[Federal Register: January 27, 2004 (Volume 69, Number 17)]
[Notices]
[Page 3876-3883]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27ja04-34]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-838, A-331-802, A-533-840, A-549-822, A-570-893, A-552-802]
Notice of 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
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Initiation of Antidumping Duty Investigations.
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EFFECTIVE DATE: January 27, 2004.
FOR FURTHER INFORMATION CONTACT: David Goldberger at (202) 482-4136
[[Page 3877]]
(Brazil and Ecuador), Michael Strollo at 202-482-0629 (India and
Thailand); Alex Villanueva at (202) 482-3208 (People's Republic of
China and Socialist Republic of Vietnam); Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW, Washington, DC 20230.
SUPPLEMENTARY INFORMATION:
Initiation of Investigations
The Petitions
On December 31, 2003, the Department of Commerce ``the Department''
received petitions filed in proper form by the Ad Hoc Shrimp Trade
Action Committee, an ad hoc coalition representative of U.S. producers
of frozen and canned warmwater shrimp and harvesters of wild-caught
warmwater shrimp ``the petitioner''. The petitioner filed amendments to
the petitions on January 12, 2004.
In accordance with section 732(b)(1) of the Tariff Act of 1930
(``the Act''), the petitioner alleges that imports of certain frozen
and canned warmwater shrimp from Brazil, Ecuador, India, Thailand, the
People's Republic of China (``the PRC'') and the Socialist Republic of
Vietnam (``Vietnam''), are, or are likely to be, sold in the United
States at less than fair value within the meaning of section 731 of the
Act, and that imports from Brazil, Ecuador, India, Thailand, the PRC
and Vietnam, are materially injuring, or are threatening to materially
injure, an industry in the United States.
The Department finds that the petitioner filed these petitions on
behalf of the domestic industry because it is an interested party as
defined in section 771(9)(G) of the Act and it has demonstrated
sufficient industry support with respect to each of the antidumping
investigations that it is requesting the Department to initiate. See
infra, ``Determination of Industry Support for the Petitions.''
Scope of Investigations
The scope of these investigations include 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,\1\ deveined or not deveined, cooked or
raw, or otherwise processed in frozen or canned form.
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\1\ ``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 investigations, 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 investigations. 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 investigations.
Excluded from the scope are (1) breaded shrimp 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.
The products covered by this scope are currently classified under
the following HTSUS subheadings; 0306.13.00.03, 0306.13.00.06,
0306.13.00.09, 0306.13.00.12, 0306.13.00.15, 0306.13.00.18,
0306.13.00.21, 0306.13.00.24, 0306.13.00.27, 0306.13.00.40,
1605.20.10.10, 1605.20.10.30, and 1605.20.10.40. These HTSUS
subheadings are provided for convenience and for Customs and Border
Protection (``CBP'') purposes only and are not dispositive, but rather
the written descriptions of the scope of these investigations is
dispositive.
As discussed in the preamble to the Department's regulations
(Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296,
27323 (May 19, 1997)), we are setting aside a period for parties to
raise issues regarding product coverage. The Department encourages all
parties to submit such comments within 20 calendar days of publication
of this notice. Comments should be addressed to Import Administration's
Central Records Unit, Room 1870, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW, Washington, DC 20230. The period of
scope consultations is intended to provide the Department with ample
opportunity to consider all comments and consult with parties prior to
the issuance of the preliminary determinations.
Determination of Industry Support for the Petitions
Section 732(b)(1) of the Act requires that a petition be filed on
behalf of the domestic industry. Section 732(c)(4)(A) of the Act
provides that the Department's industry support determination, which is
to be made before the initiation of the investigation, be based on
whether a minimum percentage of the relevant industry supports the
petition. A petition meets this requirement if the domestic producers
or workers who support the petition account for: (1) at least 25
percent of the total production of the domestic like product; and (2)
more than 50 percent of the production of the domestic like product
produced by that portion of the industry expressing support for, or
opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act
provides that, if the petition does not establish support of domestic
producers or workers accounting for more than 50 percent of the total
production of the domestic like product, the Department shall: i) poll
the industry or rely on other information in order to determine if
there is support for the petition, as required by subparagraph (A), or
ii) determine industry support using a statistically valid sampling
method.
Section 771(4)(A) of the Act defines the ``industry'' as the
producers of a domestic like product. In investigations involving some
processed agricultural products, the statue allows the Department also
to include producers of the raw agricultural product with the
definition of the industry. See 771(4)(E) of the Act. For a full
discussion, see the January 20, 2004, Memorandum to Joseph Spetrini and
Jeffrey May from James Doyle, Norbert Gannon, Alex Villanueva, and
Christopher Riker entitled ``Antidumping Duty Petitions on Certain
Frozen and Canned
[[Page 3878]]
Warmwater Shrimp from Brazil, Ecuador, India, the People's Republic of
China, Thailand, and the Socialist Republic of Vietnam: Domestic Like
Product Analysis and Calculation of Industry Support'' (``DLP and
Industry Support Memo''). The International Trade Commission (``ITC''),
which is responsible for determining whether the domestic
industry has been injured, must also determine what
constitutes a domestic like product in order to define the industry.
While both the Department and the ITC must apply the same statutory
definition regarding the domestic like product (section 771(10) of the
Act), they do so for different purposes and pursuant to a separate and
distinct authority. In addition, the Department's determination is
subject to limitations of time and information. Although this may
result in different definitions of the like product, such differences
do not render the decision of either agency contrary to the law.\2\
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\2\ See Algoma Steel Corp. Ltd. v. United States, 688 F. Supp.
639, 642-44 (Ct. Int'l Trade 1988) (``the ITC does not look behind
ITA's determination, but accepts ITA's determination as to which
merchandise is in the class of merchandise sold at LTFV'').
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Section 771(10) of the Act defines the domestic like product as ``a
product which is like, or in the absence of like, most similar in
characteristics and uses with, the article subject to an investigation
under this title.'' Thus, the reference point from which the domestic
like product analysis begins is ``the article subject to an
investigation,'' i.e., the class or kind of merchandise to be
investigated, which normally will be the scope as defined in the
petition.
In this case, the domestic like product referred to in the petition
is the single domestic like product defined in the ``Scope of
Investigations'' section, above. At this time, the Department has no
basis on the record to find the petition's definition of the domestic
like product to be inaccurate. The Department, therefore, has adopted
the domestic like product definition set forth in the petition. For a
discussion of the domestic like product analysis in this case, see the
DLP and Industry Support Memo.
Moreover, the Department has determined that the petition contains
adequate evidence of industry support; therefore, polling was
unnecessary (see DLP and Industry Support Memo). Specifically, based on
the analysis contained in the DLP and Industry Support Memo, the
Department finds that producers supporting the petition represent over
50 percent of total production of the domestic like product.
Accordingly, the Department determines that this petition is filed
on behalf of the domestic industry within the meaning of section
732(b)(1) of the Act.
Export Price and Normal Value
The following are descriptions of the allegations of sales at less
than fair value upon which the Department based its decision to
initiate these investigations. The sources of data for the deductions
and adjustments relating to U.S. and foreign market prices, constructed
value (``CV''), and factors of production are discussed in greater
detail in the country-specific Initiation Checklists, as appropriate.
Should the need arise to use any of this information as facts available
under section 776 of the Act in our preliminary or final
determinations, we will re-examine the information and revise the
margin calculations.
Regarding an investigation involving a non-market economy (``NME'')
country, the Department presumes, based on the extent of central
government control in an NME, that a single dumping margin, should
there be one, is appropriate for all NME exporters in the given
country. In the course of these investigations, all parties will have
the opportunity to provide relevant information related to the issues
of a country's NME status and the granting of separate rates to
individual exporters. See, e.g., Notice of Final Determination of Sales
at Less Than Fair Value: Silicon Carbide from the People's Republic of
China, 59 FR 22585, 22586-87 (May 2, 1994).
Brazil
Export Price
The anticipated period of investigation ``POI'' for Brazil is
October 1, 2002, through September 30, 2003.
The petitioner based export price (``EP'') on average unit values
(``AUVs'') of headless, shell-on, frozen warmwater shrimp for the POI
from official U.S. import statistics. As the AUVs used were net of
international freight, insurance and import charges, no further
deductions were made to derive U.S. prices. See the Initiation
Checklist.
Normal Value
The petitioner based normal value (``NV'') on home market ex-
factory price quotes from Brazilian producers of head-on, shell-on
frozen warmwater shrimp which it obtained from market research. See the
January 16, 2004, Memorandum to the File from David Goldberger and Jim
Nunno entitled ``Telephone Conversation with Foreign Market
Researcher.'' These prices were adjusted to reflect headless, shell-on
frozen warmwater shrimp, comparable to that which is imported into the
United States. The petitioner made currency conversions based on the
average of the daily real/U.S. dollar exchange rates as posted on the
Department's Web site. See the Initiation Checklist.
The estimated dumping margins in the petition, based on comparisons
of EP to NV, ranged from 32 percent to 349 percent.
Ecuador
Export Price
The anticipated POI for Ecuador is October 1, 2002, through
September 30, 2003.
The petitioner based EP on AUVs of headless, shell-on, frozen
warmwater shrimp for the POI from official U.S. import statistics. As
the AUVs used were net of international freight, insurance and import
charges, no further deductions were made to derive U.S. prices. See the
Initiation Checklist.
Normal Value
During the course of the initiation, the petitioner placed on the
record information which indicated that there is no viable home market
for certain frozen and canned warmwater shrimp from Ecuador because
nearly all shrimp produced in Ecuador is produced for the export
market. We confirmed this information based on our conversation with
the market researcher. See the January 16, 2004, Memorandum to the File
from David Goldberger and Jim Nunno entitled ``Telephone Conversation
with Foreign Market Researcher.''
In selecting the third-country market, the petitioner chose Italy
because: 1) it is the largest third-country market for scope
merchandise outside of the United States during the POI; 2) the
aggregate quantity of scope merchandise sold by Ecuadorian exporters to
Italy accounted for more than five percent of the aggregate quantity of
the scope merchandise sold in the United States; and 3) the product
sold to the Italian market is comparable to the product which served as
the basis for EP. After examining this evidence, we found the
petitioner's selection of Italy as the comparison market to be
reasonable.
The petitioner based NV on prices published by the Torino, Italy
Chamber of Commerce for the same count sizes upon which it based EP.
These prices were adjusted to reflect headless, shell-on shrimp,
comparable to that which is imported into the United States. The
petitioner further adjusted these prices
[[Page 3879]]
by deducting importer and wholesaler mark-ups, import charges and
international freight. Finally, the petitioner made currency
conversions based on the average of the daily euro/U.S. dollar exchange
rates as posted on the Department's Web site. See the Initiation
Checklist.
The estimated dumping margins in the petition, based on comparisons
of EP to NV, ranged from 85 percent to 166 percent.
India
Export Price
The anticipated POI for India is October 1, 2002, through September
30, 2003.
The petitioner based EP on AUVs of headless, shell-on, frozen
warmwater shrimp for the POI from official U.S. import statistics.
Although the AUVs used were net of international freight, insurance and
import charges, the petitioner made a deduction for import charges, as
well as foreign inland freight, to derive U.S. prices. We adjusted the
petitioner's EP calculation by not deducting an amount for foreign
inland freight and U.S. import expenses because the petitioner either
provided inadequate support to deduct these expenses from EP in the
petition, or the starting price did not include them. See the
Initiation Checklist.
Normal Value
The petitioner claims that the home market is not viable for
purposes of calculating normal value. Section 773(a)(1)(C)(iii) of the
Act provides that the Department may determine that home market sales
are inappropriate as a basis for determining normal value if the
particular market situation would not permit a proper comparison. In
the petition, the petitioner placed on the record information which
indicated that virtually all of the frozen and canned warmwater shrimp
sold in the home market is of non-export quality. We confirmed this
information based on our conversations with the market researcher. See
the January 16, 2004, Memorandum to the File from Alice Gibbons and Jim
Nunno entitled ``Telephone Conversations with Foreign Market
Researcher.'' Because the home market does not constitute a valid basis
for calculating normal value, the petitioner provided sales of
warmwater shrimp to India's largest export market, Japan. According to
the petitioner, this is consistent with the Department's prior
practice. See Notice of Final Determination of Sales at Less Than Fair
Value: Fresh Atlantic Salmon From Chile, 63 FR 31411, 31418 (June 9,
1998). Although we have accepted the petitioner's claim for purposes of
initiating this case, we will continue to examine the issue of home
market viability as this case progresses.
In selecting the third-country market, the petitioner chose Japan
because: 1) it is the largest third-country market for scope
merchandise outside of the United States during the POI; 2) the
aggregate quantity of scope merchandise sold by Indian exporters to
Japan accounted for more than five percent of the aggregate quantity of
the scope merchandise sold in the United States; and 3) the product
sold to the Japanese market is comparable to the product which served
as the basis for EP. After examining this evidence, we found the
petitioner's selection of Japan as the comparison market to be
reasonable.
The petitioner based NV on publicly listed price quotations from
the Tokyo Central Wholesale Market for the same count sizes upon which
it based EP. These prices were adjusted to reflect headless, shell-on
and frozen warmwater shrimp, comparable to that which is imported into
the United States. The petitioner further adjusted NV by deducting
import charges. We revised the petitioner's calculation of the average
yen/U.S. dollar exchange rate by calculating a simple average of the
daily rates as posted on the Department's Web site rather than monthly
averages as posted on the Federal Reserve's Web site. In addition, as
noted in the EP section above, we adjusted the petitioner's calculation
by not deducting an amount for foreign inland freight expenses. Because
the proposed foreign inland freight adjustment to NV is based on the
identical information as the proposed adjustment to EP, we similarly
find that the petitioner provided inadequate support to substantiate
this adjustment. Therefore, we have also not deducted foreign inland
freight expenses from NV. See the Initiation Checklist.
Pursuant to section 773(b) of the Act, the petitioner provided
information demonstrating reasonable grounds to believe or suspect that
sales by Indian producers in the relevant foreign market were made at
prices below the cost of production (``COP'') and, accordingly,
requested that the Department conduct a country-wide sales-below-COP
investigation in connection with this investigation. The Statement of
Administrative Action (``SAA''), submitted to the Congress in
connection with the interpretation and application of the URAA, states
that an allegation of sales below COP need not be specific to
individual exporters or producers. SAA, H.R. Doc. No. 103-316 at 833
(1994). The SAA, at 833, states that ``Commerce will consider
allegations of below-cost sales in the aggregate for a foreign country,
just as Commerce currently considers allegations of sales at less than
fair value on a country-wide basis for purposes of initiating an
antidumping investigation.''
Further, the SAA provides that section 773(b)(2)(A) of the Act
retains the requirement that the Department have ``reasonable grounds
to believe or suspect'' that below-cost sales have occurred before
initiating such an investigation. Reasonable grounds exist when an
interested party provides specific factual information on costs and
prices, observed or constructed, indicating that sales in the foreign
market in question are at below-cost prices. Id.
Pursuant to section 773(b)(3) of the Act, COP consists of the cost
of manufacturing (``COM''); selling, general, and administrative
expenses (``SG&A''); financial expenses; and packing expenses. Here,
the petitioner calculated the COM based on its own production
experience, adjusted for known differences between costs to produce
frozen and canned warmwater shrimp in the United States and in India
using publically available information. Specifically, for fresh shrimp,
the petitioner used consumption rates published by the National Marine
Fisheries Service. The petitioner used the U.S. producers' own
consumption rates for other raw materials, direct labor and energy. To
adjust the U.S. producers' costs associated with fresh shrimp, the
petitioner relied upon market research. To adjust the U.S. producers'
costs associated with sodium tripolyphosphate and packing materials,
the petitioner relied upon Indian import statistics as published by the
Government of India Ministry of Commerce and Industry. To adjust the
U.S. producers' costs associated with labor, the petitioner relied upon
Government of India Labor Bureau statistics. To adjust the U.S.
producers' costs associated with utilities, the petitioner relied upon
Organization for Economic Cooperation and Development's (``OECD'')
statistics. The petitioner relied upon its own overhead costs, except
for depreciation, which was based on the 2002 financial statements of
two Indian seafood processors. To calculate SG&A and financial expense,
the petitioner relied upon the 2002 financial statements of two Indian
seafood processors.
Based on a comparison of the Japanese market prices for frozen and
canned warmwater shrimp to the COP calculated in the petition, we find
[[Page 3880]]
reasonable grounds to believe or suspect that sales of the foreign like
product were made at prices below the COP within the meaning of section
773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a
country-wide cost investigation relating to third-country sales to
Japan.
Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the
petitioner also based NV for sales in the United States on CV. The
petitioner calculated CV using the same COM, SG&A, and financial
expense figures used to compute the Japanese third-country market
costs. The petitioner did not include any amount for profit. Therefore,
CV is equivalent to COP.
Based on the changes noted above, the recalculated dumping margins
for certain frozen and canned warmwater shrimp from India range from
82.30 percent to 110.90 percent.
People's Republic of China
Export Price
The anticipated POI for the PRC is April 1, 2003, through September
30, 2003.
The petitioner based EP on AUVs of headless, shell-on, frozen
warmwater shrimp for the POI from official U.S. import statistics. As
the AUVs used were net of international freight, insurance and import
charges, no further deductions for these expenses were made to derive
U.S. prices. See the Initiation Checklist.
Normal Value
The PRC is an NME country and no determination to the contrary has
yet been made by the Department. See the Initiation Checklist. In
accordance with section 771(18)(c)(i) of the Act, any determination
that a foreign country has at one time been considered an NME shall
remain in effect until revoked. See, e.g., Notice of Final
Determination of Sales at Less Than Fair Value: Saccharin from the
People's Republic of China, 68 FR 27530, 27531 (May 20, 2003)
(``Saccharin'').\3\ Accordingly, the petitioner provided a dumping
margin calculation using the Department's NME methodology as required
by 19 CFR 351.202(b)(7)(i)(C).
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\3\ The presumption of NME status for the PRC has not been
revoked by the Department and remains in effect for purposes of the
initiation and this investigation. Therefore, the NV of the product
is appropriately based on factors of production valued in a
surrogate market economy country in accordance with 773(c) of the
Act.
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The petitioner based NV on factors of production. The petitioner
asserted that it did not have specific, reliable information on the
factors of production incurred for subject merchandise in the PRC.
Therefore, the petitioner relied upon an average of factors of
production ratios used in the United States for the NV calculation.
Specifically, the petition used production factors provided by several
U.S. warmwater shrimp processors. See the petitioner's January 12
submission at Attachment A. The petitioner argues that because these
companies are significant producers of the domestic like product, their
experience is an appropriate model for estimating the costs of PRC
manufacturers. The model accounts for the amount of each manufacturing
input required to produce one pound of frozen warmwater shrimp. The
main factor is raw warmwater shrimp; however, other factors of
production included in the NV calculation are: tripolyphosphate, labor,
electricity, water, overhead and packing materials. See the Initiation
Checklist.
The petitioner selected India as the surrogate country. The
petitioner argued that, pursuant to section 773(c)(4) of the Act, India
is an appropriate surrogate because it is a market-economy country that
is at a comparable level of economic development to the PRC and is a
significant producer of comparable merchandise.\4\ Based on the
information provided by the petitioner, we believe that its use of
India as a surrogate country is appropriate for purposes of initiating
this investigation. See the Initiation Checklist.
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\4\ As noted in the India section of this notice, the Indian
home market for warmwater shrimp is not viable. However, this
situation does not lessen India's ability to be properly designated
as the appropriate primary surrogate country for the PRC and
Vietnam. Pursuant to section 773(c) of the Act, an appropriate
surrogate country is a market economy country that is (A) at a level
of comparable economic development to the NME country, and (B) a
significant producer of comparable merchandise. India is
economically comparable to both the PRC and Vietnam, and India is
the second largest producer of shrimp in the world after the PRC.
See Petition at Volume I, page 8. It follows that India is an
appropriate surrogate for purposes of this initiation and these
investigations.
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In accordance with section 773(c)(4) of the Act, the petitioner
valued factors of production, where possible, on reasonably available,
public surrogate country data. To value certain raw materials, the
petitioner used official Indian government import statistics, excluding
those values from countries previously determined by the Department to
be NME countries and excluding imports into India from Indonesia, Korea
and Thailand, in light of the prevalence of export subsidies in those
countries. See Notice of Final Determination of Sales at Less Than Fair
Value: Ferrovanadium from the People's Republic of China, 67 FR 71137,
71139 (Nov. 29, 2002). For inputs valued in Indian rupees and not
contemporaneous with the POI (i.e., April 2003 - September 2003), the
petitioner used information from the wholesale price indices (``WPI'')
in India as published in the International Financial Statistics by the
International Monetary Fund to determine the appropriate adjustments
for inflation. In addition, the petitioner made currency conversions,
where necessary, based on the average rupee/U.S. dollar exchange rate
for the POI.
To value raw warmwater shrimp, the major input, the petitioner used
a market researcher to determined the cost of shrimp in India. See the
January 16, 2004, Memorandum to the File from John LaRose and Jim Nunno
entitled ``Telephone Conversation with Foreign Market Researcher.'' The
research was conducted in Mumbai, India and completed in December 2003.
Sodium tripolyphosphate and packing materials were valued by the
petitioner using Indian import statistics, as reported in the Monthly
Statistics of Foreign Trade of India. The price information from the
Monthly Statistics of Foreign Trade of India represents cumulative
import values for the period April 2002 to March 2003. To value water,
the petitioner calculated a surrogate value based on price data in
India as reported by the Second Water Utilities Data Book, Asian and
Pacific Region, published by the Asian Development Bank. Electricity in
India was valued by the petitioner using the OECD Energy Prices and
Taxes data. In accordance with 19 CFR 351.408(c)(3), the Department
calculates and publishes the surrogate values for labor to be used in
NME cases. Therefore, to value labor, the petitioner relied on
published wage rates and a labor rate of $0.83 per hour.
The petitioner calculated surrogate financial ratios (depreciation,
SG&A and profit) using the 2001 financial statements of two Indian
seafood processors that process marine products. To calculate a single
surrogate ratio for overhead, depreciation, SG&A, and profit, the
petitioner calculated a simple average for the two Indian seafood
processors.
In its calculation of the surrogate profit and financial expenses,
the petitioner included a zero value expense when averaging the
experiences of the two Indian seafood processors.
However, it is the Department's practice not to average a zero
expense into the calculation of the surrogate financial ratios. See
Notice of Initiation of Antidumping Duty Investigations: Electrolytic
Manganese Dioxide From Australia, Greece, Ireland, Japan, South Africa
and the People's Republic of
[[Page 3881]]
China, 68 FR 51551 (Aug. 27, 2003) (``EMD''). Therefore, the Department
has recalculated the surrogate financial ratios. See the Initiation
Checklist at Attachment II. In addition, the petitioner included U.S.
producer costs in the normal value calculation of non-depreciation
overhead because they were unable to identify those unique costs in the
Indian surrogate company financial statements. However, section
773(c)(4) of the Act states that ``{t{time} he administering authority,
in valuing factors of production under paragraph (1), shall utilize, to
the extent possible, the prices or costs of factors of production in
one or more market economies that are (A) at a level of economic
development comparable to that of the non market economy, and (B)
significant producers of comparable merchandise.'' Therefore, U.S.
prices or costs are not appropriate for use as surrogate values. See,
e.g., Notice of Initiation of Antidumping Duty Investigations:
Polyvinyl Alcohol from Germany, Japan, the Peoples Republic of China,
the Republic of Korea, and Singapore, 67 FR 61591 (Oct. 1, 2002) and
accompanying Initiation Checklist at page 19 (``PVA''). The ultimate
goal of the Department's margin calculations is to achieve the greatest
accuracy possible. The Department has found no evidence on the record
showing that non-depreciation overhead is not included in the overhead
figures of the Indian surrogate company financial statements.
Therefore, to be conservative, the Department has determined that the
U.S. producer costs for non-depreciation overhead should not be
included in the normal value calculation. See the Initiation Checklist.
Based on comparisons of EP to NV, calculated in accordance with
section 773(c) of the Act, the estimated recalculated dumping margins
for certain frozen and canned warmwater shrimp from the PRC range from
112.81 percent to 263.68 percent.
Thailand
Export Price
The anticipated POI for Thailand is October 1, 2002, through
September 30, 2003.
The petitioner based EP on AUVs of frozen, cooked and peeled shrimp
for the POI from official U.S. import statistics. Although the AUVs
used were net of international freight, insurance and import charges,
the petitioner made a deduction for import charges, as well as foreign
inland freight, to derive U.S. prices. We adjusted the petitioner's EP
calculation by not deducting amounts for foreign inland freight and
U.S. import expenses because the petitioner either provided inadequate
support for these expenses in the petition, or the starting price did
not include them. See the Initiation Checklist.
Normal Value
In the petition, the petitioner placed on the record information
which indicated that there is no viable home market for certain frozen
and canned warmwater shrimp from Thailand because the Thai market
purchases only fresh (i.e., live, unchilled or else chilled,
unprocessed) or traditional household industry-produced dried shrimp.
We confirmed this information based on our conversation with the market
researcher. See the January 16, 2004, Memorandum to the File from
Elizabeth Eastwood and Jim Nunno entitled ``Telephone Conversation with
Foreign Market Researcher.''
In selecting the third-country market, the petitioner chose Japan
because: 1) it is the largest third-country market for scope
merchandise outside of the United States during the POI; 2) the
aggregate quantity of scope merchandise sold by Thai exporters to Japan
accounted for more than five percent of the aggregate quantity of the
scope merchandise sold in the United States; and 3) the product sold to
the Japanese market is comparable to the product which served as the
basis for EP. After examining this evidence, we found the petitioner's
selection of Japan as the comparison market to be reasonable.
The petitioner based NV on AUVs of Thai exports of frozen, cooked
shrimp to Japan during the POI. We revised the petitioner's calculation
of the average yen/U.S. dollar exchange rate by calculating a simple
average of the daily rates as posted on the Department's Web site
rather than monthly averages as posted on the Federal Reserve's Web
site. In addition, as noted in the EP section above, we adjusted the
petitioner's calculation by not deducting an amount for foreign inland
freight expenses. Because the proposed foreign inland freight
adjustment to NV is based on the identical information as the proposed
adjustment to EP, we similarly find that the petitioner provided
inadequate support to substantiate this adjustment. Therefore, we have
also not deducted foreign inland freight expenses from NV. See the
Initiation Checklist.
Based on the changes noted above, the recalculated dumping margin
for certain frozen and canned warmwater shrimp from Thailand is 57.64
percent.
Vietnam
Export Price
The anticipated POI for the PRC is April 1, 2003, through September
30, 2003.
The petitioner based EP on AUVs of headless, shell-on, frozen
warmwater shrimp for the POI from official U.S. import statistics. As
the AUVs used were net of international freight, insurance and import
charges, no further deductions for these expenses were made to derive
U.S. prices. See the Initiation Checklist.
Normal Value
Vietnam is an NME country and no determination to the contrary has
yet been made by the Department. In accordance with section 771(18) of
the Act, any determination that a foreign country has at one time been
considered an NME shall remain in effect until revoked. See the
Initiation Checklist. See, e.g., Saccharin, 68 FR at 27531.\5\
Accordingly, the petitioner provided a dumping margin calculation using
the Department's NME methodology as required by 19 CFR
351.202(b)(7)(i)(C).
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\5\ The presumption of NME status for the PRC has not been
revoked by the Department and remains in effect for purposes of the
initiation and this investigation. Therefore, the NV of the product
is appropriately based on factors of production valued in a
surrogate market economy country in accordance with 773(c) of the
Act.
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The petitioner based NV on factors of production. The petitioner
asserted that it did not have specific, reliable information on the
factors of production incurred for subject merchandise in Vietnam.
Therefore, the petitioner relied upon an average of factors of
production ratios used in the United States for the NV calculation.
Specifically, the petition used production factors provided by several
U.S. warmwater shrimp processors. The petitioner argues that, because
these companies are significant producers of the domestic like product,
their experience is an appropriate model for estimating the costs of
Vietnamese manufacturers. The model accounts for the amount of each
manufacturing input required to produce one pound of frozen warmwater
shrimp. The main factor is raw warmwater shrimp, however, other factors
of production included in the NV calculation are: tripolyphosphate,
labor, electricity, water, overhead and packing materials. See the
Initiation Checklist.
The petitioner selected India as the surrogate country. The
petitioner argued that, pursuant to section 773(c)(4) of the Act, India
is an appropriate surrogate because it is a market-economy country
[[Page 3882]]
that is at a comparable level of economic development to Vietnam and is
a significant producer of comparable merchandise.\6\ Based on the
information provided by the petitioner, we believe that the
petitioner's use of India as a surrogate country is appropriate for
purposes of initiating this investigation. See the Initiation
Checklist.
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\6\ As noted in the India section of this notice, the Indian
home market for warmwater shrimp is not viable. However, this
situation does not lessen India's ability to be properly designated
as the appropriate primary surrogate country for the PRC and
Vietnam. Pursuant to section 773(c) of the Act, an appropriate
surrogate country is a market economy country that is (A) at a level
of comparable economic development to the NME country, and (B) a
significant producer of comparable merchandise. India is
economically comparable to both the PRC and Vietnam, and India is
the second largest producer of shrimp in the world after the PRC.
See Petition at Volume I, page 8. It follows that India is an
appropriate surrogate for purposes of this initiation and these
investigations.
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In accordance with section 773(c)(4) of the Act, the petitioner
valued factors of production, where possible, on reasonably available,
public surrogate country data. To value certain raw materials, the
petitioner used official Indian government import statistics, excluding
those values from countries previously determined by the Department to
be NME countries and excluding imports into India from Indonesia, Korea
and Thailand, in light of the prevalence of export subsidies in those
countries. See Notice of Final Determination of Sales at Less Than Fair
Value: Ferrovanadium from the People's Republic of China, 67 FR 71137,
71139 (Nov. 29, 2002). For inputs valued in Indian rupees and not
contemporaneous with the POI (i.e., April 2003 - September 2003), the
petitioner used information from the WPI in India as published in the
International Financial Statistics by the International Monetary Fund
to determine the appropriate adjustments for inflation. In addition,
the petitioner made currency conversions, where necessary, based on the
average rupee/U.S. dollar exchange rate for the POI.
To value raw warmwater shrimp, the major input, the petitioner used
a market researcher to determine the cost of shrimp in India. The
research was conducted in Mumbai, India and completed in December 2003.
See the January 16, 2004, Memorandum to the File from Paul Walker and
Jim Nunno entitled ``Telephone Conversation with Foreign Market
Researcher.'' Sodium tripolyphosphate and packing materials were valued
by the petitioner using Indian import statistics, as reported in the
Monthly Statistics of Foreign Trade of India. The price information
from the Monthly Statistics of Foreign Trade of India represents
cumulative import values for the period April 2002 to March 2003. To
value water, the petitioner calculated a surrogate value based on price
data in India as reported by the Second Water Utilities Data Book,
Asian and Pacific Region, published by the Asian Development Bank.
Electricity in India was valued by the petitioner using the OECD Energy
Prices and Taxes data. In accordance with 19 CFR 351.408(c)(3), the
Department calculates and publishes the surrogate values for labor to
be used in NME cases. Therefore, to value labor, the petitioner relied
on published wage rates and a labor rate of $0.63 per hour.
The petitioner calculated surrogate financial ratios (depreciation,
SG&A and profit) using the 2001 financial statements of two Indian
seafood processors that process marine products. To calculate a single
surrogate ratio for overhead, depreciation, SG&A, and profit, the
petitioner calculated a simple average for the two Indian seafood
processors. In its calculation of the surrogate profit and financial
expenses, the petitioner included a zero value expense when averaging
the experiences of the two Indian seafood processors.
However, it is the Department's practice not to average a zero
expense into the calculation of the surrogate financial ratios. See
EMD. Therefore, the Department has recalculated the surrogate financial
ratios. See the Initiation Checklist at Attachment II. In addition, the
petitioner included U.S. producer costs in the normal value calculation
of non-depreciation overhead because they were unable to identify those
unique costs in the Indian surrogate company financial statements.
However, section 773(c)(4) of the Act states that ``{t{time} he
administering authority, in valuing factors of production under
paragraph (1), shall utilize, to the extent possible, the prices or
costs of factors of production in one or more market economies that are
(A) at a level of economic development comparable to that of the non
market economy, and (B) significant producers of comparable
merchandise.'' Therefore, U.S. prices or costs are not appropriate for
use as surrogate values. See, e.g., PVA. The ultimate goal of the
Department's margin calculations is to achieve the greatest accuracy
possible. The Department has found no evidence on the record showing
that non-depreciation overhead is not included in the overhead figures
of the Indian surrogate company financial statements. Therefore, to be
conservative, the Department has determined that the U.S. producer
costs for non-depreciation overhead should not be included in the
normal value calculation. See the Initiation Checklist.
Based on comparisons of EP to NV, calculated in accordance with
section 773(c) of the Act, the estimated recalculated dumping margins
for certain frozen and canned warmwater shrimp from Vietnam range from
25.76 percent to 93.13 percent.
Fair Value Comparisons
Based on the data provided by the petitioner, there is reason to
believe that imports of certain frozen and canned warmwater shrimp from
Brazil, Ecuador, India, Thailand, the PRC and Vietnam are being, or are
likely to be, sold at less than fair value.
Allegations and Evidence of Material Injury and Causation
With regard to Brazil, Ecuador, India, Thailand, the PRC, and
Vietnam, the petitioner alleges that the U.S. industry producing the
domestic like product is being materially injured, or is threatened
with material injury, by reason of the individual and cumulated imports
of the subject merchandise sold at less than NV.
The petitioner contends that the industry's injured condition is
evident in the declining trends in market share, net operating profits,
net sales volumes and revenues, and production employment. These
factors apply to both the firms that produce frozen and canned
warmwater shrimp, and the harvesters and growers of the raw
agricultural product, wild-caught and farm-raised warmwater shrimp. The
allegations of injury and causation are supported by relevant evidence
including information from U.S. import statistics, the National Marine
Fisheries Service, a commodity news reporting agency, industry surveys,
and press reports from a variety of sources. We have assessed the
allegations and supporting evidence regarding material injury and
causation, and we have determined that these allegations are properly
supported by adequate evidence and meet the statutory requirements for
initiation. See the Initiation Checklists.
Initiation of Antidumping Investigations
Based upon our examination of the petitions on certain frozen and
canned warmwater shrimp, we have found that they meet the requirements
of section 732 of the Act. Therefore, we are initiating antidumping
duty investigations to determine whether imports of certain frozen and
canned warmwater shrimp from Brazil,
[[Page 3883]]
Ecuador, India, Thailand, the PRC, and Vietnam are being, or are likely
to be, sold in the United States at less than fair value. Unless this
deadline is extended pursuant to section 733(b)(1)(A) of the Act, we
will make our preliminary determinations no later than 140 days after
the date of this initiation.
Distribution of Copies of the Petitions
In accordance with section 732(b)(3)(A) of the Act, a copy of the
public version of each petition has been provided to the
representatives of the governments of Brazil, Ecuador, India, Thailand,
the PRC, and Vietnam. We will attempt to provide a copy of the public
version of each petition to each exporter named in the petitions, as
provided for under 19 CFR 351.203(c)(2).
ITC Notification
We have notified the ITC of our initiations as required by section
732(d) of the Act.
Preliminary Determinations by the ITC
The ITC will preliminarily determine no later than February 17,
2004, whether there is a reasonable indication that imports of certain
frozen and canned warmwater shrimp from Brazil, Ecuador, India,
Thailand, the PRC and Vietnam are causing material injury, or
threatening to cause material injury, to a U.S. industry. A negative
ITC determination for any country will result in the investigation
being terminated with respect to that country; otherwise, these
investigations will proceed according to statutory and regulatory time
limits.
This notice is issued and published pursuant to section 777(i) of
the Act.
Dated: January 20, 2004.
James Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-1698 Filed 1-26-04; 8:45 am]
BILLING CODE 3510-DS-S