[Federal Register: August 4, 2004 (Volume 69, Number 149)]
[Notices]
[Page 47100-47110]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04au04-42]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-549-822]
Notice of Preliminary Determination of Sales at Less Than Fair
Value, Postponement of Final Determination, and Negative Critical
Circumstances Determination: Certain Frozen and Canned Warmwater Shrimp
From Thailand
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary determination of sales at less than fair
value.
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SUMMARY: We preliminarily determine that certain frozen and canned
warmwater shrimp from Thailand are being, or are likely to be, sold in
the United States at less than fair value, as provided in section
733(b) of the Tariff Act of 1930, as amended (the Act). In addition, we
preliminarily determine that there is no reasonable basis to believe or
suspect that critical circumstances exist with respect to the subject
merchandise exported from Thailand.
Interested parties are invited to comment on this preliminary
determination. Because we are postponing the final determination, we
will make our final determination not later than 135 days after the
date of publication of this preliminary determination in the Federal
Register.
EFFECTIVE DATE: August 4, 2004.
FOR FURTHER INFORMATION CONTACT: Irina Itkin or Elizabeth Eastwood,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-0656 or (202) 482-3874,
respectively.
Preliminary Determination
We preliminarily determine that certain frozen and canned warmwater
shrimp from Thailand are being, or are likely to be, sold in the United
States at less than fair value (LTFV), as provided in section 733 of
the Act. The estimated margins of sales at LTFV are shown in the
``Suspension of Liquidation'' section of this notice. In addition, we
preliminarily determine that there is no reasonable basis to believe or
suspect that critical circumstances exist with respect to the subject
merchandise exported from Thailand. The critical circumstances analysis
for the preliminary determination is discussed below under the section
``Critical Circumstances.''
Background
Since the initiation of this investigation (see Initiation of
Antidumping Duty Investigations: Certain Frozen and Canned Warmwater
Shrimp from Brazil, Ecuador, India, Thailand, the People's Republic of
China and the Socialist Republic of Vietnam, 69 FR 3876 (January 27,
2004) (Initiation Notice)), the following events have occurred.
On February 17, 2004, the United States International Trade
Commission (ITC) preliminarily determined that there is a reasonable
indication that imports of certain frozen and canned warmwater shrimp
from Thailand are materially injuring the United States industry. See
ITC Investigation Nos. 731-TA-1063-1068 (Publication No. 3672).
On February 20, 2004, we selected the four largest producers/
exporters of certain frozen and canned warmwater shrimp from Thailand
as the mandatory respondents in this proceeding. See Memorandum to
Louis Apple, Director Office 2, from the Team entitled: ``Antidumping
Duty Investigation of Certain Frozen and Canned Warmwater Shrimp from
Thailand--Selection of Respondents,'' dated February 20, 2004. We
subsequently issued the antidumping questionnaire to Chanthaburi
Seafoods Co., Ltd. (CSF), Thailand Fishery Cold Storage Public Co.,
Ltd. (TFC), Thai I-Mei Frozen Foods Co., Ltd. (Thai I-Mei), and the
Union Frozen Products Co., Ltd. (UFP) on February 20, 2004. From
February 11, 2004, through March 16, 2004, Andaman Seafood Co., Ltd.
(AMS), CSF, and TFC provided information to the Department related to
the affiliation of these companies and a U.S. importer, Rubicon
Resources.
During the period February through June 2004, various interested
parties, including the petitioners,\1\ submitted comments on the scope
of this and the concurrent investigations of certain frozen and canned
warmwater shrimp concerning whether the following products are covered
by the scope of the investigations: a certain seafood mix, dusted
shrimp, battered shrimp, salad shrimp sold in counts of 250 pieces or
higher, the species Macrobachium rosenbergii, organic shrimp, and
peeled
[[Page 47101]]
shrimp used in breading.\2\ In addition, the Louisiana Shrimp Alliance
(LSA), an association of domestic shrimp harvesters and processors,
requested that the Department expand the scope to include fresh (never
frozen) shrimp. See ``Scope Comments'' section of this notice.
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\1\ The petitioners in this investigation are the Ad Hoc Shrimp
Trade Alliance (an ad hoc coalition representative of U.S. producers
of frozen and canned warmwater shrimp and harvesters of wild-caught
warmwater shrimp), Versaggi Shrimp Corporation, and Indian Ridge
Shrimp Company.
\2\ Specifically, Ocean Duke Corporation (Ocean Duke), an
importer and wholesaler of the subject merchandise, requested that
the following products be excluded from the scope of this and the
concurrent investigations on certain frozen and canned warmwater
shrimp: (1) ``dusted shrimp,'' (2) ``battered shrimp,'' and (3)
``seafood mix.'' Another importer, Rubicon Resources LLP, supported
Ocean Duke's request regarding dusted and battered shrimp. Eastern
Fish Company and Long John Silver's, Inc. also requested that dusted
and battered shrimp be excluded from the scope of the
investigations. Furthermore, the Seafood Exporters' Association of
India requested that the Department find that warmwater salad shrimp
in counts of 250 pieces or higher are not within the scope, and that
the species Machrobachium Rosenbergii is a separate class or kind of
merchandise. Also, Exportadora de Alimentos S.A., one of the
respondents in the Ecuador case, requested that the Department find
that farm-raised organic shrimp is not covered by the scope of the
investigations. Finally, the American Breaded Shrimp Processors
Association, comprised of importers of peeled shrimp which they
consume in the production of breaded shrimp products, requested that
peeled shrimp imported for the sole purpose of breading be excluded
from the scope of the investigations.
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On March 22, 2004, the Department determined that it was
appropriate to treat AMS, CSF, and TFC as a single respondent (i.e.,
the Rubicon Group) for purposes of the investigation, in accordance
with 19 CFR 351.401(f). See letter from Louis Apple, Director Office 2
to the Rubicon Group, dated March 22, 2004.
We received section A questionnaire responses from the three
respondents in March 2004, and section B and C questionnaire responses
in April 2004.
We issued and received responses to our supplemental questionnaires
from April through July 2004.
On May 4 and 10, 2004, respectively, the petitioners alleged that
UFP and the Rubicon Group made third country sales below the cost of
production (COP) and, therefore, requested that the Department initiate
a sales-below-cost investigation of these respondents.
On May 18, 2004, pursuant to sections 733(c)(1)(B) and (c)(2) of
the Act and 19 CFR 351.205(f), the Department determined that the case
was extraordinarily complicated and postponed the preliminary
determination until no later than July 28, 2004. See Notice of
Postponement of Preliminary Determinations of Antidumping Duty
Investigations: Certain Frozen and Canned Warmwater Shrimp from Brazil
(A-351-838), Ecuador (A-331-802), India (A-533-840), Thailand (A-549-
822), the People's Republic of China (A-570-893), and the Socialist
Republic of Vietnam (A-503-822), 69 FR 29509 (May 24, 2004).
On May 21, 2004, the Department denied LSA's request to amend the
scope to include fresh (never frozen) shrimp. See Memorandum from
Jeffrey A. May, Deputy Assistant Secretary, AD/CVD Enforcement Group I,
and Joseph A. Spetrini, Deputy Assistant Secretary AD/CVD Enforcement
Group III, to James J. Jochum, Assistant Secretary for Import
Administration entitled: ``Antidumping Investigations on Certain Frozen
and Canned Warmwater Shrimp from Brazil, Ecuador, India, the People's
Republic of China, Thailand and the Socialist Republic of Vietnam:
Scope Determination Regarding Fresh (Never Frozen) Shrimp,'' dated May
21, 2004 (Scope Decision Memorandum I).
On May 28, 2004, and June 2, 2004, respectively, the Department
initiated a sales-below-cost investigation of UFP and the Rubicon Group
and required the parties to respond to section D of the Department's
questionnaire. See Memorandum to Louis Apple, Director Office 2, from
the Team entitled: ``Petitioners'' Allegation of Sales Below the Cost
of Production for Union Frozen Products Co., Ltd.'' dated May 28, 2004,
and Memorandum to Louis Apple, Director Office 2, from the Team
entitled: ``Petitioners'' Allegation of Sales Below the Cost of
Production for Andaman Seafood Co., Ltd., Chanthaburi Seafoods Co.,
Ltd., and Thailand Fishery Cold Storage Public Co., Ltd.'' dated June
2, 2004. We received original section D and supplemental section D
responses in June and July 2004.
On April 23, 2004, and June 15, 2004, the petitioners objected to
the Rubicon Group's and UFP's use of Canada as their third country
comparison markets, and they requested that the Department obtain sales
data for these companies' second largest third country market, Japan.
In July 2004, the Department determined that it is appropriate to use
the third country market initially reported by the Rubicon Group and
UFP (i.e., Canada). See Memorandum to Louis Apple, Director Office 2,
from the Team entitled: ``Antidumping Duty Investigation of Certain
Frozen and Canned Warmwater Shrimp from Thailand--Third-Country Market
Selection for Two Respondents' dated July 28, 2004. (the Rubicon Group
and UFP Third Country Comparison Market Selection Memorandum), for
further discussion.
Pursuant to the Department's solicitation, on June 7, 2004, various
interested parties, including the petitioners, submitted comments on
the issue of whether product comparisons and margin calculations in
this and the concurrent investigations of certain frozen and canned
warmwater shrimp should be based on data provided on an ``as sold''
basis or data converted to a headless, shell-on (HLSO) basis.\3\
Additional comments were subsequently submitted on June 15 and 25,
2004. See ``Product Comparison Comments'' section below.
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\3\ Specifically, the Department received comments from the
following interested parties, in addition to the petitioners, on
June 7: the Brazilian Shrimp Farmers' Association and Central de
Industrializacao e Distribuicao de Alimentos Ltda.; Empresa De
Armazenagem Frigorifica Ltda.; Camara Nacional de Acuacultura
(National Chamber of Aquaculture) of Ecuador; the Rubicon Group
(comprised of Andaman Seafood Co., Ltd. Chanthaburi Seafoods Co.,
Ltd. And Thailand Fishery Cold Storage Public Co., Ltd.); Thai I-Mei
Frozen Foods Co., Ltd. and its affiliated reseller Ocean Duke; the
Seafood Exporters of India and its members Devi Sea Foods Ltd.,
Hindustan Lever Limited, and Nekkanti Seafoods Limited; the VASEP
Shrimp Committee and its members; and Shantou Red Garden Foodstuff
Co., Ltd. In addition to addressing the ``as sold''/HLSO issue, some
of these parties also commented on the significance of species and
container weight in the Department's product characteristic
hierarchy.
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On July 2, 2004, the Department made preliminary scope
determinations with respect to the following shrimp products: Ocean
Duke's seafood mix, salad shrimp sold in counts of 250 pieces or
higher, Macrobrachium rosenbergii, organic shrimp, peeled shrimp used
in breading, dusted shrimp and battered shrimp. See Memorandum from
Edward C. Yang, Vietnam/NME Unit Coordinator, Import Administration to
Jeffrey A. May, Deputy Assistant Secretary for Import Administration
entitled: ``Antidumping Investigation on Certain Frozen and Canned
Warmwater Shrimp from Brazil, Ecuador, India, Thailand, the People's
Republic of China and the Socialist Republic of Vietnam: Scope
Clarifications: (1) Ocean Duke's Seafood Mix; (2) Salad Shrimp Sold in
Counts of 250 Pieces or Higher; (3) Macrobrachium rosenbergii; (4)
Organic Shrimp; and (5) Peeled Shrimp Used in Breading,'' dated July 2,
2004 (Scope Decision Memorandum II); and Memorandum from Edward C.
Yang, Vietnam/NME Unit Coordinator, Import Administration to Jeffrey A.
May, Deputy Assistant Secretary for Import Administration entitled:
``Antidumping Investigation on Certain Frozen and Canned Warmwater
Shrimp from Brazil, Ecuador, India, Thailand, the People's Republic of
China and the Socialist Republic of Vietnam: Scope Clarification:
Dusted Shrimp and Battered Shrimp,'' dated July 2, 2004
[[Page 47102]]
(Scope Decision Memorandum III). See also ``Scope Comments'' section
below.
Postponement of Final Determination
Section 735(a)(2) of the Act provides that a final determination
may be postponed until not later than 135 days after the date of the
publication of the preliminary determination if, in the event of an
affirmative preliminary determination, a request for such postponement
is made by exporters who account for a significant proportion of
exports of the subject merchandise, or in the event of a negative
preliminary determination, a request for such postponement is made by
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2),
require that requests by respondents for postponement of a final
determination be accompanied by a request for extension of provisional
measures from a four-month period to not more than six months.
Pursuant to section 735(a)(2) of the Act, on June 10, 2004, the
Rubicon Group and UFP requested that, in the event of an affirmative
preliminary determination in this investigation, the Department
postpone its final determination until not later than 135 days after
the date of the publication of the preliminary determination in the
Federal Register, and extend the provisional measures to not more than
six months.\4\ In accordance with 19 CFR 351.210(b), because (1) our
preliminary determination is affirmative, (2) the Rubicon Group and UFP
account for a significant proportion of exports of the subject
merchandise, and (3) no compelling reasons for denial exist, we are
granting the respondents' request and are postponing the final
determination until no later than 135 days after the publication of
this notice in the Federal Register. Suspension of liquidation will be
extended accordingly.
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\4\ We note that Thai I-Mei also requested a postponement of the
final determination until not later than 60 days after the date of
the publication of the preliminary determination in the Federal
Register.
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Period of Investigation
The period of investigation (POI) is October 1, 2002, through
September 30, 2003. This period corresponds to the four most recent
fiscal quarters prior to the month of the filing of the petition (i.e.,
December 2003).
Scope of Investigation
The scope of this investigation includes certain warmwater shrimp
and prawns, whether frozen or canned, wild-caught (ocean harvested) or
farm-raised (produced by aquaculture), head-on or head-off, shell-on or
peeled, tail-on or tail-off,\5\ deveined or not deveined, cooked or
raw, or otherwise processed in frozen or canned form.
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\5\ ``Tails'' in this context means the tail fan, which includes
the telson and the uropods.
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The frozen or canned warmwater shrimp and prawn products included
in the scope of the investigation, regardless of definitions in the
Harmonized Tariff Schedule of the United States (HTSUS), are products
which are processed from warmwater shrimp and prawns through either
freezing or canning and which are sold in any count size.
The products described above may be processed from any species of
warmwater shrimp and prawns. Warmwater shrimp and prawns are generally
classified in, but are not limited to, the Penaeidae family. Some
examples of the farmed and wild-caught warmwater species include, but
are not limited to, whiteleg shrimp (Penaeus vannemei), banana prawn
(Penaeus merguiensis), fleshy prawn (Penaeus chinensis), giant river
prawn (Macrobrachium rosenbergii), giant tiger prawn (Penaeus monodon),
redspotted shrimp (Penaeus brasiliensis), southern brown shrimp
(Penaeus subtilis), southern pink shrimp (Penaeus notialis), southern
rough shrimp (Trachypenaeus curvirostris), southern white shrimp
(Penaeus schmitti), blue shrimp (Penaeus stylirostris), western white
shrimp (Penaeus occidentalis), and Indian white prawn (Penaeus
indicus).
Frozen shrimp and prawns that are packed with marinade, spices or
sauce are included in the scope of the investigation. In addition, food
preparations, which are not ``prepared meals,'' that contain more than
20 percent by weight of shrimp or prawn are also included in the scope
of the investigation.
Excluded from the scope are (1) breaded shrimp \6\ and prawns
(1605.20.10.20); (2) shrimp and prawns generally classified in the
Pandalidae family and commonly referred to as coldwater shrimp, in any
state of processing; (3) fresh shrimp and prawns whether shell-on or
peeled (0306.23.00.20 and 0306.23.00.40); (4) shrimp and prawns in
prepared meals (1605.20.05.10); and (5) dried shrimp and prawns.
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\6\ Pursuant to our scope determination on battered shrimp, we
find that breaded shrimp includes battered shrimp as discussed in
the ``Scope Comments'' section below. See Scope Memorandum III.
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The products covered by this scope are currently classifiable under
the following HTSUS subheadings: 0306.13.00.03, 0306.13.00.06,
0306.13.00.09, 0306.13.00.12, 0306.13.00.15, 0306.13.00.18,
0306.13.00.21, 0306.13.00.24, 0306.13.00.27, 0306.13.00.40,
1605.20.10.10, 1605.20.10.30, and 1605.20.10.40. These HTSUS
subheadings are provided for convenience and customs purposes only and
are not dispositive, but rather the written description of the scope of
this investigation is dispositive.
Scope Comments
In accordance with the preamble to our regulations, we set aside a
period of time for parties to raise issues regarding product coverage
and encouraged all parties to submit comments within 20 calendar days
of publication of the Initiation Notice. (See Antidumping Duties;
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)
and Initiation Notice at 69 FR 3877.) Throughout the 20 days and
beyond, the Department received many comments and submissions regarding
a multitude of scope issues, including: (1) Fresh (never frozen)
shrimp, (2) Ocean Duke's seafood mix, (3) salad shrimp sold in counts
of 250 pieces or higher, (4) Macrobrachium rosenbergii, (5) organic
shrimp, (6) peeled shrimp used in breading, (7) dusted shrimp and (8)
battered shrimp. On May 21, 2004, the Department determined that the
scope of this and the concurrent investigations remains unchanged, as
certain frozen and canned warmwater shrimp, without the addition of
fresh (never frozen) shrimp. See Scope Decision Memorandum I.
On July 2, 2004, the Department made scope determinations with
respect to Ocean Duke's seafood mix, salad shrimp sold in counts of 250
pieces or higher, Macrobrachium rosenbergii, organic shrimp and peeled
shrimp used in breading. See Scope Decision Memorandum II. Based on the
information presented by interested parties, the Department determined
that Ocean Duke's seafood mix is excluded from the scope of this and
the concurrent investigations; however, salad shrimp sold in counts of
250 pieces or higher, Macrobrachium rosenbergii, organic shrimp and
peeled shrimp used in breading are included within the scope of these
investigations. See Scope Decision Memorandum II at 33.
Additionally, on July 2, 2004, the Department made a scope
determination with respect to dusted shrimp and battered shrimp. See
Scope Decision Memorandum III. Based on the information presented by
interested parties, the Department preliminarily finds that while
substantial evidence
[[Page 47103]]
exists to consider battered shrimp to fall within the meaning of the
breaded shrimp exclusion identified in the scope of these proceedings,
there is insufficient evidence to consider that shrimp which has been
dusted falls within the meaning of ``breaded'' shrimp. However, there
is sufficient evidence for the Department to consider excluding this
merchandise from the scope of these proceedings provided an appropriate
description can be developed. See Scope Decision Memorandum III at 18.
To that end, along with the previously solicited comments regarding
breaded and battered shrimp, the Department solicits comments from
interested parties which enumerate and describe a clear, administrable
definition of dusted shrimp. See Scope Decision Memorandum III at 23.
Fair Value Comparisons
To determine whether sales of certain frozen and canned warmwater
shrimp from Thailand to the United States were made at LTFV, we
compared the export price (EP) or constructed export price (CEP) to the
normal value (NV), as described in the ``Export Price/Constructed
Export Price'' and ``Normal Value'' sections of this notice, below. In
accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI
weighted-average EPs and CEPs to NVs.
For this preliminary determination, we have determined that the
Rubicon Group and UFP did not have a viable home market during the POI.
Therefore, as the basis for NV, we used third country sales to Canada
for these companies when making comparisons in accordance with section
773(a)(1)(C) of the Act. See the Rubicon Group and UFP Third Country
Comparison Market Selection Memorandum.
In addition, we have determined that Thai I-Mei did not have a
viable home or third country market during the POI. Therefore, as the
basis for NV, we used constructed value (CV) when making comparisons
for Thai I-Mei in accordance with section 773(a)(4) of the Act.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced and sold by the Rubicon Group and UFP in Canada
during the POI that fit the description in the ``Scope of
Investigation'' section of this notice to be foreign like products for
purposes of determining appropriate product comparisons to U.S. sales.
We compared U.S. sales to sales made in the third country, where
appropriate. Where there were no sales of identical merchandise in the
third country made in the ordinary course of trade to compare to U.S.
sales, we compared U.S. sales to sales of the most similar foreign like
product made in the ordinary course of trade. For Thai I-Mei, and where
there were no sales of identical or similar merchandise, we made
product comparisons using CV.
In making the product comparisons, we matched foreign like products
based on the physical characteristics reported by the respondents in
the following order of importance: processed form, cooked form, head
status, count size (on an ``as sold'' basis), shell status, vein
status, tail status, other shrimp preparation, frozen form, flavoring,
container weight, presentation, species, and preservative.
Product Comparison Comments
As Sold v. HLSO Methodology
We received comments from various interested parties concerning
whether to perform product comparisons and margin calculations using
data provided on an ``as sold'' basis or on data converted to an HLSO
basis.\7\
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\7\ In this notice, we address only those comments pertaining to
market-economy dumping calculation methodology. Any comments
pertaining to non-market-economy dumping calculation methodology are
separately addressed in the July 2, 2004, preliminary determinations
in the antidumping duty investigations of certain frozen and canned
warmwater shrimp from the People's Republic of China and the
Socialist Republic of Vietnam (see 69 FR 42654 (July 16, 2004) and
69 FR 42672 (July 16, 2004), respectively).
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The petitioners argue that using a consistent HLSO equivalent
measure permits accurate product comparisons and margin calculations
whereas the ``as sold'' measures do not. In particular, the petitioners
emphasize that it is necessary to translate the actual sold volumes
(weights) and count sizes to a uniform unit of measure that takes into
account the various levels of processing of the different shrimp
products sold and the allegedly large difference in value between the
shrimp tail meat and other parts of the shrimp that may constitute ``as
sold'' weight or count size, such as the head or shell. The
petitioners' contention is premised upon their belief that the shrimp
tail meat is the value-driving component of the shrimp. The respondents
disagree, maintaining generally that using HLSO-equivalent data
violates the antidumping duty law and significantly distorts product
comparisons and margin calculations. In particular, they argue that:
(1) Shrimp is sold based on its actual size and form, not on an HLSO
basis, and it is the Department's practice to use actual sales/cost
data in its margin analysis; (2) the rates used to convert price,
quantity and expense data to an HLSO basis are uncertain as they are
not maintained by the respondents in the ordinary course of business,
and are generally based on each individual company's experience rather
than any accepted industry-wide standard; and (3) the HLSO methodology
introduces a significant distortion through the incorrect assumption
that the value of the product varies solely in direct proportion to the
change in weight resulting from production yields, when in fact the
value of the product depends also on other factors such as quality and
form.
Our analysis of the company responses shows that: (1) No respondent
uses HLSO equivalents in the normal course of business, for either
sales or cost purposes; and (2) there is no reliable or consistent HLSO
conversion formula for all forms of processed shrimp across all
companies, as each company defined its conversion factors differently
and derived these factors based on its own production experience.
Therefore, we preliminarily determine it is appropriate to perform
product comparisons and margin calculations using data ``as sold.''
This approach is in accordance with our normal practice and precludes
the use of conversion rates, the accuracy of which is uncertain. Given
the variety and overlap of the ``as sold'' count size ranges reported
by the respondents, we also preliminarily determine that it is
appropriate to standardize product comparisons across respondents by
fitting the ``as sold'' count sizes into the count size ranges
specified in the questionnaire.
Product Characteristics Hierarchy
We also received comments from various interested parties regarding
the significance of the species and container weight criteria in the
Department's product comparison hierarchy.
Various parties requested that the species criterion be ranked
higher in the Department's product characteristic hierarchy--as high as
the second most important characteristic, rather than the thirteenth--
based on their belief that species is an important factor in
determining price. One party provided industry publications indicating
price variations according to species type. Another party requested
further that the Department revise the species categories specified in
the Department's questionnaire to reflect characteristics beyond color
(i.e., whether the shrimp was farm-raised or wild-caught). In addition,
several parties requested that
[[Page 47104]]
container weight, the eleventh characteristic in the Department's
product characteristic hierarchy, be eliminated altogether as a product
matching criterion, as they believe it is commercially insignificant
and relates to packing size or form, rather than the physical
attributes of the product.
With respect to the arguments regarding the species criterion, the
petitioners disagree, maintaining that there is no credible evidence
that species drives pricing to such a significant extent that buyers
consider it more important than product characteristics such as head
and cooked status. Rather, the petitioners contend that once shrimp is
processed (e.g., cooked, peeled, etc.), the species classification
becomes essentially irrelevant. Therefore, the petitioners assert that
while species type has some, not entirely insignificant effect on
shrimp prices, it is appropriately captured in the Department's product
matching hierarchy. Furthermore, with respect to the container weight
criterion, the petitioners assert that, while the shrimp inside the
container may be identical, in many cases the size of the container is
an integral part of the product and an important determinant of the
markets and channels through which shrimp can be sold. For this reason,
the petitioners maintain that the Department should continue to include
container weight as a product matching characteristic.
Regarding the species criterion, we have not changed the position
of this criterion in the product characteristic hierarchy for the
preliminary determination. We agree that the physical characteristic of
species type may impact the price or cost of processed shrimp. For that
reason, we included species type as one of the product matching
criteria. However, based on our review of the record evidence, we find
that other physical characteristics of the subject merchandise, such as
head status, count size, shell status, and frozen form, appear to be
more significant in setting price or determining cost. The information
provided by the parties, which suggests that price may be affected in
some cases by species type, does not provide sufficient evidence that
species type is more significant than the remaining physical
characteristics of the processed shrimp. Therefore, we find an
insufficient basis to revise the ranking of the physical
characteristics established in the Department's questionnaire for the
purpose of product matching.
With respect to differentiating between species types beyond the
color classifications identified in the questionnaire, we do not find
that such differentiations reflect meaningful differences in the
physical characteristics of the merchandise. In particular, we note
that whether shrimp is farm-raised or wild-caught is not a physical
characteristic of the shrimp, but rather a method of harvesting.
Therefore, we have not accepted the additional species classifications
proposed by the respondents. Accordingly, in those cases where the
respondents reported additional species classifications for their
processed shrimp products, we reclassified the products into one of the
questionnaire color classifications. We made an exception for the
shrimp identified as ``scampi'' (or Macrobrachium rosenbergii) and
``red ring'' (or Aristeus alcocki), where appropriate, because they
represent species distinct from those associated by color in the
Department's questionnaire. Regarding this exception, we note that
while scampi and red ring are sufficiently distinct for product
matching purposes, they are not so distinct as to constitute a separate
class or kind of merchandise (see Scope Memorandum II). We also made an
exception for the shrimp identified as ``mixed'' (e.g., ``salad''
shrimp), where appropriate, because there is insufficient information
on the record to classify these products according to the questionnaire
color classifications.
Regarding the container weight criterion, we have included it as
the eleventh criterion in the product characteristic hierarchy because
we view the size or weight of the packed unit as an integral part of
the final product sold to the customer, rather than a packing size or
form associated with the shipment of the product to the customer.
Moreover, we find it appropriate, where possible (other factors being
equal), to compare products of equivalent container weight (e.g., a
one-pound bag of frozen shrimp with another one-pound bag of frozen
shrimp, rather than a five-pound bag), as the container weight may
impact the per-unit selling price of the product.
Broken Shrimp/Mixed Seafood Products
Two of the respondents in this case, the Rubicon Group and UFP,
reported sales of broken shrimp in both their Canadian and U.S.
markets. In addition, UFP reported sales of mixed seafood products in
both markets. Because: (1) The matching criteria for this investigation
do not currently account for broken shrimp or mixed seafood products;
(2) no interested parties have provided comments on the appropriate
methodology to match these sales; and (3) the quantity of such sales
does not constitute a significant percentage of the respondents'
databases, we have excluded these sales from our analysis for purposes
of the preliminary determination. Nonetheless, we are seeking comments
from interested parties regarding our treatment of these sales for
consideration in the final determination.
Export Price/Constructed Export Price
A. The Rubicon Group
In accordance with section 772(a) of the Act, we calculated EP for
those sales where the merchandise was sold to the first unaffiliated
purchaser in the United States prior to importation by the exporter or
producer outside the United States. We based EP on the packed price to
unaffiliated purchasers in the United States. Where appropriate, we
made adjustments for billing adjustments and discounts. We made
deductions for movement expenses in accordance with section
772(c)(2)(A) of the Act; these included, where appropriate, foreign
inland freight, foreign warehousing expenses, foreign inland insurance,
foreign brokerage and handling expenses, ocean freight, marine
insurance, U.S. brokerage and handling, gate charges, U.S. customs
duties (including harbor maintenance fees and merchandise processing
fees), U.S. inland insurance, U.S. inland freight expenses (i.e.,
freight from port to warehouse and freight from warehouse to the
customer), container charges, customs inspection and storage fees, and
U.S. warehousing expenses.
In accordance with section 772(b) of the Act, we calculated CEP for
those sales where the merchandise was first sold (or agreed to be sold)
in the United States before or after the date of importation by or for
the account of the producer or exporter, or by a seller affiliated with
the producer or exporter, to a purchaser not affiliated with the
producer or exporter. We used the earlier of shipment date from
Thailand to the customer or the U.S. affiliate's invoice date as the
date of sale for CEP sales, in accordance with our practice. See, e.g.,
Notice of Final Determination of Sales at Less Than Fair Value:
Structural Steel Beams from Germany, 67 FR 35497 (May 20, 2002) (SS
Beams from Germany) and accompanying Issues and Decision Memorandum at
Comment 2.
We based CEP on the packed delivered prices to unaffiliated
purchasers in the United States. Where appropriate, we made adjustments
for billing adjustments and discounts. We
[[Page 47105]]
made deductions for movement expenses, in accordance with section
772(c)(2)(A) of the Act; these included, where appropriate, foreign
inland freight, foreign warehousing expenses, foreign inland insurance,
foreign brokerage and handling expenses, ocean freight, marine
insurance, U.S. brokerage and handling, gate charges, U.S. customs
duties (including harbor maintenance fees and merchandise processing
fees), U.S. inland insurance, U.S. inland freight expenses (i.e.,
freight from port to warehouse and freight from warehouse to the
customer), container charges, customs inspection and storage fees, and
U.S. warehousing expenses. In accordance with section 772(d)(1) of the
Act and 19 CFR 351.402(b), we deducted those selling expenses
associated with economic activities occurring in the United States,
including direct selling expenses (i.e., bank charges, advertising,
imputed credit expenses, and repacking), and indirect selling expenses
(including inventory carrying costs and other indirect selling
expenses). Although the Rubicon Group reported imputed interest revenue
related to accruals, we have not increased the reported gross unit
price by this amount, in accordance with the Department's practice.
Pursuant to section 772(d)(3) of the Act, we further reduced the
starting price by an amount for profit to arrive at CEP. In accordance
with section 772(f) of the Act, we calculated the CEP profit rate using
the expenses incurred by the Rubicon Group and its U.S. affiliate on
their sales of the subject merchandise in the United States and the
profit associated with those sales.
B. Thai I-Mei
In accordance with section 772(b) of the Act, we calculated CEP for
those sales where the merchandise was first sold (or agreed to be sold)
in the United States before or after the date of importation by or for
the account of the producer or exporter, or by a seller affiliated with
the producer or exporter, to a purchaser not affiliated with the
producer or exporter. We used the earlier of shipment date from
Thailand to the customer or the U.S. affiliate's invoice date as the
date of sale for CEP sales, in accordance with our practice. See e.g.,
SS Beams from Germany and accompanying Issues and Decision Memorandum
at Comment 2.
We based CEP on the packed delivered prices to unaffiliated
purchasers in the United States. Where appropriate, we made adjustments
for billing adjustments. We made deductions for movement expenses, in
accordance with section 772(c)(2)(A) of the Act; these included, where
appropriate, foreign inland freight, foreign warehousing expenses,
foreign inland insurance, foreign brokerage and handling expenses,
ocean freight, marine insurance, U.S. brokerage and handling, U.S.
customs duties (including harbor maintenance fees and merchandise
processing fees), U.S. inland insurance, U.S. inland freight expenses
(i.e., freight from port to warehouse and freight from warehouse to the
customer), and U.S. warehousing expenses. In accordance with section
772(d)(1) of the Act and 19 CFR 351.402(b), we deducted those selling
expenses associated with economic activities occurring in the United
States, including direct selling expenses (i.e., imputed credit
expenses), and indirect selling expenses (including inventory carrying
costs and other indirect selling expenses).
Pursuant to section 772(d)(3) of the Act, we further reduced the
starting price by an amount for profit to arrive at CEP. In accordance
with section 772(f) of the Act, we calculated the CEP profit rate using
the expenses incurred by Thai I-Mei and its U.S. affiliate on their
sales of the subject merchandise in the United States and the profit
associated with those sales.
C. UFP
In its U.S. and third country sales listings, UFP reported sales of
frozen shrimp purchased from other countries and further processed in
Thailand before exportation. Where we were able to identify these
sales, we excluded them from our analysis because we find that the
country of origin for these products is not Thailand.
In accordance with section 772(a) of the Act, we calculated EP for
those sales where the merchandise was sold to the first unaffiliated
purchaser in the United States prior to importation by the exporter or
producer outside the United States. We based EP on the packed price to
unaffiliated purchasers in the United States. Where appropriate, we
made adjustments for billing adjustments. We made deductions for
movement expenses in accordance with section 772(c)(2)(A) of the Act;
these included, where appropriate, foreign warehousing, foreign inland
freight, foreign brokerage and handling expenses, and international
freight (offset by destination delivery charge revenue).
Duty Drawback
The Rubicon Group, Thai I-Mei, and UFP claimed a duty drawback
adjustment based on their participation in the Thai government's Duty
Compensation on Exported Goods Manufactured in the Kingdom. Such
adjustments are permitted under section 772(c)(1)(B) of the Act.
The Department will grant a respondent's claim for a duty drawback
adjustment where the respondent has demonstrated that there is (1) a
sufficient link between the import duty and the rebate, and (2) a
sufficient amount of raw materials imported and used in the production
of the final exported product. See Rajinder Pipe Ltd. v. United States,
70 F. Supp. 2d 1350, 1358 (CIT 1999) (Rajinder Pipes). In Rajinder
Pipes, the Court of International Trade upheld the Department's
decision to deny a respondent's claim for duty drawback adjustments
because there was not substantial evidence on the record to establish
that part one of the Department's test had been met. See also Viraj
Group, Ltd. v. United States, Slip Op. 01-104 (CIT August 15, 2001).
In this investigation, the Rubicon Group, Thai I-Mei, and UFP have
failed to demonstrate that there is a link between the import duty paid
and the rebate received, and that imported raw materials are used in
the production of the final exported product. Therefore, because they
have failed to meet the Department's requirements, we are denying the
respondents' requests for a duty drawback adjustment.
The Rubicon Group has argued that, if the Department chooses not to
grant it a duty drawback adjustment, the Department should make a
circumstance of sale adjustment for the amounts it received as duty
drawback. In support of this assertion, the Rubicon Group cites Certain
Hot-Rolled Carbon Steel Flat Products From Thailand: Final Results and
Partial Rescission of Antidumping Duty Administrative Review, 69 FR
19388 (April 13, 2004) and accompanying Issues and Decision Memorandum
at Comment 2 (Hot-Rolled Steel from Thailand). However, we find that
Rubicon's reliance on Hot-Rolled Steel from Thailand is misplaced. That
case merely stands for the proposition that when we make a duty
drawback adjustment to EP, we will consider whether an increase in NV
is warranted, as a circumstance of sale adjustment, in order to account
for the effect of the duty drawback on home market sales. That case
does not signify that in the absence of a duty drawback adjustment, we
will make a circumstance of sale adjustment to NV.
Finally, Thai I-Mei has argued that, if the Department chooses not
to grant it a duty drawback adjustment, the Department should reduce
its raw material costs by the amount of the duty drawback. As support
for its proposed
[[Page 47106]]
methodology, Thai I-Mei cites Notice of Final Determination of Sales at
Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip
From India, 67 FR 34899 (May 12, 2002) and accompanying Issues and
Decision Memorandum at Comment 3 (PET Film from India). However, we
note that Thai I-Mei's reliance on that case is also misplaced because
in PET Film from India, the respondent demonstrated that it used a
portion of the duty drawback it received to pay import duties on raw
materials used in the production of the subject merchandise. In this
investigation, we find that Thai I-Mei is unable to tie the import duty
paid to the rebate received, and thus any cost adjustment for duty
drawback would be unwarranted.
Normal Value
A. Home Market Viability
In order to determine whether there is a sufficient volume of sales
in the home market to serve as a viable basis for calculating NV (i.e.,
the aggregate volume of home market sales of the foreign like product
is equal to or greater than five percent of the aggregate volume of
U.S. sales), we compared each respondent's volume of home market sales
of the foreign like product to the volume of U.S. sales of the subject
merchandise, in accordance with section 773(a)(1)(C) of the Act.
In this investigation, we determined that the Rubicon Group's and
UFP's aggregate volume of home market sales of the foreign like product
was insufficient to permit a proper comparison with U.S. sales of the
subject merchandise. Therefore, we used sales to the Rubicon Group's
and UFP's largest third country market (i.e., Canada) as the basis for
comparison-market sales in accordance with section 773(a)(1)(C) of the
Act and 19 CFR 351.404. Further, we determined that Thai I-Mei's
aggregate volume of home and third country market sales of the foreign
like product was insufficient to permit a proper comparison with U.S.
sales of the subject merchandise. Therefore, we used CV as the basis
for calculating NV for Thai I-Mei, in accordance with section 773(a)(4)
of the Act.
B. Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (LOT) as the EP or CEP. Pursuant to 19 CFR
351.412(c)(1), the NV LOT is that of the starting-price sales in the
comparison market or, when NV is based on CV, that of the sales from
which we derive selling, general and administrative expenses (SG&A) and
profit. For EP, the U.S. LOT is also the level of the starting-price
sale, which is usually from exporter to importer. For CEP, it is the
level of the constructed sale from the exporter to the importer.
To determine whether NV sales are at a different LOT than EP or CEP
sales, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the
unaffiliated customer. See 19 CFR 351.412(c)(2). If the comparison-
market sales are at a different LOT, and the difference affects price
comparability, as manifested in a pattern of consistent price
differences between the sales on which NV is based and comparison
market sales at the LOT of the export transaction, we make an LOT
adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP
sales, if the NV level is more remote from the factory than the CEP
level and there is no basis for determining whether the difference in
levels between NV and CEP affects price comparability, we adjust NV
under section 773(a)(7)(B) of the Act (the CEP-offset provision). See
Notice of Final Determination of Sales at Less Than Fair Value: Certain
Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731
(November 19, 1997).
In this investigation, we obtained information from each respondent
regarding the marketing stages involved in making the reported third
country, as applicable, and U.S. sales, including a description of the
selling activities performed by each respondent for each channel of
distribution. Company-specific LOT findings are summarized below.
We examined the chain of distribution and the selling activities
associated with sales reported by the Rubicon Group to distributors/
wholesalers and retailers in the Canadian market. The Rubicon Group's
sales to different customer categories did not differ from each other
with respect to selling activities (i.e., sales forecasting/market
research, sales promotion/trade shows/advertising, inventory
maintenance, order processing/invoicing, freight and delivery
arrangements, and direct sales personnel). Based on our overall
analysis, we found that all of the Rubicon Group's sales in the
Canadian market constituted one LOT.
In the U.S. market, the Rubicon Group reported both EP and CEP
sales to distributors/wholesalers, retailers, and food service industry
customers. The Rubicon Group reported sales through two channels of
distribution: (1) Direct sales from the Thai exporters to unaffiliated
U.S. customers; and (2) sales made to the affiliated U.S. importer.
According to the Rubicon Group, its Canadian and U.S. EP sales are at
the same LOT and this LOT is more advanced than that of its CEP sales.
We examined the selling activities performed for each channel.
Specifically, for direct sales (i.e., EP sales), the Rubicon Group
reported the following selling functions: sales forecasting/market
research, sales promotion/trade shows/advertising, inventory
maintenance, order processing/invoicing, freight and delivery
arrangements, and direct sales personnel. For sales to the U.S.
affiliate, the Rubicon Group reported the following selling functions:
sales promotion/trade shows/advertising, inventory maintenance, order
processing/invoicing, freight and delivery arrangements, and direct
sales personnel. Regarding CEP sales, although the Rubicon Group
reported that it performed fewer selling functions for sales to its
U.S. affiliate, we do not find that these selling functions differ
significantly from those performed for the direct sales.
After analyzing the selling functions performed for each sales
channel, we find that the distinctions in selling functions are not
material. We acknowledge that the Rubicon Group provides sales
forecasting/market research for sales to Canada and direct U.S. sales,
but not for sales to its U.S. affiliate. However, we do not find that
this difference, combined with the claimed difference in the levels of
the common selling functions, amounts to a significant difference in
the selling functions performed for the two channels of distribution.
Further, we note that the Rubicon Group has reported a higher level of
indirect selling expenses for sales made to Rubicon Resources.
Therefore, we do not find that the U.S. LOT for CEP sales is less
advanced than the LOT for Canadian sales.
Based on the above analysis, we find that the Rubicon Group
performed essentially the same selling functions when selling in both
Canada and the United States (for both the EP and CEP sales).
Therefore, we determine that these sales are at the same LOT and no LOT
adjustment is warranted. Because we find that no difference in the LOT
exists between markets, we have not granted a CEP offset to the Rubicon
Group.
UFP made sales to distributors through three channels of
distribution
[[Page 47107]]
in the Canadian market and two channels of distribution in the U.S.
market. UFP's two channels of distribution in the U.S. market are the
same as two of the three channels of distribution in the Canadian
market. Further, UFP sales through these two channels of distribution
did not differ from each other with respect to selling activities
(i.e., sales forecasting, sales promotion, order processing, sales and
marketing support, freight and delivery, packing, and payment
processing).
Regarding UFP's third channel of distribution in the Canadian
market, sales made through its affiliate Bright Sea, we note that UFP
performs the same selling activities to sell to Bright Sea as it does
to sell through its other sales channels. While Bright Sea also
provides order and payment processing, we do not find these additional
selling functions to be significant. Therefore, we find that all of
UFP's sales channels are at the same LOT. Accordingly, all comparisons
are at the same LOT for UFP and an adjustment pursuant to section
773(a)(7)(A) is not warranted.
With respect to Thai I-Mei, this exporter had no viable home or
third country market during the POI. Therefore, we based NV on CV. When
NV is based on CV, the NV LOT is that of the sales from which we derive
SG&A expenses and profit. (See Notice of Preliminary Determination of
Sales at Less Than Fair Value and Postponement of Final Determination:
Fresh Atlantic Salmon from Chile, 63 FR 2664 (January 16, 1998)). In
accordance with 19 CFR 351.412(d), the Department will make its LOT
determination under paragraph (d)(2) of this section on the basis of
sales of the foreign like product by the producer or exporter. Because
we based the selling expenses and profit for Thai I-Mei on the
weighted-average selling expenses incurred and profits earned by the
other respondents in the investigation, we are able to determine the
LOT of the sales from which we derived selling expenses and profit for
CV.
Thai I-Mei reported making sales through six channels of
distribution in the United States; however, it stated that the selling
activities it performed did not vary by channel of distribution.\8\
Thai I-Mei reported performing the following selling functions for
sales to its U.S. affiliate: order input/processing, direct sales
personnel, freight and delivery arrangements, and packing. We find that
the Rubicon Group's and UFP's selling functions performed for third
country sales are more significant than those performed by Thai I-Mei
to sell to its U.S. affiliate. Therefore, we determine that the NV LOT
for Thai I-Mei is more advanced than the LOT of Thai I-Mei's CEP sales.
However, because the Rubicon Group and UFP only made sales at one LOT
in their third country markets, and there is no additional information
on the record that would allow for an LOT adjustment, no LOT adjustment
is possible for Thai I-Mei. Because we find that the NV LOT is more
advanced than the CEP LOT, we have preliminarily granted a CEP offset
to Thai I-Mei.
---------------------------------------------------------------------------
\8\ Thai I-Mei states that its U.S. affiliate, Ocean Duke, did
not provide inventory maintenance for those sales which were shipped
directly to the U.S. customer (i.e., two of the six sales channels).
---------------------------------------------------------------------------
C. Cost of Production Analysis
Based on our analysis of the petitioners' allegation, we found that
there were reasonable grounds to believe or suspect that the Rubicon
Group's and UFP's sales of frozen and canned warmwater shrimp in the
third country were made at prices below their COP. Accordingly,
pursuant to section 773(b) of the Act, we initiated sales-below-cost
investigations to determine whether the Rubicon Group's and UFP's sales
were made at prices below their respective COPs. See Memorandum to
Louis Apple, Director Office 2, from the Team entitled: ``Petitioners''
Allegation of Sales Below the Cost of Production for Andaman Seafood
Co., Ltd., Chanthaburi Seafoods Co., Ltd., and Thailand Fishery Cold
Storage Public Co., Ltd.,'' dated June 2, 2004, and Memorandum to Louis
Apple, Director Office 2, from the Team entitled: ``Petitioners''
Allegation of Sales Below the Cost of Production for Union Frozen
Products Co., Ltd.,'' dated May 28, 2004.
1. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated COP
based on the sum of the cost of materials and fabrication for the
foreign like product, plus an amount for general and administrative
expenses (G&A), interest expenses, and third country packing costs. See
``Test of Third Country Sales Prices'' section below for treatment of
third country selling expenses. We relied on the COP data submitted by
the Rubicon Group, Thai I-Mei, and UFP except in the following
instances.
A. The Rubicon Group
1. We revised Rubicon Group's producer-specific G&A expense rates
in order to exclude revenue offsets which did not relate to the general
operations of the company.
2. We revised Rubicon Group's producer-specific financial expense
rates in order to include an interest income offset for one of the
entities.
3. For each of the six producers in the Rubicon Group, we deducted
the total ``excludable'' costs from the cost of goods sold (COGS)
denominators instead of a portion of them.
See Memorandum from Gina Lee to Neal Halper, Director Office of
Accounting, entitled: ``Cost of Production and Constructed Value
Calculation Adjustments for the Preliminary Determination--the Rubicon
Group,'' dated July 28, 2004.
B. Thai I-Mei
1. We used the COGS shown on Thai I-Mei's fiscal year 2003
financial statements net of packing expense and scrap offset as the
denominator of the G&A and interest expense rate calculations.
2. Thai I-Mei did not report direct packaging costs for certain
control numbers. For these control numbers, we assigned the direct
packaging costs for PE bags and film submitted by Thai I-Mei.
3. Thai I-Mei did not provide the Department with cost data for all
of its U.S. sales, as instructed in both the original questionnaire and
in the Department's section D supplemental questionnaire issued on June
16, 2004. Thai I-Mei's failure to provide this necessary information
meets the requirements for application of adverse facts available set
forth in Nippon Steel Corp. v. United States, 337 F. 3d 1373 (Fed. Cir.
2003) (Nippon Steel). As stated by the Court of Appeals for the Federal
Circuit during its discussion of section 776(a) of the Act in Nippon
Steel, ``[t] he focus of subsection (a) is respondent's failure to
provide information. The reason for the failure is of no moment. The
mere failure of a respondent to furnish requested information--for any
reason--requires Commerce to resort to other sources of information to
complete the factual record on which it makes its determination.'' See
Id. at 1381. In regard to the use of an adverse inference, section
776(b) of the Act states that the Department may use an adverse
inference if ``an interested party has failed to cooperate by not
acting to the best of its ability to comply with a request for
information. * * *'' In Nippon Steel, the Court set out two
requirements for drawing an adverse inference under section 776(b) of
the Act. First, the Department ``must make an objective showing that a
reasonable and responsible importer would have known that the requested
information was required to be kept and maintained under the applicable
statutes, rules, and
[[Page 47108]]
regulations.'' See Nippon Steel, 337 F. 3d 1382-83. Next the Department
must ``make a subjective showing that the respondent * * * has failed
to promptly produce the requested information'' and that ``failure to
fully respond is the result of the respondent's lack of cooperation in
either: (a) Failing to keep and maintain all required records, or (b)
failing to put forth its maximum efforts to investigate and obtain the
requested information from its records.'' See Id. Because: (1) Thai I-
Mei reasonably should have known that the necessary information was
required to be kept and maintained and it did not report this
information; and (2) it failed to put forth its maximum effort as
required by the Department's questionnaire, we find that Thai I-Mei's
failure to provide complete cost information in this case clearly meets
these standards. As facts available, we have applied the highest cost
reported for any control number, in accordance with our practice. See
Notice of Preliminary Determination of Sales at Less Than Fair Value
and Postponement of Final Determination: Certain Cold-Rolled Carbon
Steel Flat Products From Brazil, 67 FR 31200, 31202 (May 9, 2002).
For further discussion of these adjustments, see Memorandum from Oh
Ji to Neal Halper, Director Office of Accounting, entitled: ``Cost of
Production and Constructed Value Calculation Adjustments for the
Preliminary Determination--Thai I-Mei Frozen Foods Co., Ltd.,'' dated
July 28, 2004.
C. UFP
1. We revised UFP's G&A expense rate to include the ``Expense in
previous accounting period,'' because we find this expense was recorded
in the company's current year audited financial statements and
represents a current period expense.
See Memorandum from Ernest Gziryan to Neal Halper, Director Office
of Accounting entitled: ``Cost of Production and Constructed Value
Calculation Adjustments for the Preliminary Determination--The Union
Frozen Products Co., Ltd.,'' dated July 28, 2004.
2. Test of Third Country Sales Prices
On a product-specific basis, we compared the adjusted weighted-
average COP to the third country sales of the foreign like product, as
required under section 773(b) of the Act, in order to determine whether
the sale prices were below the COP. The prices were exclusive of any
applicable billing adjustments, movement charges, and direct and
indirect selling expenses. In determining whether to disregard third
country market sales made at prices less than their COP, we examined,
in accordance with sections 773(b)(1)(A) and (B) of the Act, whether
such sales were made (1) within an extended period of time in
substantial quantities, and (2) at prices which permitted the recovery
of all costs within a reasonable period of time.
3. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of the respondent's sales of a given product during the POI are
at prices less than the COP, we do not disregard any below-cost sales
of that product, because we determine that in such instances the below-
cost sales were not made in substantial quantities. Where 20 percent or
more of the respondent's sales of a given product during the POI are at
prices less than the COP, we determine that the below-cost sales
represent substantial quantities within an extended period of time, in
accordance with section 773(b)(1)(A) of the Act. In such cases, we also
determine whether such sales were made at prices which would not permit
recovery of all costs within a reasonable period of time, in accordance
with section 773(b)(1)(B) of the Act.
We found that, for certain specific products, more than 20 percent
of the Rubicon Group's and UFP's third country sales during the POI
were at prices less than the COP and, in addition, the below-cost sales
did not provide for the recovery of costs within a reasonable period of
time. We therefore excluded these sales and used the remaining sales,
if any, as the basis for determining NV, in accordance with section
773(b)(1) of the Act. Where there were no sales of any comparable
product at prices above the COP, we used CV as the basis for
determining NV.
D. Calculation of Normal Value Based on Comparison Market Prices
1. The Rubicon Group
For the Rubicon Group, we calculated NV based on delivered prices
to unaffiliated customers. We also made deductions for movement
expenses, including inland freight (plant to warehouse and warehouse to
port), warehousing, foreign inland insurance, gate charges,
international freight, and foreign brokerage and handling under section
773(a)(6)(B)(ii) of the Act.
For third country price-to-EP comparisons, we made circumstance of
sale adjustments for differences in credit expenses and commissions,
pursuant to section 773(a)(6)(C) of the Act.
For third country price-to-CEP comparisons, we made deductions for
third country credit expenses, commissions, and repacking, pursuant to
773(a)(6)(C) of the Act.
Furthermore, we made adjustments for differences in costs
attributable to differences in the physical characteristics of the
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and
19 CFR 351.411. We also deducted third country packing costs and added
U.S. packing costs in accordance with sections 773(a)(6)(A) and (B) of
the Act.
2. UFP
For UFP, we calculated NV based on delivered prices to unaffiliated
customers. We made adjustments, where appropriate, to the starting
price for billing adjustments. We also made deductions for movement
expenses, including foreign warehousing, foreign inland freight,
foreign brokerage and handling expenses, and international freight
(offset by destination delivery charge revenue), under section
773(a)(6)(B)(ii) of the Act. In addition, we made adjustments under
section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 for differences
in circumstances of sale for credit expenses (offset by interest
revenue), payment insurance, bank charges, discounting charges, and
commissions.
Furthermore, we made adjustments for differences in costs
attributable to differences in the physical characteristics of the
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and
19 CFR 351.411. We also deducted third country packing costs and added
U.S. packing costs in accordance with sections 773(a)(6)(A) and (B) of
the Act.
E. Calculation of Normal Value Based on Constructed Value
In accordance with section 773(a)(4) of the Act, for Thai I-Mei, we
based NV on CV because there was no viable home or third country
market.
In accordance with section 773(e) of the Act, we calculated CV
based on the sum of Thai I-Mei's cost of materials and fabrication for
the foreign like product, plus amounts for SG&A, profit, and U.S.
packing costs. We calculated the cost of materials and fabrication,
SG&A and interest based on the methodology described in the
``Calculation of COP'' section of this notice.
Because Thai I-Mei does not have a viable comparison market, the
Department cannot determine profit
[[Page 47109]]
under section 773(e)(2)(A) of the Act, which requires sales by the
respondent in question in the ordinary course of trade in a comparison
market. Likewise, because Thai I-Mei does not have sales of any product
in the same general category of products as the subject merchandise, we
are unable to apply alternative (i) of section 773(e)(2)(B) of the Act.
Further, the Department cannot calculate profit based on alternative
(ii) of this section because the other two respondents in this
investigation do not have viable home markets and 19 CFR 351.405(b)
requires a profit ratio under this alternative be based on home market
sales. Therefore, we calculated Thai I-Mei's CV profit and selling
expenses based on the third alternative, any other reasonable method,
in accordance with section 773(e)(2)(B)(iii) of the Act. As a result,
as a reasonable method, we calculated Thai I-Mei's CV profit and
selling expenses as a weighted-average of the profit and selling
expenses incurred by the two other respondents in this investigation.
Specifically, we calculated the weighted-average profit and selling
expenses incurred on third country sales by the Rubicon Group and UFP.
Pursuant to alternative (iii), the Department has the option of
using any other reasonable method, as long as the amount allowed for
profit is not greater than the amount realized by exporters or
producers ``in connection with the sale, for consumption in the foreign
country, of merchandise that is in the same general category of
products as the subject merchandise,'' the ``profit cap.'' We are
unable to calculate the profit cap because the available data (i.e.,
the Rubicon Group and UFP data) are based solely on the third country
sales, and thus cannot be used under 19 CFR 351.405(b). Therefore, as
facts available we are applying option (iii), without quantifying a
profit cap. See the Memorandum from Alice Gibbons to the file entitled,
``Calculations Performed for Thai I-Mei Frozen Foods Co., Ltd. for the
Preliminary Determination in the Investigation of Certain Frozen and
Canned Warmwater Shrimp from Thailand'' dated July 28, 2004.
For comparisons to CEP, we deducted from CV the weighted-average
third country direct selling expenses. Finally, we made a CEP offset
pursuant to section 773(a)(7)(B) of the Act and 19 CFR 351.412(f). We
calculated the CEP offset as the lesser of the weighted-average third
country indirect selling expenses or the indirect selling expenses
deducted from the starting price in calculating CEP.
Currency Conversion
We made currency conversions into U.S. dollars in accordance with
section 773A(a) of the Act based on the exchange rates in effect on the
dates of the U.S. sales as certified by the Federal Reserve Bank.
Critical Circumstances
On May 19, 2004, the petitioners alleged that there is a reasonable
basis to believe or suspect critical circumstances exist with respect
to the antidumping investigations of certain frozen and canned
warmwater shrimp from Thailand. In accordance with 19 CFR
351.206(c)(2)(i), because the petitioners submitted critical
circumstances allegations more than 20 days before the scheduled date
of the preliminary determination, the Department must issue preliminary
critical circumstances determinations not later than the date of the
preliminary determination.
Section 733(e)(1) of the Act provides that the Department will
preliminarily determine that critical circumstances exist if there is a
reasonable basis to believe or suspect that: (A)(i) There is a history
of dumping and material injury by reason of dumped imports in the
United States or elsewhere of the subject merchandise; or (ii) the
person by whom, or for whose account, the merchandise was imported knew
or should have known that the exporter was selling the subject
merchandise at less than its fair value and that there was likely to be
material injury by reason of such sales; and, (B) there have been
massive imports of the subject merchandise over a relatively short
period. Section 351.206(h)(1) of the Department's regulations provides
that, in determining whether imports of the subject merchandise have
been ``massive,'' the Department normally will examine: (i) The volume
and value of the imports; (ii) seasonal trends; and (iii) the share of
domestic consumption accounted for by the imports. In addition, section
351.206(h)(2) of the Department's regulations provides that an increase
in imports of 15 percent during the ``relatively short period'' of time
may be considered ``massive.'' Section 351.206(i) of the Department's
regulations defines ``relatively short period'' as normally being the
period beginning on the date the proceeding begins (i.e., the date the
petition is filed) and ending at least three months later. The
regulations also provide, however, that if the Department finds that
importers, exporters, or producers had reason to believe, at some time
prior to the beginning of the proceeding, that a proceeding was likely,
the Department may consider a period of not less than three months from
that earlier time.
In determining whether the relevant statutory criteria have been
satisfied, we considered: (i) Exporter-specific shipment data requested
by the Department; (ii) information presented by the respondents in
their May 26, 2004, and June 14, 2004, submissions, and (iii) the ITC
preliminary injury determination.
To determine whether there is a history of injurious dumping of the
merchandise under investigation, in accordance with section
733(e)(1)(A)(i) of the Act, the Department normally considers evidence
of an existing antidumping duty order on the subject merchandise in the
United States or elsewhere to be sufficient. See Preliminary
Determination of Critical Circumstances: Steel Concrete Reinforcing
Bars From Ukraine and Moldova, 65 FR 70696 (November 27, 2000). With
regard to imports of certain frozen and canned warmwater shrimp from
Thailand, the petitioners make no specific mention of a history of
dumping for Thailand. We are not aware of any antidumping order in the
United States or in any country on certain frozen and canned warmwater
shrimp from Thailand. For this reason, the Department does not find a
history of injurious dumping of the subject merchandise from Thailand
pursuant to section 733(e)(1)(A)(i) of the Act.
To determine whether the person by whom, or for whose account, the
merchandise was imported knew or should have known that the exporter
was selling the subject merchandise at less than its fair value and
that there was likely to be material injury by reason of such sales in
accordance with 733(e)(1)(A)(ii) of the Act, the Department normally
considers margins of 25 percent or more for EP sales, or 15 percent or
more for CEP transactions, sufficient to impute knowledge of dumping.
See Preliminary Determination of Sales at Less Than Fair Value: Certain
Cut-to-Length Carbon Steel Plate from the People's Republic of China,
62 FR 31972, 31978 (October 19, 2001).
For the Rubicon Group, Thai I-Mei, and UFP, we preliminarily
determine that there is not a sufficient basis to find that importers
should have known that the exporter was selling the subject merchandise
at less than its fair value and that there was likely to be material
injury by reason of such sales pursuant to section 733(e)(1)(A)(ii) of
the Act, because the calculated margins were not 25 percent or more for
EP sales, or 15 percent or more for CEP sales. Because
[[Page 47110]]
the knowledge criterion has not been met, we have not addressed the
second criterion of whether or not imports were massive in the
comparison period when compared to the base period.
Regarding the companies subject to the ``all others'' rate, it is
the Department's normal practice to conduct its critical circumstances
analysis for these companies based on the experience of investigated
companies. See Notice of Final Determination of Sales at Less Than Fair
Value: Certain Steel Concrete Reinforcing Bars From Turkey, 62 FR 9737,
9741 (March 4, 1997). However, the Department does not automatically
extend an affirmative critical circumstances determination to companies
covered by the ``all others'' rate. See Notice of Final Determination
of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in
Coils from Japan, 64 FR 30574 (June 8, 1999) (Stainless Steel from
Japan). Instead, the Department considers the traditional critical
circumstances criteria with respect to the companies covered by the
``all others'' rate. Consistent with Stainless Steel from Japan, the
Department has, in this case, applied the traditional critical
circumstances criteria to the ``all others'' category for the
antidumping investigation of shrimp from Thailand.
The dumping margin for the ``all others'' category in the instant
case, 6.39 percent, does not exceed the 15/25 percent thresholds
necessary to impute knowledge of dumping. Therefore, we do not find
that importers knew or should have known that there would be material
injury from the dumped merchandise.
In summary, we find that there is no reasonable basis to believe or
suspect importers had knowledge of dumping and the likelihood of
material injury with respect to certain frozen and canned warmwater
shrimp from Thailand. Given the analysis summarized above, and
described in more detail in the Critical Circumstances Memo, we
preliminarily determine that critical circumstances do not exist for
imports of certain frozen and canned warmwater shrimp produced in and
exported from Thailand.
We will make a final determination concerning critical
circumstances for all producers and exporters of subject merchandise
from Thailand when we make our final dumping determinations in this
investigation, which will be 135 days after publication of the
preliminary dumping determination.
Verification
As provided in section 782(i) of the Act, we will verify all
information relied upon in making our final determination.
Suspension of Liquidation
In accordance with section 733(d)(2) of the Act, we are directing
U.S. Customs and Border Protection (CBP) to suspend liquidation of all
imports of subject merchandise that are entered, or withdrawn from
warehouse, for consumption on or after the date of publication of this
notice in the Federal Register.
We will instruct CBP to require a cash deposit or the posting of a
bond equal to the weighted-average amount by which the NV exceeds EP or
CEP, as indicated in the chart below. These suspension-of-liquidation
instructions will remain in effect until further notice. The weighted-
average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average Critical
Exporter/manufacturer margin circumstances
percentage
------------------------------------------------------------------------
The Rubicon Group........................... 5.56 No
Thai I-Mei.................................. 5.91 No
UFP......................................... 10.25 No
All Others.................................. 6.39 No
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
Disclosure
We will disclose the calculations used in our analysis to parties
in this proceeding in accordance with 19 CFR 351.224(b).
Public Comment
Case briefs for this investigation must be submitted to the
Department no later than seven days after the date of the final
verification report issued in this proceeding. Rebuttal briefs must be
filed five days from the deadline date for case briefs. A list of
authorities used, a table of contents, and an executive summary of
issues should accompany any briefs submitted to the Department.
Executive summaries should be limited to five pages total, including
footnotes. Section 774 of the Act provides that the Department will
hold a public hearing to afford interested parties an opportunity to
comment on arguments raised in case or rebuttal briefs, provided that
such a hearing is requested by an interested party. If a request for a
hearing is made in this investigation, the hearing will tentatively be
held two days after the rebuttal brief deadline date at the U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC 20230. Parties should confirm by telephone the time,
date, and place of the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, within 30 days of the publication of this notice. Requests should
contain: (1) The party's name, address, and telephone number; (2) the
number of participants; and (3) a list of the issues to be discussed.
Oral presentations will be limited to issues raised in the briefs.
We will make our final determination no later than 135 days after
the publication of this notice in the Federal Register.
This determination is published pursuant to sections 733(f) and
777(i) of the Act.
Dated: July 28, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-17816 Filed 8-3-04; 8:45 am]
BILLING CODE 3510-DS-P