Fresh Kiwifruit From New Zealand; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-614-801]

Fresh Kiwifruit From New Zealand; Preliminary Results of

Antidumping Duty Administrative Review

AGENCY: Import Administration/International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review.

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SUMMARY: In response to a request by the respondent, the New Zealand

Kiwifruit Marketing Board, the Department of Commerce has conducted an

administrative review of the antidumping duty order on fresh kiwifruit

from New Zealand. The review covers one exporter and the period

November 27, 1991, through May 31, 1993. The review indicates the

existence of margins for the exporter.

As a result of this review, we preliminarily determine to assess

antidumping duties equal to the difference between the United States

price and foreign market value.

Interested parties are invited to comment on these preliminary

results.

EFFECTIVE DATE: May 6, 1994.

FOR FURTHER INFORMATION CONTACT: Amer M. Kayani or Thomas F. Futtner,

Office of Antidumping Compliance, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue NW., Washington, DC 20230; telephone (202) 482-5346

or 482-3814, respectively.

Background

On June 2, 1992, the Department of Commerce (the Department)

published the antidumping duty order on fresh kiwifruit from New

Zealand (57 FR 23203). The Department published a notice of

``Opportunity to Request Administrative Review'' on June 7, 1993 (58 FR

31941). The respondent, the New Zealand Kiwifruit Marketing Board

(NZKMB), requested that we conduct an administrative review for the

period November 27, 1991, through May 31, 1993. We published a notice

of ``Initiation of Antidumping and Countervailing Duty Administrative

Review'' on July 21, 1993 (58 FR 39007), announcing an administrative

review of the NZKMB. The Department has now conducted this

administrative review in accordance with section 751 of the Tariff Act

of 1930, as amended (the Tariff Act).

Scope of the Review

The product covered by this review is fresh kiwifruit. Processed

kiwifruit, including fruit jams, jellies, pastes, purees, mineral

waters, or juices made from or containing kiwifruit, are not covered

under the scope of this review. The subject merchandise is currently

classifiable under subheading 0810.90.20.60 of the Harmonized Tariff

Schedule (HTS). Although the HTS number is provided for convenience and

customs purposes, our written description of the scope of this review

is dispositive.

United States Price

Exporter's Sales Price: As provided in section 772(c) of the Tariff

Act, we used the exporter's sales price (ESP) as U.S. price for certain

sales by the NZKMB to the United States; these sales were made to the

first unrelated party in the United States after importation, and hence

warranted ESP methodology.

We calculated ESP based on packed F.O.B. (ex-New Zealand

coolstore), and packed F.O.B., freight-prepaid prices. We made

deductions, where appropriate, for New Zealand inland freight

(coolstore to port), loading charges in New Zealand, ocean freight,

basic marine insurance, charter insurance, U.S. import duties, U.S.

brokerage and handling, U.S. inland freight (decreased to account for

prepaid freight where applicable), and price discounts (i.e.,

advertising allowances, special advertising allowances, market

adjustment discounts, advertising rebates which actually constituted

discounts, and discounts for quality problems). In accordance with

sections 772(e) (1) and (2) of the Tariff Act, we made additional

deductions, where appropriate, for agent commissions, broker

commissions, credit, direct advertising, and indirect selling expenses.

Indirect selling expenses included inventory carrying costs, repacking,

U.S. primary and U.S. satellite coolstore charges, New Zealand and U.S.

instore insurance, fire insurance, product liability and tamper

insurance, earthquake insurance, indirect advertising, quality control

expenses, miscellaneous selling-agent-related charges, U.S.-incurred

indirect expenses, and New Zealand incurred indirect selling expenses

associated with selling in the United States. We increased the U.S.

price to account for post sale price adjustments not reflected in the

gross price.

Purchase Price: As provided in section 772(b) of the Tariff Act, we

used purchase price to represent the U.S. price for sales made on a CIF

basis directly by the NZKMB. Deductions were made, where appropriate,

for ocean freight, foreign inland freight, and inland/marine insurance

in accordance with section 772(d)(2) of the Tariff Act.

Foreign Market Value

The Department determined that home market sales did not constitute

a viable basis for calculating foreign market value (FMV). Therefore,

in accordance with 19 CFR 353.48 and 353.49(b), the Department chose

sales to Japan as the basis of FMV. Japan is the largest third-country

market based on information submitted by the NZKMB. Neither the

petitioner nor the respondent raised in this review any other factor

relevant to third country selection, hence we did not consider any

other factor in determining the third-country market.

In general, the Department relies on monthly weighted-average

prices in the calculation of FMV. In consideration of the significant

volume of third-country sales involved in this review, we decided to

test respondents' third-country sales to determine whether we could use

annual FMVs as a basis of comparison to U.S. sales. To determine

whether a period of review (POR) weighted-average price was

representative of the transactions under consideration, we performed a

three-step test. See Antifriction Bearings from Japan, et al.; Final

Results of Review, 58 FR 42289 (1993).

We first compared the monthly weighted-average third-country price

for each model with the weighted-average POR price of that model. We

calculated the proportion of each model's sales whose POR weighted-

average price did not vary more than plus or minus 10 percent from the

monthly weighted-average prices. We did this test for each model of

kiwifruit. We then compared the volume of sales of all models of

kiwifruit whose POR weighted-average price did not vary more than plus

or minus 10 percent from the monthly weighted-average price with the

total volume of sales of kiwifruit. If the POR weighted-average price

of at least 90 percent of sales of kiwifruit did not vary more than

plus or minus 10 percent from the monthly weighted-average price, we

considered the POR weighted-average price to be representative of the

transactions under consideration. Finally, we tested whether there was

any correlation between fluctuations in price and time for each model.

We found that no significant correlation existed between price and time

(See analysis memorandum to the file, 4/25/94). That is, prices did not

consistently rise or fall so as to make annual weighted-average prices

unrepresentative of home market prices.

Because many of the NZKMB's sales were determined to be at prices

below the cost of production (COP) during the investigation, the

Department initiated a COP investigation for the purposes of this

administrative review. Just as the Department found in the

investigation, we find that in comparing third-country sales to COP,

the reseller/exporter's acquisition prices are irrelevant because

section 773(b) of the Tariff Act requires that the Department look at

the actual COP of the subject merchandise. Thus, we used the cost

incurred by kiwifruit farmers, the actual producers of the subject

merchandise, to calculate the COP benchmark.

Due to the large number of growers from which the NZKMB purchased

kiwifruit during the POR, the Department determined that sampling was

both administratively necessary and methodologically appropriate to

calculate a representative cost of producing the subject merchandise

for purposes of this administrative review (See section 777A of the

Tariff Act). Based on comments submitted by the petitioner and the

respondent, we decided to select kiwifruit growers on a stratified

basis across the categories of regional location. Farms were stratified

by geographic regions into either the Bay of Plenty region or non-Bay

of Plenty regions. This division was made because 70 percent of the New

Zealand kiwifruit is produced in the Bay of Plenty region and it is

considered to be the most cost-effective area in which to grow

kiwifruit. Once farms were categorized into two geographic regions, a

random sample of 20 growers was selected. Since 70 percent of the New

Zealand kiwifruit production originates in the Bay of Plenty region, we

selected 14 growers representing this region. An additional six growers

were selected from the non-Bay of Plenty regions.

We sent COP questionnaires through the NZKMB to the 20 kiwifruit

growers, all of which responded to the Department's questionnaire.

These 20 responses, along with supplemental responses and verification

results, were analyzed and relied upon, where appropriate, in reaching

the preliminary results of the review.

We calculated the cost of cultivation for each grower by summing

all costs for the 1992 kiwifruit season. These costs included the cost

of materials, farm labor, farm overhead, and packing. We allocated the

cost on a per tray-equivalent basis over the total number of tray-

equivalents submitted by each grower to the NZKMB. We then adjusted

those costs to reflect the fruit loss of 22 percent, which was

disclosed by the NZKMB in its financial statement. We added the NZKMB's

general and administrative expenses to the farm's average cost per

tray.

The orchard set-up costs for all growers were amortized over 20

years (See memorandum to Holly A. Kuga, 4/21/94). Because several

growers failed to provide actual orchard set-up costs, we must base our

determination on the ``best information available'' (BIA), pursuant to

19 CFR 353.37(a). For those growers that did not or could not provide

actual set-up costs, we used grower number 17's average cost per

hectare, collected at verification, as BIA to calculate set-up costs.

These are the highest orchard set-up costs of the 20 growers in our

sample.

For growers that allocated costs over the productive area, that is,

canopy area, we made adjustments to include the headlands and sidelands

in the productive area of the kiwifruit orchard for the purpose of

allocating costs.

We made adjustments to growers' cost for depreciation, interest,

labor, repairs, management, vehicles, fertilizer, spraying, rates

(property tax), electricity, shelter, water, general and

administrative, pruning, and mowing on a farm-specific basis where

appropriate.

For the grower that failed verification, we used BIA to determine

its COP, pursuant to 19 CFR 353.37(a). This BIA was based on the

highest COP we calculated for all responding growers.

We calculated a simple average COP from the sampled growers'

individual COPs. The total COP was calculated on a New Zealand dollar

per single-layer tray equivalent basis (NZ$/SLT).

Pursuant to Department practice, in conducting our COP analysis, if

over 90 percent of a respondent's sales of a particular model were at

prices above the COP, we did not disregard any below-cost sales of that

model because we determined that the respondent's below-cost sales were

not made in substantial quantities, as required under section 773(b) of

the Tariff Act. See Certain Carbon Steel Butt-Weld Pipe Fittings from

Thailand; Final Determination of Sales at Less Than Fair Value, 57 FR

21065 (1992). If between 10 and 90 percent of a respondent's sales of a

particular model were at prices above the COP, we retained the sales

above cost for analysis, and we examined the sales below cost to

determine whether they occurred over an extended period of time.

Consistent with the Departments' practice, the Department disregarded

those sales made below cost if occurring in more than two months. Where

we found that more than 90 percent of respondent's sales of a model

were at prices below the COP and over an extended period of time, we

disregarded all home market sales of that model and based FMV on

constructed value (CV) in accordance with section 773(b) of the Tariff

Act. There is no information on the record demonstrating that prices of

below cost sales would recover all costs within a reasonable period of

time.

To calculate CV, the statutory minimum profit of eight percent was

added because the NZKMB's actual profit was less than the statutory

minimum (See section 773(e) of the Tariff Act). We added selling,

general and administrative expenses for the NZKMB to the farm's average

cost per tray because the actual expenses were higher than the

statutory minimum of 10 percent.

We adjusted third-country prices, where appropriate, to reflect

deductions for rebates, New Zealand inland freight, New Zealand inland

freight insurance, New Zealand port loading expenses, ocean freight and

charter insurance. Direct advertising, imputed credit, and letter of

credit charges were also deducted. We also deducted indirect selling

expenses including inventory carrying costs, New Zealand instore and

fire insurance, product liability and tamper insurance, indirect

advertising, and other indirect selling expenses when calculating FMV

for comparison to ESP transactions. This deduction for third country

indirect selling expenses was capped by the amount represented by U.S.

indirect selling expenses plus U.S. commissions, in accordance with 19

CFR 353.56(b).

Preliminary Results of Review

We have preliminarily determined that the following margin exists

for the period November 27, 1991, through May 31, 1993:

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Margin

Manufacturer/exporter (percent)

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New Zealand Kiwifruit Marketing Board........................ 35.86

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Interested parties may request disclosure within five days of the

date of publication of this notice, and a hearing within 10 days of the

date of publication. Any hearing requested will be held as early as

convenient for parties but not later than 44 days after the date of

publication, or the first workday thereafter. Case briefs, or other

written comments, from interested parties may be submitted not later

than 30 days after the date of publication of this notice. Rebuttal

briefs and rebuttal comments, limited to issues raised in the case

briefs, may be filed no later than 37 days after the date of

publication. The Department will publish the final results of review,

including its results of its analysis of issues raised in any such

written comments.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between U.S. price and FMV may vary from the percentage

stated above. Upon completion of this review, the Department will issue

appraisement instructions concerning the respondent directly to the

U.S. Customs Service.

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise, entered, or withdrawn

from warehouse, for consumption on or after the publication date of the

final results of this administrative review, as provided for by section

751(a)(1) of the Tariff Act: (1) The cash deposit rate for the reviewed

firm will be that firm's rate established in the final results of this

administrative review; and (2) the cash deposit rate for merchandise

exported by all other manufacturers and exporters who are not covered

by this or any previous administrative review conducted by the

Department will be the ``all others'' rate of 98.60 percent established

in the LTFV investigation.

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR

353.22.

Dated: April 29, 1994.

Paul L. Joffe,

Deputy Assistant Secretary for Import Administration.

[FR Doc. 94-10989 Filed 5-5-94; 8:45 am]

BILLING CODE 3510-DS-P