiang Chengda Imp & Exp Co., Ltd. 
(Chengda), Jinxiang Yuanxin Imp & Exp Co., Ltd. (Yuanxin), and 
Zhengzhou Huachao Industrial Co., Ltd. (Huachao) under the antidumping 
duty order on fresh garlic from the People's Republic of China (PRC) 
covering the period of review (POR) of

[[Page 69416]]

November 1, 2008 through October 31, 2009. As discussed below, we 
preliminarily determine that Yuanxin's and Huachao's sales are bona 
fide and that these sales have been made in the United States at prices 
below normal value (NV). Yuanxin and Huachao have also demonstrated 
their eligibility for a separate rate in these NSRs. In addition, we 
find Chengda's sales to be not bona fide. As such, we are preliminarily 
rescinding the NSR for Chengda. The dumping margins are set forth in 
the ``Preliminary Results of the Review'' section below. If these 
preliminary results are adopted in our final results of review, we will 
instruct U.S. Customs and Border Protection (CBP) to assess antidumping 
duties on entries of subject merchandise during the POR for which 
importer-specific assessment rates are above de minimis. We invite 
interested parties to comment on these preliminary results. See 
``Comments'' section below.

DATES: Effective Date: November 12, 2010.

FOR FURTHER INFORMATION CONTACT: Scott Lindsay, Toni Page, and Lingjun 
Wang, AD/CVD Operations, Office 6, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
0780, (202) 482-1398, and (202) 482-2316, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On November 27, 2009, the Department received timely requests for a 
NSR from Chengda and Yuanxin, and on December 1, 2009, the Department 
received a timely request from Huachao in accordance with 19 CFR 
351.214(c). On December 29, 2009, the Department determined that the 
requests submitted by Chengda, Yuanxin, and Huachao met the threshold 
requirements for initiation of a NSR and initiated the NSRs. See Fresh 
Garlic From the People's Republic of China: Initiation of New Shipper 
Reviews, 75 FR 343 (January 5, 2010).
    Since the initiation of these reviews, the Department has issued 
original and supplemental questionnaires to Chengda, Yuanxin, and 
Huachao, to which each has responded in a timely manner. As explained 
in the memorandum from the Deputy Assistant Secretary (DAS) for Import 
Administration, the Department exercised its discretion to toll 
deadlines for the duration of the closure of the Federal Government 
from February 5 through February 12, 2010. Thus, all deadlines in this 
segment of the proceeding were extended by seven days. See Memorandum 
to the Record from Ronald Lorentzen, DAS for Import Administration, Re: 
Tolling of Administrative Deadlines as a Result of the Government 
Closure During the Recent Snowstorm (February 12, 2010).
    On March 10, 2010, the Department placed copies of CBP documents on 
the record of this review pertaining to Chengda's, Yuanxin's, and 
Huachao's shipments of garlic from the PRC exported to the United 
States during the POR. See Memorandum to the File, from Scott Lindsay, 
Senior Case Analyst, Re: New Shipper Review of Fresh Garlic from the 
People's Republic of China: Customs Entry Packages (March 10, 2010).
    On June 8, 2010, the Department extended the deadline for the 
preliminary results of these NSRs to no later than November 1, 2010. 
See Fresh Garlic from the People's Republic of China: Extension of Time 
Limit for the Preliminary Results of the New Shipper Reviews, 75 FR 
32362 (June 8, 2010). On July 20, 2010, the Department sent interested 
parties a letter requesting comments on the surrogate country selection 
and information pertaining to valuing factors of production. See Letter 
to Interested Parties, from the Department, Re: New Shipper Review of 
Fresh Garlic from the People's Republic of China (``PRC'') (July 20, 
2010). On September 10, 2010, Huachao submitted comments on the 
surrogate country selection and information pertaining to valuing 
factors of production. See Letter to the Department, from Huachao, Re: 
Fresh Garlic from the People's Republic of China--Surrogate Value 
Information for 16th New Shipper Review (September 10, 2010) (Huachao's 
Surrogate Value Submission). The Fresh Garlic Producers Association 
(FGPA) and its individual members (Christopher Ranch L.L.C., the Garlic 
Company, Valley Garlic, and Vessey and Company, Inc.) (collectively, 
Petitioners) also submitted comments regarding surrogate values for 
this NSR. See Letter to the Department, from Petitioners, Re: 16th New 
Shipper Review of the Antidumping Duty Order on Fresh Garlic from the 
People's Republic of China (September 10, 2010) (Petitioners' Surrogate 
Value Data). No other party has submitted surrogate values or surrogate 
country comments on the record of this proceeding.
    On October 6, 2010, the Department placed a copy of the CBP data 
run on the record of this review, which contains all entries of subject 
merchandise exported from the PRC to the United States during the POR. 
See Memorandum to the File, from The Team, AD/CVD Operations, Office 6, 
Re: New Shipper Review of Fresh Garlic from the People's Republic of 
China: Customs Entries from November 1, 2008 through October 31, 2009 
(October 6, 2010). On October 18, 2010, Petitioners placed on the 
record comments regarding the bona fides of sales made by Yuanxin, 
Chengda, and Huachao. See Petitioners' October 18, 2010 Bona Fides 
Comments.

Period of Review

    Pursuant to 19 CFR 351.214(g), the POR covered by these NSRs is 
November 1, 2008 through October 31, 2009.

Scope of the Order

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

Non-Market Economy Country Status

    In every case conducted by the Department involving the PRC, the 
PRC has been treated as a non-market economy (NME) country. In 
accordance with section 771(18)(C)(i) of the Tariff Act of 1930, as 
amended (the Act), any determination that a foreign country is

[[Page 69417]]

an NME country shall remain in effect until revoked by the 
administering authority. See, e.g., Brake Rotors From the People's 
Republic of China: Final Results and Partial Rescission of the 2004/
2005 Administrative Review and Notice of Rescission of 2004/2005 New 
Shipper Review, 71 FR 66304 (November 14, 2006). None of the parties to 
this proceeding have contested such treatment. Accordingly, we 
calculated NV in accordance with section 773(c) of the Act, which 
applies to NME countries.

Bona Fides Analysis

    Consistent with Department practice, we examined the bona fides of 
each new shipper sale at issue. In evaluating whether or not a sale in 
a NSR is commercially reasonable, and therefore bona fide, the 
Department considers, inter alia, such factors as: (1) The timing of 
the sale; (2) the price and quantity; (3) the expenses arising from the 
transaction; (4) whether the goods were resold at a profit; and (5) 
whether the transaction was made on an arm's-length basis. See Tianjin 
Tiancheng Pharmaceutical Co., Ltd. v. United States, 366 F. Supp. 2d 
1246, 1250 (Ct. Int'l Trade 2005) (TTPC). Accordingly, the Department 
considers a number of factors in its bona fides analysis, ``all of 
which may speak to the commercial realities surrounding an alleged sale 
of subject merchandise.'' See Hebei New Donghua Amino Acid Co., Ltd. v. 
United States, 374 F. Supp. 2d 1333, 1342 (Ct. Int'l Trade 2005) (New 
Donghua) (citing Fresh Garlic From the People's Republic of China: 
Final Results of Antidumping Administrative Review and Rescission of 
New Shipper Review, 67 FR 11283 (March 13, 2002), and accompanying 
Issues and Decision Memorandum: New Shipper Review of Clipper 
Manufacturing Ltd.). In TTPC, the court also affirmed the Department's 
decision that ``any factor which indicates that the sale under 
consideration is not likely to be typical of those which the producer 
will make in the future is relevant,'' (TTPC, 366 F. Supp. 2d at 1250), 
and found that ``the weight given to each factor investigated will 
depend on the circumstances surrounding the sale.'' TTPC, 366 F. Supp. 
2d at 1263. Finally, in New Donghua, the Court of International Trade 
affirmed the Department's practice of evaluating the circumstances 
surrounding a NSR sale, so that a respondent does not unfairly benefit 
from an a typical sale and obtain a lower dumping margin than the 
producer's usual commercial practice would dictate.
    Chengda: We preliminarily find that the sales made by Chengda 
during the POR were not bona fide commercial transactions. Chengda's 
POR sales' price and quantities were both atypical and aberrational. 
Since much of the factual information used in our analysis of the bona 
fides of the transactions involves business proprietary information, a 
full discussion of the bases for our decision to rescind is set forth 
in the Memorandum to: Barbara E. Tillman, Office Director, AD/CVD 
Operations, Office 6, Import Administration, from Thomas Gilgunn, 
Program Manager, AD/CVD Operations, Office 6, Import Administration: 
Bona Fide Nature of the Sale in the Antidumping Duty New Shipper Review 
of Fresh Garlic from the People's Republic of China (PRC): Jinxiang 
Chengda Import & Export Co., Ltd. (November 1, 2010) (Chengda Bona 
Fides Memorandum). Because we have found Chengda's sales to not be bona 
fide, we cannot rely on them to calculate a dumping margin and are 
therefore preliminarily rescinding Chengda's NSR. See TTPC and New 
Donghua.
    Yuanxin: Based on the totality of circumstances, we preliminarily 
find that the sale made by Yuanxin during the POR was a bona fide 
commercial transaction. The facts that led us to this preliminary 
conclusion include the following: (1) Neither Yuanxin nor its customers 
incurred any extraordinary expenses arising from this transaction; (2) 
the sale was made between unaffiliated parties at arm's length; and (3) 
the timing of the sale does not indicate that the sale was not bona 
fide. Since much of the factual information used in our analysis of the 
bona fides of the transaction involves business proprietary 
information, a full discussion of the bases for our decision to rescind 
is set forth in the Memorandum to: Barbara E. Tillman, Office Director, 
AD/CVD Operations, Office 6, Import Administration, from Thomas 
Gilgunn, Program Manager, AD/CVD Operations, Office 6, Import 
Administration: Bona Fide Nature of the Sale in the Antidumping Duty 
New Shipper Review of Fresh Garlic from the People's Republic of China 
(PRC): Jinxiang Yuanxin Imp & Exp Co., Ltd. (November 1, 2010) (Yuanxin 
Bona Fides Memorandum). We will continue to examine the bona fides of 
Yuanxin's sale after the preliminary results.
    Huachao: Based on the totality of circumstances, we preliminarily 
find that the sale made by Huachao during the POR was a bona fide 
commercial transaction. The facts that led us to this preliminary 
conclusion include the following: (1) Neither Huachao nor its customer 
incurred any extraordinary expenses arising from the transaction; (2) 
the sale was made between unaffiliated parties at arm's length; and (3) 
the timing of the sale does not indicate that this sale was not bona 
fide. However, we note that certain evidence on the record suggests 
that the bona fides of Huachao's sale is not definitive. Since much of 
our analysis regarding the evidence of the bona fides of the 
transaction involves business proprietary information, a full 
discussion of the bases for our preliminary decision is set forth in 
the Memorandum to: Barbara E. Tillman, Office Director, AD/CVD 
Operations, Office 6, Import Administration, from Thomas Gilgunn, 
Program Manager, AD/CVD Operations, Office 6, Import Administration: 
Bona Fide Nature of the Sale in the Antidumping Duty New Shipper Review 
of Fresh Garlic from the People's Republic of China (PRC): Zhengzhou 
Huachao Industrial Co., Ltd. (November 1, 2010) (Huachao's Bona Fides 
Memorandum). Accordingly, we will continue to examine the bona fides of 
Huachao's sale after the preliminary results.

Separate Rates

    As noted above, designation of a country as an NME remains in 
effect until it is revoked by the Department. See section 771(18)(C)(i) 
of the Act. Accordingly, there is a rebuttable presumption that all 
companies within the PRC are subject to government control and, thus, 
should be assessed a single antidumping duty rate.
    It is the Department's standard policy to assign all exporters of 
the merchandise subject to review in NME countries a single rate unless 
an exporter can affirmatively demonstrate an absence of government 
control, both in law (de jure) and in fact (de facto), with respect to 
its exports. To establish whether a company is sufficiently independent 
to be eligible for a separate, company-specific rate, the Department 
analyzes each exporting entity in an NME country under the test 
established in the Final Determination of Sales at Less than Fair 
Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 
6, 1991) (Sparklers), as amplified by the Notice of Final Determination 
of Sales at Less Than Fair Value: Silicon Carbide from the People's 
Republic of China, 59 FR 22585 (May 2, 1994) (Silicon Carbide).
    The Department's separate-rate status test to determine whether the 
exporter is independent from government control does not consider, in 
general, macroeconomic/border-type controls (e.g., export licenses, 
quotas, and minimum export prices), particularly if these controls are 
imposed to prevent dumping. The test focuses, rather, on

[[Page 69418]]

controls over the investment, pricing, and output decision-making 
process at the individual firm level.\1\
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    \1\ See Notice of Final Determination of Sales at Less than Fair 
Value; Certain Cut-to-Length Carbon Steel Plate from Ukraine, 62 FR 
61754, 61758 (November 19, 1997), and Tapered Roller Bearings and 
Parts Thereof, Finished and Unfinished, From the People's Republic 
of China, Final Results of Antidumping Administrative Review, 62 FR 
61276, 61279 (November 17, 1997)
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A. Absence of De Jure Control

    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) An absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) other formal 
measures by the government decentralizing control of companies.
    Throughout the course of this proceeding, Yuanxin and Huachao have 
each placed documentation on the record to demonstrate absence of de 
jure control including business licenses, financial statements, and 
narrative information regarding government laws and regulations on 
corporate ownership and the companies' operations and selection of 
management.\2\ In addition, Yuanxin and Huachao have each placed on the 
record copies of certain laws and regulations, including the ``Company 
Law of the People's Republic of China,'' the ``Foreign Trade Law of the 
PRC,'' and ``Regulations of the PRC on the Administration of Company 
Registration.'' The Department has analyzed these PRC laws and found 
that they establish an absence of de jure control. See, e.g., Honey 
from the People's Republic of China: Preliminary Results and Partial 
Rescission of Antidumping Duty Administrative Review, 72 FR 102, 105 
(January 3, 2007), unchanged in Honey from the People's Republic of 
China: Final Results and Final Rescission, In Part, of Antidumping Duty 
Administrative Review, 72 FR 37715, 37716 (July 11, 2007). We have no 
information in this proceeding that would cause us to reconsider this 
determination. Thus, we determine that the evidence on the record 
supports a preliminary finding of an absence of de jure government 
control of Yuanxin and Huachao based on: (1) An absence of restrictive 
stipulations associated with the exporter's business license; (2) the 
existence of legislative enactments legal authority on the record 
decentralizing control over the respondent; and (3) other formal 
measures by the government decentralizing control of companies.
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    \2\ Since we have preliminarily determined that Chengda's NSR 
sales are not bona fide, there is no reason to conduct an analysis 
of whether Chengda has demonstrated an absence of government control 
over its operations.
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B. Absence of De Facto Control

    As stated in previous cases, there is evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See, 
e.g., Silicon Carbide, 59 FR at 22586-87. Therefore, the Department has 
determined that an analysis of de facto control is critical in 
determining whether Yuanxin and Huachao are, in fact, subject to a 
degree of government control which would preclude the Department from 
assigning separate rates.
    The absence of de facto governmental control over exports is based 
on whether a company: (1) Sets its own export prices independent of the 
government and other exporters; (2) retains the proceeds from its 
export sales and makes independent decisions regarding the disposition 
of profits or financing of losses; (3) has the authority to negotiate 
and sign contracts and other agreements; and (4) has autonomy from the 
government regarding the selection of management. See, e.g., Silicon 
Carbide, 59 FR at 22587, and Sparklers, 56 FR at 20589; see also Notice 
of Final Determination of Sales at Less Than Fair Value: Furfuryl 
Alcohol From the People's Republic of China, 60 FR 22544, 22545 (May 8, 
1995).
    The Department conducted a separate-rates analysis for each new 
shipper. In their questionnaire responses, Yuanxin and Huachao each 
submitted evidence indicating an absence of de facto governmental 
control over its export activities. Specifically, this evidence 
indicates that: (1) Each new shipper sets its own export prices 
independent of the government and without the approval of a government 
authority; (2) each new shipper retains the proceeds from its sales and 
makes independent decisions regarding the disposition of profits or 
financing of losses; (3) each new shipper has an executive director and 
general manager with the authority to negotiate and bind the company in 
an agreement; (4) the general manager is selected by the owners of the 
company, and the general manager appoints the manager of each 
department; and (5) there is no restriction on each new shipper's use 
of export revenues. The questionnaire responses of the new shippers do 
not suggest that pricing is coordinated among exporters. During our 
analysis of the information on the record, we found no information 
indicating the existence of de facto government control. Therefore, the 
Department preliminarily finds that Yuanxin and Huachao have 
established, prima facie, that each qualifies for separate rate status 
under the criteria established by Silicon Carbide and Sparklers. 
Accordingly, the Department has preliminarily granted Yuanxin and 
Huachao separate rate status.

Preliminary Determination of New Shipper Status

    We preliminarily determine that Yuanxin and Huachao have met the 
requirements to qualify as new shippers during the POR. Both companies 
have preliminarily established that they have: (1) Not previously 
shipped subject merchandise to the United States, (2) made sales to the 
United States we have preliminarily found to be bona fide; (3) 
demonstrated eligibility for a separate rate, and (4) provided adequate 
questionnaire responses. Therefore, for purposes of these preliminary 
results, we are treating Yuanxin's and Huachao's respective new shipper 
sales of subject merchandise to the United States as appropriate 
transactions for review.

Surrogate Country

    When the Department investigates imports from an NME country, 
section 773(c)(1) of the Act directs it to base NV on the NME 
producer's factors of production (FOPs), valued in a surrogate market 
economy country or countries considered to be appropriate by the 
Department. In accordance with section 773(c)(4) of the Act, in valuing 
the FOPs, the Department shall utilize, to the extent possible, the 
prices or costs of FOPs in one or more market economy countries that 
are: (1) At a level of economic development comparable to that of the 
NME country; and (2) significant producers of comparable merchandise. 
Moreover, it is the Department's practice to select an appropriate 
surrogate country based on the availability and reliability of data 
from the countries. See Department Policy Bulletin No. 04.1: Non-Market 
Economy Surrogate Country Selection Process (March 1, 2004).
    As discussed in the ``Non-Market Economy Country Status'' section 
above, the Department considers the PRC to be an NME country. Pursuant 
to section 773(c)(4) of the Act, the Department determined that India, 
Indonesia, Peru, the Philippines, Thailand, and Ukraine are countries 
comparable to the PRC in terms of economic development. See Memorandum 
to Thomas Gilgunn, Program Manager, from Carole Showers,

[[Page 69419]]

Director, Office of Policy, Subject: Request for a List of Surrogate 
Countries for a New Shipper Review of the Antidumping Duty Order on 
Fresh Garlic from the People's Republic of China (July 20, 2010). Also 
in accordance with section 773(c)(4) of the Act, the Department has 
found that India is a significant producer of comparable merchandise. 
Moreover, pursuant to section 773(c)(4) of the Act, the Department 
finds India to be a reliable source for surrogate values because India 
is at a similar level of economic development, is a significant 
producer of comparable merchandise, and has publicly available and 
reliable data. Furthermore, the Department notes that India has been 
the primary surrogate country in past segments of this proceeding, and 
the only surrogate value data submitted on the record are from Indian 
sources. Given the above facts, the Department has selected India as 
the primary surrogate country for this review. The sources of the 
surrogate factor values are discussed under the ``Normal Value'' 
section below and in the Memorandum from Scott Lindsay, Re: Preliminary 
Results of the 2008-2009 New Shipper Reviews of Fresh Garlic from the 
People's Republic of China: Surrogate Values (November 1, 2010) 
(Surrogate Values Memorandum).

U.S. Price

    In accordance with section 772(a) of the Act, we calculated an 
export price for sales to the Unites States for Yuanxin and Huachao 
because each company made its sale to an unaffiliated party before the 
date of importation and the use of constructed export prices was not 
otherwise warranted. We calculated each company's export price based on 
its price to unaffiliated purchasers in the United States. In 
accordance with section 772(c) of the Act, where appropriate, we 
deducted from the starting price to unaffiliated purchasers the 
expenses for foreign inland freight, international freight, brokerage 
and handling, marine insurance, warehousing, and U.S. customs duties. 
For the expenses that were either provided by an NME vendor or paid for 
using an NME currency, we used surrogate values as appropriate. See the 
``Factor Valuations'' section below for details regarding the surrogate 
values for movement expenses. See also Memorandum To: The File, From: 
Lingjun Wang, Case Analyst, Office 6, Import Administration: 
Antidumping Duty New Shipper Review of Fresh Garlic from the People's 
Republic of China: Calculation Memorandum for the Preliminary Results 
of Jinxian Yuanxin Imp. & Exp. Co., Ltd.; and Memorandum To: The File, 
From: Summer Avery, Case Analyst, Office 6, Import Administration: 
Antidumping Duty New Shipper Review of Fresh Garlic from the People's 
Republic of China: Calculation Memorandum for the Preliminary Results 
of Zhengzhou Huachao Industrial Co., Ltd.

Normal Value

A. Methodology

    Section 773(c)(1)(B) of the Act provides that the Department shall 
determine NV using an FOP methodology if the merchandise is exported 
from an NME country and the information does not permit the calculation 
of NV using home-market prices, third-country prices, or constructed 
value under section 773(a) of the Act. The Department calculates NV 
using each of the FOPs that a respondent consumes in the production of 
a unit of the subject merchandise because the presence of government 
controls on various aspects of NMEs renders price comparisons and the 
calculation of production costs invalid under the Department's normal 
methodologies. However, there are circumstances in which the Department 
will modify its standard FOP methodology, choosing to apply a surrogate 
value to an intermediate input instead of the individual FOPs used to 
produce that intermediate input. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: Polyvinyl Alcohol from 
the People's Republic of China, 68 FR 47538 (August 11, 2003), and 
accompanying Issues and Decision Memorandum at Comment 1 (PVA) (citing 
to Final Results of First New Shipper Review and First Antidumping Duty 
Administrative Review: Certain Preserved Mushrooms from the People's 
Republic of China, 66 FR 31204 (June 11, 2001)).
    For the final results of several recent prior administrative 
reviews (ARs) and NSRs,\3\ the Department found that garlic industry 
producers in the PRC do not generally track actual labor hours incurred 
for growing, tending, and harvesting activities and, thus, do not 
maintain appropriate records which would allow most, if not all, 
respondents to quantify, report, and substantiate this information. In 
the preliminary results of the 11th AR and NSRs, the Department also 
stated that ``should a respondent be able to provide sufficient factual 
evidence that it maintains the necessary information in its internal 
books and records that would allow us to establish the completeness and 
accuracy of the reported FOPs, we will revisit this issue and consider 
whether to use its reported FOPs in the calculation of NV.'' \4\ In the 
course of this review, none of the garlic producers reported FOPs 
related to growing whole garlic bulbs. As such, for the reasons 
outlined in the Memorandum from Scott Lindsay, Re: 2008-2009 New 
Shipper Review of Fresh Garlic from the People's Republic of China: 
Intermediate Input Methodology (November 1, 2010) (Intermediate Input 
Methodology Memorandum), the Department is applying an ``intermediate-
product valuation methodology'' to the NSR respondents for which we are 
calculating an antidumping duty margin in these preliminary results. 
Using this methodology, the Department calculated NV by starting with a 
surrogate value for the garlic bulb (i.e., the ``intermediate 
product''), adjusting for yield losses during the processing stages, 
and adding the respondents' processing costs, which were calculated 
using their reported usage rates for processing fresh garlic. See 
Intermediate Input Methodology Memorandum.
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    \3\ See, e.g., Fresh Garlic from the People's Republic of China: 
Final Results and Partial Rescission of the Eleventh Administrative 
Review and New Shipper Reviews, 72 FR 34438 (June 22, 2007) (11th AR 
and NSRs); Fresh Garlic from the People's Republic of China: Final 
Results and Partial Rescission of the 12th Administrative Review, 73 
FR 34251 (June 17, 2008) (12th AR); Fresh Garlic from the People's 
Republic of China: Final Results and Rescission, In Part, of Twelfth 
New Shipper Reviews, 73 FR 56550 (September 29, 2008); and Fresh 
Garlic From the People's Republic of China: Final Results and 
Partial Rescission of the 13th Antidumping Duty Administrative and 
New Shipper Reviews, 74 FR 29174 (June 19, 2009).
    \4\ Fresh Garlic from the People's Republic of China: Partial 
Rescission and Preliminary Results of the Eleventh Administrative 
Review and New Shipper Reviews, 71 FR 71510, 71520 (December 11, 
2006).
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B. Factor Valuations

    In accordance with section 773(c) of the Act, we calculated NV 
based on the FOP data reported by Yuanxin and Huachao for the POR. We 
relied on the factor-specific data submitted by Yuanxin and Huachao for 
the production inputs in their questionnaire responses, where 
applicable, for purposes of selecting surrogate values (SVs). To 
calculate NV, we multiplied the reported per-unit factor consumption 
rates by publicly-available Indian SVs.
    In selecting the SVs, consistent with our past practice, we 
considered the quality, specificity, and contemporaneity of the data. 
See, e.g., Folding Metal Tables and Chairs from the People's Republic 
of China; Final Results of Antidumping Duty Administrative Review, 71 
FR 71509

[[Page 69420]]

(December 11, 2006), and accompanying Issues and Decision Memorandum at 
Comment 9. As appropriate, we adjusted input prices by including 
freight costs to make them delivered prices. Specifically, we added to 
Indian import SVs a surrogate freight cost using the shorter of the 
reported distance from the domestic supplier to the factory or the 
distance from the nearest seaport to the factory, where appropriate. 
This adjustment is in accordance with the decision of the U.S. Court of 
Appeals for the Federal Circuit (CAFC). See Sigma Corp. v. United 
States, 117 F. 3d 1401, 1408 (Fed. Cir. 1997). Where necessary, we 
adjusted the SVs for inflation/deflation using the Wholesale Price 
Index (WPI) as published in the International Monetary Fund's 
International Financial Statistics, available at http://ifs.apdi.net/imf. For more information regarding the Department's valuation for the 
various FOPs, see Surrogate Values Memorandum.
Garlic Bulb Valuation for Huachao
    The Department's practice when selecting the ``best available 
information'' for valuing FOPs, in accordance with section 773(c)(1) of 
the Act,\5\ is to select, to the extent practicable, surrogate values 
which are publicly available, product-specific, representative of a 
broad market average, tax-exclusive, and contemporaneous with the POR. 
See, e.g., Final Determination of Sales at Less Than Fair Value: 
Certain Artist Canvas from the People's Republic of China, 71 FR 16116 
(March 30, 2006), and accompanying Issues and Decision Memorandum at 
Comment 2.
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    \5\ Section 773(c)(1)(B) of the Act states that * * * ``the 
valuation of the factors of production shall be based on the best 
available information regarding the values of such factors in a 
market economy country or countries considered to be appropriate by 
the administering authority.''
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    As discussed above, the Department is applying an intermediate 
input methodology for Huachao. Therefore, we sought to identify the 
best available SV for the garlic bulb input for production. See 
Petitioners' Surrogate Value Data and Huachao's Surrogate Value 
Submission; see also Surrogate Values Memorandum. For the preliminary 
results of this review, we find that data from the Azadpur APMC's 
``Market Information Bulletin'' are the most appropriate information 
available to value Huachao's garlic bulb input.
    In its FOP database, Huachao reported garlic bulb input size for 
the garlic produced and sold to the United States during the POR. 
Consistent with our findings in the 12th AR, the Department continues 
to find that garlic bulb sizes that range from 55 mm and above are 
Grade Super-A, and garlic bulb sizes that range between 40 mm and 55 mm 
are Grade A and Grade Super-A. See Surrogate Values Memorandum. Because 
the Grade Super-A prices reported by the APMC which are on the record 
of this review are from 2007-2008, we inflated them to make them 
contemporaneous to our POR. See Surrogate Values Memorandum.
Garlic Bulb Valuation for Yuanxin
    Yuanxin has submitted information on the record indicating that it 
sold single clove garlic. When examining single clove garlic in a prior 
segment of this proceeding, the Department determined that single clove 
garlic possessed physical characteristics which significantly 
distinguish it from the Grade A and Grade Super-A garlic on which we 
normally rely to value garlic bulb inputs. See Fresh Garlic from the 
People's Republic of China: Final Results and Final Rescission, In 
Part, of New Shipper Reviews, 74 FR 50952 (October 2, 2009). As such, 
neither Grade A nor Grade Super-A garlic is an appropriate basis from 
which to derive a SV for the bulb input used by Yuanxin. Petitioners 
have placed on the record an FOB sales offer, which is contemporaneous 
with the POR, from Sundaram Overseas Operations (SOO), an Indian 
trading company, as the basis for deriving NV. SOO's sales offer is an 
Indian export price for a whole garlic product that is physically 
similar to the product sold by Yuanxin. For these preliminary results, 
the Department is using the SOO sales offer of single clove garlic as 
the NV for Yuanxin. See Surrogate Values Memorandum. However, the 
Department requests comments and factual information regarding the 
appropriate SV to use in calculating the single clove garlic input for 
Yuanxin for purposes of the final results of review. Since much of our 
analysis regarding Yuanxin's garlic and the garlic bulb input thereof 
has been treated as business proprietary information, a full discussion 
of the basis for calculating an appropriate surrogate value for 
Yuanxin's garlic bulb input is set forth in the Surrogate Values 
Memorandum.
Other Factors of Production
    In past cases, it has been the Department's practice to value 
various FOPs using import statistics of the primary selected surrogate 
country from World Trade Atlas (WTA), as published by Global Trade 
Information Services (GTIS).\6\ However, in October 2009, the 
Department learned that Indian import data obtained from the WTA, as 
published by GTIS, began identifying the original reporting currency 
for India as the U.S. Dollar. The Department then contacted GTIS about 
the change in the original reporting currency for India from the Indian 
Rupee to the U.S. Dollar. Officials at GTIS explained that while GTIS 
obtains data on imports into India directly from the Ministry of 
Commerce, Government of India, as denominated and published in Indian 
Rupees, the WTA software is limited with regard to the number of 
significant digits it can manage. Therefore, GTIS made a decision to 
change the original reporting currency for Indian data from the Indian 
Rupee to the U.S. Dollar in order to reduce the loss of significant 
digits when obtaining data through the WTA software. GTIS explained 
that it converts the Indian Rupee to the U.S. Dollar using the monthly 
Federal Reserve exchange rate applicable to the relevant month of the 
data being downloaded and converted.\7\
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    \6\ See Certain Preserved Mushrooms from the People's Republic 
of China: Preliminary Results of Antidumping Duty New Shipper 
Review, 74 FR 50946, 50950 (October 2, 2009) (unchanged in Certain 
Preserved Mushrooms From the People's Republic of China: Final 
Results of Antidumping Duty New Shipper Review, 74 FR 65520 
(December 10, 2009)).
    \7\ See Certain Oil Country Tubular Goods from the People's 
Republic of China: Final Determination of Sales at Less Than Fair 
Value, Affirmative Final Determination of Critical Circumstances, 
and Final Determination of Targeted Dumping, 75 FR 20335 (April 19, 
2010), and accompanying Issues and Decision Memorandum at Comment 4.
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    However, the data reported in the Global Trade Atlas (GTA) software 
published by GTIS reports import statistics, such as from India, in the 
original reporting currency and, thus, these data correspond to the 
original currency value reported by each country. Additionally, the 
data reported in the GTA software are reported to the nearest digit 
and, thus, there is not a loss of data by rounding, as there is with 
the data reported by the WTA software. Consequently, the Department 
will now obtain import statistics from GTA for valuing various FOPs 
because the GTA import statistics are in the original reporting 
currency of the country from which the data are obtained, and have the 
same level of accuracy as the original data released.
    Furthermore, with regard to the GTA Indian import-based SVs, in 
accordance with the Omnibus Trade and Competitiveness Act of 1988 
legislative history, the Department continues to apply its long-
standing practice of disregarding SVs if it has a reason to

[[Page 69421]]

believe or suspect the source data may be subsidized.\8\ In this 
regard, the Department has previously found that it is appropriate to 
disregard such prices from India, Indonesia, South Korea and Thailand, 
because we have determined that these countries maintain broadly 
available, non-industry specific export subsidies.\9\ Based on the 
existence of these subsidy programs that were generally available to 
all exporters and producers in Indonesia, South Korea, and Thailand at 
the time of the POR, the Department finds that it is reasonable to 
infer that all exporters from these countries may have benefitted from 
these subsidies. We also disregarded prices from NME countries \10\ and 
those imports that were labeled as originating from an ``unspecified'' 
country from the average Indian import values, because we could not be 
certain that they were not from either an NME or a country with general 
export subsidies.
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    \8\ Omnibus Trade and Competitiveness Act of 1988, Conf. Report 
to Accompany H.R. 3, H.R. Rep. No. 576, 100th Cong., 2nd Sess. 
(1988) at 590.
    \9\ See, e.g., Expedited Sunset Review of the Countervailing 
Duty Order on Carbazole Violet Pigment 23 from India, 75 FR 13257 
(March 19, 2010), and accompanying Issues and Decision Memorandum at 
pages 4-5; Expedited Sunset Review of the Countervailing Duty Order 
on Certain Cut-to-Length Carbon Quality Steel Plate from Indonesia, 
70 FR 45692 (August 8, 2005), and accompanying Issues and Decision 
Memorandum at page 4; Corrosion-Resistant Carbon Steel Flat Products 
from the Republic of Korea: Final Results of Countervailing Duty 
Administrative Review, 74 FR 2512 (January 15, 2009), and 
accompanying Issues and Decision Memorandum at pages 17, 19-20; and 
Certain Hot-Rolled Carbon Steel Flat Products from Thailand: Final 
Results of Countervailing Duty Determination, 66 FR 50410 (October 
3, 2001), and accompanying Issues and Decision Memorandum at page 
23.
    \10\ The NME countries are Armenia, Azerbaijan, Belarus, 
Georgia, Kyrgyz Republic, Moldova, North Korea, the People's 
Republic of China, Tajikistan, Turkmenistan, Uzbekistan, and 
Vietnam.
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    We valued the packing material inputs using weighted-average unit 
import values derived from the Monthly Statistics of the Foreign Trade 
of India (MSFTI), as published by the Directorate General of Commercial 
Intelligence and Statistics of the Ministry of Commerce and Industry, 
Government of India, and compiled by the GTA.
    The Department valued surrogate truck freight cost by using a per-
unit average rate calculated from April 2009 data on the following Web 
site: http://www.infobanc.com/logistics/logtruck.htm. See Polyethylene 
Retail Carrier Bags from the People's Republic of China: Preliminary 
Results of Antidumping Duty Administrative Review, 73 FR 52282, 52286 
(September 9, 2008) (and unchanged in Polyethylene Retail Carrier Bags 
from the People's Republic of China: Final Results of Antidumping Duty 
Administrative Review, 74 FR 6857 (February 11, 2009)); and Surrogate 
Values Memorandum at Attachment 9.
    To value electricity, the Department used March 2008 electricity 
price rates from Electricity Tariff & Duty and Average Rates of 
Electricity Supply in India, published by the Central Electricity 
Authority of the Government of India. Because these data are not 
contemporaneous with the POR, we inflated March 2008 prices to make 
them contemporaneous to our POR. See Surrogate Values Memorandum at 
Attachment 4.
    We valued brokerage and handling expenses using a price list of 
export procedures necessary to export a standardized cargo of goods in 
India. The price list is compiled based on a survey case study of the 
procedural requirements for trading a standard shipment of goods by 
ocean transport in India that is published in Doing Business 2010: 
India, published by the World Bank. See Surrogate Value Memorandum at 
Attachment 4.
    For direct, indirect, and packing labor, pursuant to a recent 
decision by the Court CAFC, we are no longer using the regression-based 
methodology to value labor. See Dorbest Ltd. v. United States, 604 F.3d 
1363, 1372 (Fed. Cir. 2010). The Department is continuing to evaluate 
options for determining labor values in light of the recent CAFC 
decision. For these preliminary results, we have calculated an hourly 
wage rate to use in valuing respondents' reported labor input by 
averaging industry-specific earnings and/or wages in countries that are 
economically comparable to the PRC and that are significant producers 
of comparable merchandise.
    For the preliminary results of this AR, the Department is valuing 
labor using a simple average industry-specific wage rate using earnings 
or wage data reported under Chapter 5B by the International Labor 
Organization (ILO). To achieve an industry-specific labor value, we 
relied on industry-specific labor data from the countries we determined 
to be both economically comparable to the PRC, and significant 
producers of comparable merchandise. A full description of the 
industry-specific wage rate calculation methodology is provided in the 
Surrogate Values Memorandum. The Department calculated a simple average 
industry-specific wage rate of $1.20 for these preliminary results. 
Specifically, for this review, the Department has calculated the wage 
rate using a simple average of the data provided to the ILO under Sub-
Classification 15 of the ISIC-Revision 3 standard by countries 
determined to be both economically comparable to the PRC and 
significant producers of comparable merchandise. The Department finds 
the two-digit description under ISIC-Revision 3 (``Manufacture of Food 
Products and Beverages'') to be the best available wage rate SV on the 
record because it is specific and derived from industries that produce 
merchandise comparable to the subject merchandise. Consequently, we 
averaged the ILO industry-specific wage rate data or earnings data 
available from the following countries found to be economically 
comparable to the PRC and to be significant producers of comparable 
merchandise: Ecuador, Egypt, Indonesia, Jordan, Peru, Philippines, 
Thailand, and Ukraine. Further information on the calculation of the 
wage rate can be found in the Surrogate Values Memorandum.
Financial Ratios
    Petitioners and Huachao submitted factual information regarding 
surrogate financial ratios. See Petitioners' Surrogate Value Data and 
Huachao's Surrogate Value Submission. After analyzing these comments 
and factual information, the Department has determined that it is 
appropriate to calculate a single set of surrogate financial ratios 
applicable to the production and sales of all subject merchandise (both 
whole and peeled garlic) for these preliminary results using both Tata 
Tea's and Limtex's financial data. Since the 2002-2003 administrative 
review, the Department has considered tea processing to be sufficiently 
similar to garlic processing in that neither product is highly 
processed or preserved prior to sale. See Fresh Garlic from the 
People's Republic of China: Final Results of Antidumping Duty 
Administrative Review, 70 FR 34082 (June 13, 2005) (9th AR Final 
Results), and accompanying Issues and Decision Memorandum at 34-35. 
Moreover, we note that it is the Department's preference to use 
financial data from more than one surrogate producer to reflect the 
broader experience of the surrogate industry.\11\

[[Page 69422]]

We find that calculating an average of these two Indian tea processors' 
data provides financial ratios that best reflect the broader experience 
of the garlic industry and that are consistent with our practice during 
previous reviews.\12\ The Department finds that both Tata Tea's and 
Limtex's non-integrated production process is similar to that of the 
garlic industry. We find that the resulting financial ratios from the 
average of Tata Tea's and Limtex's financial data provide the best 
surrogate for the garlic industry in the PRC as a whole, based on the 
information on the record of this review. See Surrogate Values 
Memorandum.
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    \11\ See, e.g., Brake Rotors From the People's Republic of 
China: Final Results and Partial Rescission of the Sixth Antidumping 
Duty Administrative Review and Final Results of the Ninth New 
Shipper Review, 69 FR 42039 (July 13, 2004), and accompanying Issues 
and Decision Memorandum at Comment 2; see also Final Results of 
First New Shipper Review and First Antidumping Duty Administrative 
Review: Certain Preserved Mushrooms from the People's Republic of 
China, 66 FR 31204 (June 11, 2001), and accompanying Issues and 
Decisions Memorandum at Comment 3, and Certain Oil Country Tubular 
Goods from the People's Republic of China: Final Determination of 
Sales at Less Than Fair Value, Affirmative Final Determination of 
Critical Circumstances and Final Determination of Targeted Dumping, 
75 FR 20335 (April 19, 2010), and accompanying Issues and Decision 
Memorandum at Comment 13.
    \12\ See Fresh Garlic From the People's Republic of China: Final 
Results of New Shipper Review, 75 FR 61130 (October 4, 2010), and 
accompanying Issues and Decision Memorandum at Issue 4.
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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 date of the U.S. sale, as certified by the Federal Reserve Bank. 
See http://www.ia.ita.doc.gov/exchange/index.html.

Preliminary Results of the Reviews

    As a result of our review, we preliminarily find that the following 
margins exist for Yuanxin and Huachao during the period November 1, 
2008 through October 31, 2009:

                        Fresh Garlic From the PRC
------------------------------------------------------------------------
                                                             Weighted-
                                                              average
                  Exporter/manufacturer                       margin
                                                           (dollars per
                                                             kilogram)
------------------------------------------------------------------------
Manufactured and Exported by Jinxiang Yuanxin Imp & Exp            $0.75
 Co.....................................................
Manufactured and Exported by Zhengzhou Huachao                      0.03
 Industrial Co., Ltd....................................
------------------------------------------------------------------------

Assessment Rates

    Upon issuance of the final results, the Department will determine, 
and CBP shall assess, antidumping duties on all appropriate entries. 
Consistent with the Fresh Garlic From the People's Republic of China: 
Final Results and Partial Rescission of the 13th Antidumping Duty 
Administrative Review and New Shipper Reviews, 74 FR 29174 (June 19, 
2009) (Final Results Garlic Thirteenth Review), we will direct CBP to 
assess importer-specific assessment rates based on the resulting per-
unit (i.e., per kilogram) amount on each entry of the subject 
merchandise during the POR. See Final Results Garlic Thirteenth Review. 
Specifically, we will divide the total dumping margins for each 
importer by the total quantity of subject merchandise sold to that 
importer during the POR to calculate a per-unit assessment amount. If 
the Department issues a final rescission determination for Chengda, it 
will be assessed at the PRC-entity rate of $4.71 per kilogram. We will 
direct CBP to assess importer-specific assessment rates based on the 
resulting per-unit (i.e., per kilogram) amount on each entry of the 
subject merchandise during the POR if any importer-specific assessment 
rate calculated in the final results of this review is above de 
minimis. The Department will issue appropriate assessment instructions 
directly to CBP 15 days after publication of the final results of this 
review.

Cash Deposit Requirements

    Consistent with the final results of the Final Results Garlic 
Thirteenth Review, we will establish and collect a per-kilogram cash-
deposit amount which will be equivalent to the company-specific dumping 
margin published in the final results of this review. Specifically, the 
following cash deposit requirements will be effective upon publication 
of the final results of this review for all shipments of the subject 
merchandise entered, or withdrawn from warehouse, for consumption on or 
after the publication date of the final results, as provided by section 
751(a)(1) of the Act: (1) For subject merchandise produced and exported 
by Yuanxin or Huachao, the cash deposit rate will be the per-unit rate 
determined in the final results of this new shipper review and; (2) for 
subject merchandise exported by Yuanxin, but not produced by Yuanxin, 
the cash deposit rate will be the per-unit PRC-wide rate (i.e., $4.71 
per kilogram); (3) for subject merchandise exported by Huachao, but not 
produced by Huachao, the cash deposit rate will be the per-unit PRC-
wide rate; (4) For subject merchandise produced and exported by 
Chengda, the cash deposit rate will continue to be the PRC-wide rate; 
(5) for subject merchandise exported Chengda but not manufactured by 
Chengda, the cash deposit rate will continue to be the PRC-wide rate; 
and (6) for subject merchandise manufactured by Chengda, but exported 
by any other party, the cash deposit rate will be the rate applicable 
to the exporter. These requirements, when imposed, shall remain in 
effect until further notice.

Disclosure

    We will disclose the calculations used in our analysis to parties 
to this proceeding not later than ten days after the date of public 
announcement, or if there is no public announcement within five days of 
the date of publication of this notice. See 19 CFR 351.224(b).

Comments

    Interested parties are invited to comment on these preliminary 
results and may submit case briefs and/or written comments within 30 
days of the date of publication of this notice, unless otherwise 
notified by the Department. See 19 CFR 351.309(c)(ii). Rebuttal briefs, 
limited to issues raised in the case briefs, will be due five days 
later, pursuant to 19 CFR 351.309(d). Parties who submit case or 
rebuttal briefs in these proceedings are requested to submit with each 
argument: (1) A statement of the issue; and (2) a brief summary of the 
argument. Parties are requested to provide a summary of the arguments 
not to exceed five pages and a table of statutes, regulations, and 
cases cited. Additionally, parties are requested to provide their case 
and rebuttal briefs in electronic format (e.g., preferably in Microsoft 
Word).
    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 within 30 days of the date of 
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 issues to be discussed. See 19 CFR 351.310(c). Issues 
raised in the hearing will be limited to those raised in case and 
rebuttal briefs. The Department will issue the final results of this 
review, including the results of its analysis of issues raised in any 
such written briefs not later than 90 days after these preliminary 
results are issued, unless the final results are extended. See 19 CFR 
351.214(i).

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties

[[Page 69423]]

occurred and the subsequent assessment of double antidumping duties.
    We are issuing and publishing these preliminary results in 
accordance with sections 751(a)(2)(B) and 777(i) of the Act, and 19 CFR 
351.214(h) and 351.221(b)(4).

    Dated: November 1, 2010.
Paul Piquado,
Acting Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-28571 Filed 11-10-10; 8:45 am]
BILLING CODE 3510-DS-P