[Federal Register: August 4, 2004 (Volume 69, Number 149)]
[Notices]
[Page 47081-47091]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04au04-40]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-838]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Certain Frozen and
Canned Warmwater Shrimp From Brazil
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 Brazil 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).
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: Kate Johnson or Rebecca Trainor,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-4929 or (202) 482-4007,
respectively.
Preliminary Determination
We preliminarily determine that certain frozen and canned warmwater
shrimp from Brazil are being sold, or are likely to be sold, in the
United States at less than fair value (LTFV), as provided in section
733 of the Act. The estimated margins of sales at LTFV are shown in the
``Suspension of Liquidation'' section of this notice.
Background
Since the initiation of this investigation (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 Brazil are materially injuring the United States industry. See ITC
Investigation Nos. 731-TA-1063-1068 (Publication No. 3672).
On February 20, 2004, we selected the three largest producers/
exporters of certain frozen and canned warmwater shrimp from Brazil as
the mandatory respondents in this proceeding. See Memorandum to Louis
Apple, Director Office 2, from The Team dated February 20, 2004. We
subsequently issued the antidumping questionnaire to Empresa de
Armazenagem Frigorifica Ltda. (EMPAF), Central de Industrializacao e
Distribuicao de Alimentos Ltda. (CIDA), and Norte Pesca S.A. (Norte
Pesca) on February 20, 2004.
During the period February through June 2004, various interested
parties, including the petitioners, submitted comments on the scope of
this and the concurrent investigations of certain frozen and canned
warmwater shrimp concerning whether the following products are covered
by the scope of the investigations: a certain seafood mix, dusted
shrimp, battered shrimp, salad shrimp sold in counts of 250 pieces or
higher, the species Macrobachium rosenbergii, organic shrimp, and
peeled shrimp used in breading.\1\ In addition, the Louisiana Shrimp
Alliance (LSA), an association of domestic shrimp harvesters and
processors, requested
[[Page 47082]]
that the Department expand the scope to include fresh (never frozen)
shrimp. See ``Scope Comments'' section of this notice.
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\1\ Specifically, Ocean Duke Corporation (Ocean Duke), an
importer and wholesaler of the subject merchandise, requested that
the following products be excluded from the scope of this and the
concurrent investigations on certain frozen and canned warmwater
shrimp: (1) ``dusted shrimp,'' (2) ``battered shrimp,'' and (3)
``seafood mix.'' Another importer, Rubicon Resources LLP, supported
Ocean Duke's request regarding dusted and battered shrimp. Eastern
Fish Company and Long John Silver's, Inc. also requested that dusted
and battered shrimp be excluded from the scope of the
investigations. Furthermore, the Seafood Exporters' Association of
India requested that the Department find that warmwater salad shrimp
in counts of 250 pieces or higher are not within the scope, and that
the species Machrobachium rosenbergii is a separate class or kind of
merchandise. Also, Exportadora de Alimentos S.A., one of the
respondents in the Ecuador case, requested that the Department find
that farm-raised organic shrimp is not covered by the scope of the
investigations. Finally, the American Breaded Shrimp Processors
Association, comprised of importers of peeled shrimp which they
consume in the production of breaded shrimp products, requested that
peeled shrimp imported for the sole purpose of breading be excluded
from the scope of the investigations.
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We received section A questionnaire responses from the three
respondents in March 2004, and section B and C questionnaire responses
from CIDA and EMPAF, as well as section C and D questionnaire responses
from Norte Pesca, in April 2004. We issued and received responses to
our supplemental questionnaires from April through June 2004.
On April 30, 2004, the petitioners\2\ alleged that CIDA made third
country sales below the cost of production (COP) and, therefore,
requested that the Department initiate a sales-below-cost investigation
of CIDA with respect to its third country sales in France.\3\ On June
7, 2004, the Department initiated a sales-below-cost investigation of
CIDA, and required it to respond to section D of the Department's
questionnaire. See Memorandum to Louis Apple, Director Office 2, from
The Team Re: Petitioners' Allegation of Sales Below the Cost of
Production for Central de Industrializacao e Distribuicao de Alimentos
Ltda.
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\2\ The petitioners in this investigation are the Ad Hoc Shrimp
Trade Alliance (an ad hoc coalition representative of U.S. producers
of frozen and canned warmwater shrimp and harvesters of wild-caught
warmwater shrimp), Versaggi Shrimp Corporation, and Indian Ridge
Shrimp Company.
\3\ Although the petitioners' sales below cost allegation
pertained to third country sales in both Spain and France, we only
analyzed the allegation with respect to France, which is the largest
third country market reported by CIDA.
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On June 7, 2004, the petitioners alleged that EMPAF made home
market sales below the COP and, therefore, requested that the
Department initiate a sales-below-cost investigation of EMPAF. On June
15, 2004, the Department initiated a sales-below-cost investigation of
EMPAF, and required it to respond to section D of the Department's
questionnaire. See Memorandum to Louis Apple, Director Office 2, from
The Team Re: Petitioners' Allegation of Sales Below the Cost of
Production for Empresa de Armazenagem Frigorifica Ltda. With respect to
CIDA and EMPAF, we received original section D responses in June 2004,
and supplemental section D responses in July 2004.
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 Re: Antidumping Investigations on Certain Frozen and
Canned Warmwater Shrimp from Brazil, Ecuador, India, the People's
Republic of China, Thailand and the Socialist Republic of Vietnam:
Scope Determination Regarding Fresh (Never Frozen) Shrimp, dated May
21, 2004 (Scope Decision Memorandum I).
On June 29, 2004, EMPAF requested that the Department allow it to
report its COP based on its fiscal year rather than the period of
investigation (POI) because its fiscal year ended within three months
of the POI. On July 6, 2004, EMPAF provided information that the
Department requested in a July 1, 2004, letter addressing the impact of
such a period shift on its cost reporting. On July 8, 2004, the
Department granted EMPAF's request because it appeared, based on the
information provided, that shifting the cost reporting period would not
materially impact the antidumping duty analysis.
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.\4\
Additional comments were subsequently submitted on June 15 and 25,
2004. See ``Product Comparison Comments'' section below.
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
Re: Antidumping Investigation on Certain Frozen and Canned Warmwater
Shrimp from Brazil, Ecuador, India, Thailand, the People's Republic of
China and the Socialist Republic of Vietnam: Scope Clarifications: (1)
Ocean Duke's Seafood Mix; (2) Salad Shrimp Sold in Counts of 250 Pieces
or Higher; (3) Macrobrachium rosenbergii; (4) Organic Shrimp; and (5)
Peeled Shrimp Used in Breading, dated July 2, 2004 (Scope Decision
Memorandum II); and Memorandum from Edward C. Yang, Vietnam/NME Unit
Coordinator, Import Administration to Jeffrey A. May, Deputy Assistant
Secretary for Import Administration Re: Antidumping Investigation on
Certain Frozen and Canned Warmwater Shrimp from Brazil, Ecuador, India,
Thailand, the People's Republic of China and the Socialist Republic of
Vietnam: Scope Clarification: Dusted Shrimp and Battered Shrimp, dated
July 2, 2004 (Scope Decision Memorandum III). See also ``Scope
Comments'' section below.
On July 7, 2004, the petitioners filed comments on various company-
specific issues for consideration in the preliminary determination. On
July 8, 2004, CIDA responded to these comments as they pertained to
CIDA's reported data. On July 12, 2004, EMPAF submitted revised U.S.
and home market databases to correct clerical errors in previously
submitted data.
On July 9, 2004, the Department found it appropriate to select
France as the third country comparison market for CIDA. See Memorandum
to Louis Apple, Director Office 2, from The Team Re: Selection of Third
Country Market for Central de Industrializacao e Distribuicao de
Alimentos Ltda. (CIDA)
[[Page 47083]]
(Third Country Comparison Market Selection Memorandum).
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\4\ 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 21, 2004, CIDA and EMPAF submitted revised U.S. and
comparison market databases as a result of refinements to the COP
databases, also submitted on this date, and to correct minor errors in
the sales listings previously submitted to the Department. The revised
sales databases were not submitted in time to be fully analyzed for use
in the preliminary determination, except where the revised data was
solicited by the Department in the context of the section D
supplemental questionnaire issued in July 2004.
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 16, 2004, CIDA,
EMPAF, Norte Pesca, and the Association of Brazilian Shrimp Farmers
requested that, in the event of an affirmative preliminary
determination in this investigation, the Department postpone its final
determination until not later than 135 days after the date of the
publication of the preliminary determination in the Federal Register,
and extend the provisional measures to not more than six months. In
accordance with 19 CFR 351.210(b), because (1) our preliminary
determination is affirmative, (2) the respondents account for a
significant proportion of exports of the subject merchandise, and (3)
no compelling reasons for denial exist, we are granting respondents'
request and are postponing the final determination until no later than
135 days after the publication of this notice in the Federal Register.
Suspension of liquidation will be extended accordingly.
Period of Investigation
The POI is October 1, 2002, through September 30, 2003. This period
corresponds to the four most recent fiscal quarters prior to the month
of the filing of the petition (i.e., December 2003).
Scope of Investigation
The scope of this investigation includes certain warmwater shrimp
and prawns, whether frozen or canned, wild-caught (ocean harvested) or
farm-raised (produced by aquaculture), head-on or head-off, shell-on or
peeled, tail-on or tail-off,\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
[[Page 47084]]
within the scope of these investigations. See Scope Decision Memorandum
II at 33.
Additionally, on July 2, 2004, the Department made a scope
determination with respect to dusted shrimp and battered shrimp. See
Scope Decision Memorandum III. Based on the information presented by
interested parties, the Department preliminarily finds that while
substantial evidence exists to consider battered shrimp to fall within
the meaning of the breaded shrimp exclusion identified in the scope of
these proceedings, there is insufficient evidence to consider that
shrimp which has been dusted falls within the meaning of ``breaded''
shrimp. However, there is sufficient evidence for the Department to
consider excluding this merchandise from the scope of these proceedings
provided an appropriate description can be developed. See Scope
Decision Memorandum III at 18. To that end, along with the previously
solicited comments regarding breaded and battered shrimp, the
Department solicits comments from interested parties which enumerate
and describe a clear, administrable definition of dusted shrimp. See
Scope Decision Memorandum III at 23.
Fair Value Comparisons
To determine whether sales of certain frozen and canned warmwater
shrimp from Brazil 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.
As discussed below under the ``Home Market Viability and Comparison
Market Selection'' section, we determined that CIDA did not have a
viable home market during the POI and that Norte Pesca did not have a
viable home or third country market during the POI. Therefore, as the
basis for NV, we used third country sales to France for CIDA and
constructed value (CV) for Norte Pesca when making comparisons in
accordance with sections 773(a)(1)(C) and 773 (a)(4) of the Act,
respectively.
For purposes of the preliminary dumping calculation, we have
treated EMPAF and Maricultura Netuno S.A. (Maricultura), an affiliate
of EMPAF that is involved in the production of the subject merchandise,
as one entity. These two producers are affiliated under section
771(33)(E) of the Act and 19 CFR 351.102 based on EMPAF's level of
ownership in Maricultura, and should be treated as one entity for
dumping calculation purposes under 19 CFR 351.401(f). Specifically,
EMPAF and Maricultura have production facilities for similar or
identical products that would not require substantial retooling of
either facility to restructure manufacturing priorities and there is
significant potential for the manipulation of price or production. We
also note that EMPAF and Maricultura presented themselves as one entity
for purposes of responding to the Department's antidumping
questionnaire.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced and sold by the respondents in Brazil 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 home market or third country, where appropriate.
Where there were no sales of identical merchandise in the home market
or 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. Where there were no
sales of identical or similar merchandise made in the ordinary course
of trade, we made product comparisons using CV.
In making the product comparisons, we matched foreign like products
based on the physical characteristics reported by the respondents in
the following order of importance: processed form, cooked form, head
status, count size (on an ``as sold'' basis), shell status, vein
status, tail status, other shrimp preparation, frozen form, flavoring,
container weight, presentation, species, and preservative.
Product Comparison Comments
As Sold v. HLSO Methodology
We received comments from various interested parties concerning
whether to perform product comparisons and margin calculations using
data provided on an ``as sold'' basis or on data converted to an HLSO
basis.\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 Notice of Preliminary
Determination of Sales at Less Than Fair Value, Partial Affirmative
Preliminary Determination of Critical Circumstances and Postponement
of Final Determination: Certain Frozen and Canned Warmwater Shrimp
from the People's Republic of China (69 FR 42654, July 16, 2004),
and Notice of Preliminary Determination of Sales at Less Than Fair
Value, Negative Preliminary Determination of Critical Circumstances
and Postponement of Final Determination: Certain Frozen and Canned
Warmwater Shrimp from the Socialist Republic of Vietnam (69 FR
42672, July 16, 2004).
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The petitioners argue that using a consistent HLSO equivalent
measure permits accurate product comparisons and margin calculations
whereas the ``as sold'' measures do not. In particular, the petitioners
emphasize that it is necessary to translate the actual sold volumes
(weights) and count sizes to a uniform unit of measure that takes into
account the various levels of processing of the different shrimp
products sold and the allegedly large difference in value between the
shrimp tail meat and other parts of the shrimp that may constitute ``as
sold'' weight or count size, such as the head or shell. The
petitioners'' contention is premised upon their belief that the shrimp
tail meat is the value-driving component of the shrimp. The respondents
disagree, maintaining generally that using HLSO-equivalent data
violates the antidumping duty law and significantly distorts product
comparisons and margin calculations. In particular, they argue that:
(1) Shrimp is sold based on its actual size and form, not on an HLSO
basis, and it is the Department's practice to use actual sales/cost
data in its margin analysis; (2) the rates used to convert price,
quantity and expense data to an HLSO basis are uncertain as they are
not maintained by the respondents in the ordinary course of business,
and are generally based on each individual company's experience rather
than any accepted industry-wide standard; and (3) the HLSO methodology
introduces a significant distortion through the incorrect assumption
that the value of the product varies solely in direct proportion to the
change in weight resulting from production yields, when in fact the
value of the product depends also on other factors such as quality and
form.
Our analysis of the company responses shows that: (1) No respondent
uses HLSO equivalents in the normal course of business, for either
sales or cost purposes; and (2) there is no reliable or consistent HLSO
conversion formula for all forms of processed shrimp across all
companies, as each company defined its conversion factors differently
and derived these factors
[[Page 47085]]
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.
EMPAF reported that certain of its home market sales were not made
on the basis of count size, and thus it was unable to report an ``as
sold'' count size for these sales because this information does not
exist in its records. In response to the Department's request, EMPAF
provided estimated average count sizes for certain count size ranges
but stated that these ranges are simply estimates and are not reliable.
Therefore, as facts available under section 776(a)(1) of the Act, we
assigned count size code ``10'' (the mid-point of all of the count size
ranges specified in the Department's questionnaire) to those home
market sales. See Memorandum from Kate Johnson to The File dated July
28, 2004, Re: Preliminary Determination Calculation Memorandum for
Empresa de Armazenagem Frigrofica Ltd. (EMPAF) (EMPAF Calculation
Memo). We will scrutinize this issue at verification for purposes of
the final determination and revisit it if this investigation proceeds
to an antidumping duty order and a subsequent review of the order.
Product Characteristics Hierarchy
We also received comments from various interested parties regarding
the significance of the species and container weight criteria in the
Department's product comparison hierarchy.
Various parties requested that the species criterion be ranked
higher in the Department's product characteristic hierarchy--as high as
the second most important characteristic, rather than the thirteenth--
based on their belief that species is an important factor in
determining price. One party provided industry publications indicating
price variations according to species type. Another party requested
further that the Department revise the species categories specified in
the Department's questionnaire to reflect characteristics beyond color
(i.e., whether the shrimp was farm-raised or wild-caught). In addition,
several parties requested that container weight, the eleventh
characteristic in the Department's product characteristic hierarchy, be
eliminated altogether as a product matching criterion, as they believe
it is commercially insignificant and relates to packing size or form,
rather than the physical attributes of the product.
With respect to the arguments regarding the species criterion, the
petitioners disagree, maintaining that there is no credible evidence
that species drives pricing to such a significant extent that buyers
consider it more important than product characteristics such as head
and cooked status. Rather, the petitioners contend that once shrimp is
processed (e.g., cooked, peeled, etc.), the species classification
becomes essentially irrelevant. Therefore, the petitioners assert that
while species type has some, not entirely insignificant effect on
shrimp prices, it is appropriately captured in the Department's product
matching hierarchy. Furthermore, with respect to the container weight
criterion, the petitioners assert that, while the shrimp inside the
container may be identical, in many cases the size of the container is
an integral part of the product and an important determinant of the
markets and channels through which shrimp can be sold. For this reason,
the petitioners maintain that the Department should continue to include
container weight as a product matching characteristic.
Regarding the species criterion, we have not changed the position
of this criterion in the product characteristic hierarchy for the
preliminary determination. We agree that the physical characteristic of
species type may impact the price or cost of processed shrimp. For that
reason, we included species type as one of the product matching
criteria. However, based on our review of the record evidence, we find
that other physical characteristics of the subject merchandise, such as
head status, count size, shell status, and frozen form, appear to be
more significant in setting price or determining cost. The information
provided by the parties, which suggests that price may be affected in
some cases by species type, does not provide sufficient evidence that
species type is more significant than the remaining physical
characteristics of the processed shrimp. Therefore, we find an
insufficient basis to revise the ranking of the physical
characteristics established in the Department's questionnaire for the
purpose of product matching.
With respect to differentiating between species types beyond the
color classifications identified in the questionnaire, we do not find
that such differentiations reflect meaningful differences in the
physical characteristics of the merchandise. In particular, we note
that whether shrimp is farm-raised or wild-caught is not a physical
characteristic of the shrimp, but rather a method of harvesting.
Therefore, we have not accepted the additional species classifications
proposed by the respondents. Accordingly, in those cases where the
respondents reported additional species classifications for their
processed shrimp products, we reclassified the products into one of the
questionnaire color classifications. We made an exception for the
shrimp identified as ``scampi'' (or Macrobrachium rosenbergii) and
``red ring'' (or Aristeus alcocki), where appropriate, because they
represent species distinct from those associated by color in the
Department's questionnaire. Regarding this exception, we note that
while scampi and red ring are sufficiently distinct for product
matching purposes, they are not so distinct as to constitute a separate
class or kind of merchandise (see Scope Memorandum II). We also made an
exception for the shrimp identified as ``mixed'' (e.g., ``salad''
shrimp), where appropriate, because there is insufficient information
on the record to classify these products according to the questionnaire
color classifications.
Regarding the container weight criterion, we have included it as
the eleventh criterion in the product characteristic hierarchy because
we view the size or weight of the packed unit as an integral part of
the final product sold to the customer, rather than a packing size or
form associated with the shipment of the product to the customer.
Moreover, we find it appropriate, where possible (other factors being
equal), to compare products of equivalent container weight (e.g., a
one-pound bag of frozen shrimp with another one-pound bag of frozen
shrimp, rather than a five-pound bag), as the container weight may
impact the per-unit selling price of the product.
Broken Shrimp
CIDA reported sales of broken shrimp in its U.S. market. Because:
(1) The matching criteria for this investigation do not currently
account for broken shrimp; (2) no interested parties have provided
comments on the appropriate methodology to match these sales; and (3)
the quantity of such sales does not constitute a significant percentage
of the respondent's database, we have excluded these sales from our
analysis
[[Page 47086]]
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.
Norte Pesca also reported sales of broken shrimp in its U.S.
market. However, because the quantity of sales of broken shrimp to the
U.S. market is significant and because we used CV as the basis for
calculating NV, thereby eliminating the matching issue, we have
included these sales in our analysis for purposes of the preliminary
determination.
Export Price/Constructed Export Price
For CIDA and Norte Pesca we used EP price methodology, in
accordance with section 772(a) of the Act, because the subject
merchandise was sold directly 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 FOB or CFR (Norte
Pesca only) prices to unaffiliated purchasers in the United States.
CIDA
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 inland insurance, and
foreign brokerage and handling expenses. We did not allow CIDA's claim
for a freight charge adjustment because there was no evidence on the
record to suggest that such an adjustment was realized by CIDA. See
Memorandum to Irene Darzenta Tzafolias from Rebecca Trainor dated July
28, 2004, Re: Calculation Memorandum for the Preliminary Determination
for Central de Industrializacao e Distribuicao de Alimentos Ltd.
(CIDA).
Norte Pesca
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 brokerage and handling expenses, ocean freight,
U.S. brokerage and handling, U.S. customs duties, and U.S. inland
freight expenses (i.e., freight from port to warehouse and freight from
warehouse to the customer). We also made deductions, where appropriate,
for the profit earned by Norte Pesca's unaffiliated U.S. consignee.
(See Norte Pesca's June 8, 2004, supplemental questionnaire response at
4-6.)
EMPAF
We calculated CEP in accordance with section 772(b) of the Act 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 based CEP on the packed CFR or FOB prices to unaffiliated
purchasers in the United States. We made deductions for billing
adjustments and discounts, as appropriate. We also 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, brokerage and handling expenses, ocean freight
(net of freight rebates), U.S. brokerage and handling, U.S. customs
duties, U.S. inland freight expenses (i.e., freight from port to
warehouse and freight from warehouse to the customer), and post-sale
warehousing expenses. With respect to sales made on a CFR basis, we
used the flat rate foreign inland freight expense reported in the
original section B and C response because it appears to be less
distortive than the destination- and sale term-specific expenses
reported in the June 17, 2004, supplemental response. We did not deduct
this expense from the starting price for FOB sales. See EMPAF
Calculation Memo.
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., finance charges and 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 EMPAF and its affiliate on their sales of the
subject merchandise in the United States and the profit associated with
those sales.
Normal Value
A. Home Market Viability and Comparison Market Selection
In order to determine whether there is a sufficient volume of sales
in the home market to serve as a viable basis for calculating NV (i.e.,
the aggregate volume of home market sales of the foreign like product
is equal to or greater than five percent of the aggregate volume of
U.S. sales), we compared each respondent's volume of home market sales
of the foreign like product to the volume of U.S. sales of the subject
merchandise, in accordance with section 773(a)(1)(C) of the Act.
In this investigation, we determined that EMPAF's aggregate volume
of home market sales of the foreign like product was greater than five
percent of the aggregate volume of U.S. sales of the subject
merchandise. Therefore, we used home market sales as the basis for NV
in accordance with section 773(a)(1)(B) of the Act.
Furthermore, we determined that CIDA's aggregate volume of home
market sales of the foreign like product and Norte Pesca's aggregate
volume of home market and third country sales of the foreign like
product were insufficient to permit a proper comparison with U.S. sales
of the subject merchandise. Therefore, with respect to CIDA, we used
sales to France, which is CIDA's largest third country market, as the
basis for comparison-market sales in accordance with section
773(a)(1)(C) of the Act and 19 CFR 351.404. See Third Country
Comparison Market Selection Memorandum. For Norte Pesca, we used CV as
the basis for calculating NV, 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. The NV LOT is that of
the starting-price sales in the comparison market or, when NV is based
on CV, that of the sales from which we derive selling, general and
administrative expenses (SG&A) and profit. For EP, the U.S. LOT is also
the level of the starting-price sale, which is usually from exporter to
importer. For CEP, it is the level of the constructed sale from the
exporter to the importer.
To determine whether NV sales are at a different LOT than EP or CEP
sales, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the
unaffiliated customer. If the comparison-market sales are at a
different LOT, and the difference affects price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison market sales at the LOT of
the export transaction, we make an LOT adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP
[[Page 47087]]
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 (Nov.
19, 1997).
In this investigation, we obtained information from each respondent
regarding the marketing stages involved in making the reported home
market or third country 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.
CIDA
CIDA made direct sales to distributors/traders through the same
channel of distribution in both the United States and France. As
described in its questionnaire response, CIDA performs the identical
selling functions in the United States and France. Therefore, these
sales channels are at the same LOT. Accordingly, all comparisons are at
the same LOT for CIDA and an adjustment pursuant to section
773(a)(7)(A) is not warranted.
EMPAF
EMPAF sold through one channel of distribution in the home market--
directly to unaffiliated small distributors, retailers, and consumers.
We examined the chain of distribution and the selling activities and
selling expenses associated with sales reported by EMPAF to
distributors, retailers, and consumers in the home market. EMPAF's
sales to these customers did not differ from each other with respect to
selling activities (e.g. packing, order input/processing, direct sales
personnel, freight and delivery logistics and warranty services).
Therefore, we found that all of EMPAF's sales to customers in the home
market constituted one LOT.
In the U.S. market, EMPAF made CEP sales to distributors through
two channels of distribution: (1) directly to U.S. customers with
assistance from NetUSA (EMPAF's affiliated U.S. importer) and (2) to
NetUSA, which then resold the subject merchandise to U.S. customers. We
examined EMPAF's U.S. distribution system, including selling functions,
classes of customers, and selling expenses, and determined that EMPAF
performs the same selling functions with respect to all CEP sales.
Therefore, we found only one LOT for EMPAF's CEP sales. This CEP LOT
differed from the home market LOT in that EMPAF reported a lower
intensity of selling activities associated with order input/processing,
direct sales personnel, freight and delivery logistics, and warranty
services for the CEP LOT than the home market LOT. Therefore, we found
the CEP LOT to be different from the home market LOT and to be at a
less advanced stage of distribution than the home market LOT.
Therefore, we could not match CEP sales to sales at the same LOT in
the home market, nor could we determine an LOT adjustment based on
EMPAF's sales in Brazil because there is only one LOT in the home
market, and it is not possible to determine if there is a pattern of
consistent price differences between the sales on which NV is based and
home market sales at the LOT of the export transaction. Furthermore, we
have no other information that provides an appropriate basis for
determining an LOT adjustment. Consequently, because the data available
do not form an appropriate basis for making an LOT adjustment but the
home market LOT is at a more advanced stage of distribution than the
CEP LOT, we have made a CEP offset to NV in accordance with section
773(a)(7)(B) of the Act. The CEP offset is calculated as the lesser of:
(1) the indirect selling expenses on the home market sales, or (2) the
indirect selling expenses deducted from the starting price in
calculating CEP.
Norte Pesca
Norte Pesca 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)(1) 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 Norte Pesca on the weighted-average selling
expenses incurred and profits earned by the other respondents in the
investigation, we could not determine the LOT of the sales from which
we derived selling expenses and profit for CV. As a result, there is
insufficient information on the record to enable us to determine
whether there is a difference in LOT between any U.S. sales and CV.
Therefore, we made no LOT adjustment to NV. See ``Calculation of Normal
Value Based on Constructed Value'' section of this notice below.
C. Cost of Production Analysis
Based on our analysis of the petitioners' allegations, we found
that there were reasonable grounds to believe or suspect that CIDA's
and EMPAF's sales of frozen and canned warmwater shrimp in the third
country and home market, respectively, 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 CIDA's and EMPAF's
sales were made at prices below their respective COPs. See Memorandum
to Louis Apple, Director Office 2, from The Team Re: Petitioners'
Allegation of Sales Below the Cost of Production for Central de
Industrializacao e Distribuicao de Alimentos Ltda. dated June 7, 2004;
and Memorandum to Louis Apple, Director Office 2, from The Team Re:
Petitioners' Allegation of Sales Below the Cost of Production for
Empresa de Armazenagem Frigorifica Ltda. dated June 15, 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 home market or third country
packing costs. See ``Test of Home Market/Third Country Sales Prices''
section below for treatment of home market/third country selling
expenses. We relied on the COP data submitted by the respondents except
in the following instances:
CIDA
During the POI, CIDA used an affiliated processor, Cia. Exportadora
de Produtos do Mar (PRODUMAR), to produce the subject merchandise. CIDA
purchased all material inputs, and maintained ownership of the
materials and the processed shrimp, and PRODUMAR charged a fee for
processing. During the POI, PRODUMAR neither produced nor sold the
subject merchandise or the foreign like product for its own account.
CIDA performed all marketing and selling functions, and controlled both
the sale of the subject merchandise and the production schedules
followed by PRODUMAR. For cost reporting purposes, CIDA collapsed
itself with PRODUMAR as a single entity, and reported the processing
costs incurred by PRODUMAR.
[[Page 47088]]
Based upon the facts above, we find that PRODUMAR is a toller under
19 CFR 351.401(h). Section 351.401(h) of the Department's regulations
mandates that the Department will not consider a toller to be a
manufacturer or producer where the toller does not acquire ownership,
and does not control the relevant sale of the subject merchandise.
Consistent with our practice with respect to subcontractors and
tollers, we do not consider CIDA and PRODUMAR to be one reporting
entity. See Notice of Final Determination of Sales at Less Than Fair
Value: Dynamic Random Access Memory Semiconductors of One Megabit and
Above from Taiwan, 64 FR 56308, 56318 (October 19, 1999). Accordingly,
because we consider PRODUMAR to be a toller affiliated with CIDA, we
invoked the transactions disregarded and major input rules, in
accordance with sections 773(f)(2) and (3) of the Act and 19 CFR
351.407(b). We determined the value of PRODUMAR's toll processing based
on the higher of the transfer price paid by CIDA and PRODUMAR's
reported processing costs. See Memorandum to Neal Halper from Sheikh M.
Hannan dated July 28, 2004, Re: Cost of Production and Constructed
Value Calculation Adjustments for the Preliminary Determination (CIDA
COP/CV Calculation Memo.)
However, the Department recognizes that, given the nature of the
affiliation between CIDA and PRODUMAR, a related issue could arise with
respect to whether there is a potential for manipulation of price or
production and, if so, whether CIDA and PRODUMAR should receive the
same antidumping duty rate. Therefore, the Department is soliciting
comments on this issue for consideration in the final determination.
We also made the following adjustments to CIDA's reported COP
information:
1. We revised the reported cost of manufacturing to include the
internal taxes on purchases of inputs which were not refunded.
2. As noted above, we revised the reported cost of manufacturing
for affiliated party transactions in accordance with sections 773(f)(3)
of the Act.
3. We revised the reported product-specific G&A and net financial
expense amounts by applying the reported G&A and financial expense
ratios to the product-specific cost of manufacturing.
4. CIDA did not report costs for some products that were sold in
the third country and U.S. markets. In these instances, as facts
available under 776(a)(1) of the Act, we assigned to those products the
costs reported for comparable products. We intend to solicit the
missing cost information from CIDA after the preliminary determination
for consideration in the final determination.
For further discussion of these adjustments, see CIDA COP/CV
Calculation Memo.
EMPAF
1. We revised EMPAF's and Maricultura's G&A expense rate to include
Maricultura's amortization of pre-operating costs.
2. We revised EMPAF's and Maricultura's financial expense rate to
exclude EMPAF's other financial income.
3. EMPAF did not report costs for one product that was sold in the
home market. In this instance, as facts available under 776(a)(1) of
the Act, we assigned to that product the cost reported for a comparable
product. We intend to solicit the missing cost information from EMPAF
after the preliminary determination for consideration in the final
determination. See Memorandum to Neal Halper from Michael P. Harrison
dated July 28, 2004, Re: Cost of Production and Constructed Value
Calculation Adjustments for the Preliminary Determination (EMPAF COP/CV
Calculation Memo).
Norte Pesca
1. We revised the direct materials costs by increasing the raw
material shrimp costs for all shrimp with a count size of 51/60 per
pound and lower (i.e., the larger shrimp). See the ``Facts Available''
section of this notice below.
2. Norte Pesca asserted that it did not pay ICMS and PIS taxes on
the purchases of shrimp. Thus, we revised the direct materials cost by
excluding an offset to the raw material shrimp costs for the recovery
of ICMS and PIS taxes.
3. We adjusted the reported variable and fixed overhead ratios in
the CV/COP database to reflect the revised ratios submitted by Norte
Pesca.
4. We revised Norte Pesca's per-unit cost of manufacturing to
reflect a correction to the production quantity.
5. We adjusted the reported G&A expense ratio in the CV/COP
database to reflect the revised ratio submitted by Norte Pesca and to
exclude an offset for the recovery of ICMS, IPI, and PIS taxes, as
Norte Pesca reported that it did not pay these taxes.
6. We adjusted the reported financial expense ratio in the CV/COP
database to reflect the revised ratio submitted by Norte Pesca.
See Memorandum to Neal Halper from Mark Todd dated July 28, 2004,
Re: Cost of Production and Constructed Value Calculation Adjustments
for the Preliminary Determination (Norte Pesca COP/CV Calculation
Memo).
2. Test of Home Market/Third Country Sales Prices
On a product-specific basis, we compared the adjusted weighted-
average COP to the home market/third country sales of the foreign like
product, as required under section 773(b) of the Act, in order to
determine whether the sale prices were below the COP. The prices were
exclusive of any applicable billing adjustments, movement charges,
discounts, and direct and indirect selling expenses. In determining
whether to disregard home market/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 respondents' 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.
[[Page 47089]]
4. Use of Facts Available
Section 776(a)(2) of the Act provides that, if an interested party
withholds information requested by the Department, fails to provide
such information by the deadline or in the form or manner requested,
significantly impedes a proceeding, or provides information which
cannot be verified, the Department shall use, subject to sections
782(d) and (e) of the Act, facts otherwise available in reaching the
applicable determination. Section 782(d) of the Act provides that if
the Department determines that a response to a request for information
does not comply with the Department's request, the Department shall
promptly inform the responding party and provide an opportunity to
remedy the deficient submission. Section 782(e) of the Act further
states that the Department shall not decline to consider submitted
information if all of the following requirements are met: (1) The
information is submitted by the established deadline; (2) the
information can be verified; (3) the information is not so incomplete
that it cannot serve as a reliable basis for reaching the applicable
determination; (4) the interested party has demonstrated that it acted
to the best of its ability; and (5) the information can be used without
undue difficulties.
In this case, Norte Pesca has failed to provide information
requested by the Department that is necessary to properly calculate
antidumping margins for its preliminary determination. Specifically,
Norte Pesca failed to provide product-specific raw material costs by
control number. The Department's section D questionnaire at III.A.3,
requests that if a physical characteristic identified by the Department
is not tracked by the company's normal cost accounting system, then the
respondent company should calculate the appropriate cost differences
for the physical characteristic, using a reasonable method based on
available company records (e.g., production records, engineering
statistics). Norte Pesca did not comply with the instructions in the
Department's original Section D questionnaire nor did it explain why it
could not do so. Moreover, Norte Pesca failed to provide requested
information in a supplemental questionnaire that would enable the
Department to differentiate raw material costs by control number. As a
result of Norte Pesca's failure to provide the above requested
information, the Department is unable to use the reported raw materials
data to properly calculate CV.
Thus, in reaching our preliminary determination, pursuant to
sections 776(a)(2)(A), (B), and (C) of the Act, we have based Norte
Pesca's raw materials cost on facts otherwise available in calculating
the dumping margin.
In applying facts otherwise available, section 776(b) of the Act
provides that the Department may use an inference adverse to the
interests of a party that has failed to cooperate by not acting to the
best of its ability to comply with the Department's requests for
information. See, e.g., Notice of Final Determination of Sales at Less
Than Fair Value and Final Negative Critical Circumstances: Carbon and
Certain Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55794-96 (August
30, 2002). Adverse inferences are appropriate ``to ensure that the
party does not obtain a more favorable result by failing to cooperate
than if it had cooperated fully.'' See Statement of Administrative
Action accompanying the Uruguay Round Agreements Act, H.R. Rep. No.
103-316, at 870 (1994) (SAA). Furthermore, ``affirmative evidence of
bad faith on the part of a respondent is not required before the
Department may make an adverse inference.'' See Antidumping Duties;
Countervailing Duties; Final Rule, 62 FR 27355 (May 19, 1997). See also
Nippon Steel v. U.S., 337 F.3d 1373 (Fed. Cir. 2003). In this case,
Norte Pesca failed to provide adequate responses to the Department's
section D questionnaires in regard to the cost of raw materials. Norte
Pesca's April 15, 2004, response to the original section D
questionnaire was inadequate with respect to differentiating raw
material costs by control number. In order to address the deficiencies
in Norte Pesca's response, pursuant to section 782(d) of the Act, the
Department issued supplemental section D questionnaires on June 17,
2004, and June 25, 2004. Norte Pesca's responses were received on July
6, 2004, and July 9, 2004, respectively. In the June 25, 2004,
supplemental questionnaire, the Department requested detailed raw
materials purchase cost information necessary for the Department to
adequately differentiate raw material costs by control number but Norte
Pesca failed to provide it in its July 9, 2004, supplemental
questionnaire response. Norte Pesca's failure to provide this critical
information in any of its responses has rendered its raw materials
costs inadequate for the preliminary determination. This constitutes a
failure on the part of Norte Pesca to cooperate to the best of its
ability to comply with a request for information by the Department
within the meaning of section 776(b) of the Act. Therefore, the
Department has preliminarily determined that in selecting from among
the facts otherwise available, an adverse inference is warranted with
regard to the raw material costs. See, e.g., Notice of Final
Determination of Sales at Less than Fair Value: Circular Seamless
Stainless Steel Hollow Products from Japan, 65 FR 42985, 42986 (July
12, 2000).
Where the Department applies adverse facts available (AFA) because
a respondent failed to cooperate by not acting to the best of its
ability to comply with a request for information, section 776(b) of the
Act authorizes the Department to rely on information derived from the
petition, a final determination, a previous administrative review, or
other information placed on the record. See also 19 CFR 351.308(c); SAA
at 829-831. In this case, we revised Norte Pesca's raw material costs
based on Norte Pesca's own data placed on the record. Because an
adverse inference is warranted, we have increased raw material costs
for all shrimp with a count size of 51/60 per pound and lower (i.e.,
the larger size shrimp) by the percent difference between the reported
total average purchase price for all shrimp and the top ten percent of
the reported highest purchase prices for shrimp during the POI. See
Norte Pesca COP/CV Calculation Memo. Thus, for the preliminary
determination, the Department has differentiated raw material costs by
control number for the larger size shrimp based on AFA.
D. Calculation of Normal Value Based on Comparison Market Prices
CIDA
We calculated NV based on delivered prices to unaffiliated
customers. We made deductions for movement expenses, including inland
freight and insurance, brokerage, and warehousing under section
773(a)(6)(B)(ii) of the Act. In addition, we made adjustments under
section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 for differences
in circumstances of sale for imputed credit and other direct selling
expenses.
Furthermore, we made adjustments for differences in costs
attributable to differences in the physical characteristics of the
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and
19 CFR 351.411. We also deducted third country packing costs and added
U.S. packing costs in accordance with sections 773(a)(6)(A) and (B) of
the Act.
[[Page 47090]]
EMPAF
We calculated NV based on delivered prices to unaffiliated
customers. We made deductions, where appropriate, from the starting
price for billing adjustments. We made further deductions for taxes in
accordance with section 773(a)(6)(B)(iii) of the Act. See Notice of
Preliminary Determination of Less Than Fair Value and Postponement of
Final Determination: Carbon and Certain Alloy Steel Wire Rod from
Brazil, 67 FR 18165, 18169 (April 15, 2002). We also made deductions
for movement expenses, including inland freight, under section
773(a)(6)(B)(ii) of the Act. In addition, we made adjustments under
section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 for differences
in circumstances of sale for imputed credit and interest revenue.
In accordance with 19 CFR 351.403(d), we excluded from our analysis
sales made to employees because they were insignificant in terms of
volume and value. We also excluded home market sales of processed
shrimp produced by manufacturers other than EMPAF or Maricultura in
accordance with section 771(16) 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 home market packing costs and added
U.S. packing costs in accordance with sections 773(a)(6)(A) and (B) of
the Act.
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 indirect selling expenses on the comparison-market sales
or the indirect selling expenses deducted from the starting price in
calculating CEP.
E. Calculation of Normal Value Based on Constructed Value
In accordance with section 773(a)(4) of the Act, we based NV on CV
where there was no viable home market or third country market (Norte
Pesca), or no comparable sales in the third country market (CIDA) made
in the ordinary course of trade.
In accordance with section 773(e) of the Act, we calculated CV
based on the sum of the respondents' cost of materials and fabrication
for the foreign like product, plus amounts for SG&A, profit, and U.S.
packing costs. We calculated the cost of materials and fabrication, G&A
and interest based on the methodology described in the ``Calculation of
COP'' section of this notice. For further details, see CIDA COP/CV
Calculation Memo and Norte Pesca COP/CV Calculation Memo.
Because Norte Pesca does not have a viable comparison market, the
Department cannot determine profit 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 Norte Pesca
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 without
violating our responsibility to protect respondents' administrative
protective order (APO) information because EMPAF is the only other
respondent with viable home market sales (19 CFR 351.405(b) requires
that a profit ratio under this alternative be based solely on home
market sales). If we were to use EMPAF's profit ratio exclusively under
this alternative, Norte Pesca would be able to determine EMPAF's
proprietary profit rate. Therefore, we calculated Norte Pesca'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 Norte Pesca's
CV profit and selling expenses based on the weighted average of the
profit and selling expenses incurred by the two other respondents in
this investigation. Specifically, we calculated weighted-average profit
and selling expenses incurred on home market sales by EMPAF and third
country sales by CIDA.
Pursuant to alternative (iii), the Department has the option of
using any other reasonable method, as long as the result 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.'' In the instant case, the profit cap
cannot be calculated using the available data (i.e., CIDA and EMPAF),
because this data would render the cap unrepresentative or inaccurate.
Specifically, a cap using CIDA's third country data would not reflect
profit derived solely based on home market data. Furthermore, using
EMPAF's home market data, the only information we have to allow us to
calculate the amount normally realized by other exporters or producers
in connection with the sale, for consumption in the home market, of
merchandise in the same general category, would violate our
responsibility to protect the respondent's APO information. Therefore,
as facts available, we are applying option (iii), without quantifying a
profit cap.
For comparisons to EP for CIDA and Norte Pesca, we made
circumstances-of-sale adjustments for direct selling expenses. For CIDA
we deducted third country direct selling expenses and added U.S. direct
selling expenses. For Norte Pesca, we deducted the weighted-average
direct selling expenses of the other two respondents, as described
above, and added U.S. direct selling expenses.
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.
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 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:
[[Page 47091]]
------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer margin
percentage
------------------------------------------------------------------------
Empresa de Armazenagem Frigorifica Ltda./Maricultura Netuno 0.00
S.A.......................................................
Central de Industrializacao e Distribuicao de Alimentos 8.41
Ltda......................................................
Norte Pesca S.A............................................ 67.80
All Others................................................. 36.91
------------------------------------------------------------------------
The All Others rate is derived exclusive of all de minimis margins and
margins based entirely on adverse facts available.
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. 04-17814 Filed 8-3-04; 8:45 am]
BILLING CODE 3510-DS-P