Notice of Amended Preliminary Determination of Sales at Less Than Fair Value: Fresh Cut Roses From Colombia

DEPARTMENT OF COMMERCE

International Trade Administration

[A-301-801]

Notice of Amended Preliminary Determination of Sales at Less Than

Fair Value: Fresh Cut Roses From Colombia

AGENCY: Import Administration, International Trade Administration,

Department of Commerce

EFFECTIVE DATE: October 12, 1994.

FOR FURTHER INFORMATION CONTACT: James Maeder or James Terpstra, Office

of Antidumping Investigations, Import Administration, U.S. Department

of Commerce, 14th Street and Constitution Avenue, N.W., Washington,

D.C. 20230; telephone (202) 482-3330 and 482-3965, respectively.

Scope of Investigation

The products covered by this investigation are fresh cut roses,

including sweethearts or miniatures, intermediates, and hybrid teas,

whether imported as individual blooms (stems) or in bouquets or

bunches. Roses are classifiable under subheadings 0603.10.6010 and

0603.10.6090 of the Harmonized Tariff Schedule of the United States

(HTSUS). The HTSUS subheadings are provided for convenience and customs

purposes. The written description of the scope of this investigation is

dispositive.

Summary

The purpose of this notice is to amend our preliminary

determination (59 FR 48284, September 20, 1994) with regard to

respondents Grupo Andes and Grupo Benilda, and to the ``all-others''

rate.

Case History

On September 12, 1994, the Department of Commerce (the Department)

made its affirmative preliminary determination of sales at less than

fair value (59 FR 48284, September 20, 1994).

On September 16, 1994, Grupo Andes, Grupo Benilda, Grupo

Intercontinental, and the Prisma Group alleged that the Department, in

making its determination, made ministerial errors which led to the

application of best information available (BIA). They requested that

the Department correct the ministerial errors, amend its preliminary

determination, and recalculate the all others rate. In addition, Grupo

Andes requested that the Department reverse its preliminary decision

not to verify its information.

On September 21, 1994, counsel for Grupo Andes, Grupo Benilda,

Grupo Intercontinental and the Prisma Group met with officials of the

Department of Commerce (see the September 22, 1994, ex-parte

memorandum). Also on September 21, 1994, the Caicedo Group alleged that

the Department made ministerial errors in calculating its dumping

margin and requested that the Department correct these errors and amend

the preliminary determination. On September 21, 1994, petitioner

submitted comments opposing respondents' ministerial error allegations

and their request to amend the preliminary determination. On September

22, 1994, counsel for petitioner met with officials of the Department

of Commerce (see the September 22, 1994, ex-parte memorandum). On

September 23, 1994, petitioner submitted a written summary of its

September 22, 1994, meeting comments.

On September 26, 1994, Grupo Tropicales alleged that the Department

made ministerial errors in calculating its dumping margin and requested

that the Department correct these errors and amend the preliminary

determination.

Amendment of Preliminary Determination

The Department has determined that the allegations of the Caicedo

Group, Grupo Intercontinental, Grupo Prisma, and Grupo Tropicales

involved issues that were other than clerical or ministerial in nature.

Consequently, we are not amending our preliminary determination with

respect to these companies. However, we are amending the preliminary

determination for Grupo Andes and Grupo Benilda. Accordingly, we have

recalculated the ``all others'' rate. Set forth below is the basis for

our amended preliminary determination with respect to these companies.

It is not our normal practice to amend preliminary determinations

since these determinations only establish estimated margins, which are

subject to verification and which may change in the final

determination. However, because of the specific facts pertaining to

this investigation, the Department has determined to amend its

preliminary determination to correct for the significant ministerial

errors involved. See the Department's proposed 19 CFR 353.15(g)(4) (57

FR 1131, 1132 (January 10, 1992)); Amendment to Preliminary

Determination of Sales at Less Than Fair Value; Sweaters Wholly or in

Chief Weight of Man-Made Fiber from Hong Kong, 55 Fed. Reg. 19289-90

(May 9, 1990).

A. Grupo Andes

In determining whether Grupo Andes had a viable home market for the

preliminary determination, the Department relied upon the narrative of

Grupo Andes's July 22 submission, which indicated that its home market

was not viable when, in its appendix to this submission, Grupo Andes

provided data which demonstrated that its home market was viable. Thus,

although there was data on the record which established that Andes'

home market was viable, we did not pursue further Grupo Andes home

market sales data for the preliminary determination. Therefore, the

Department's initial viability determination for Grupo Andes was

erroneous, as was the Department's decision not to take additional

action in regard to Grupo Andes' home market sales. Therefore, the

Department was left with no option but to preliminarily assign Grupo

Andes a margin based on BIA. Because the Department considers its

initial unintentional error to be ministerial, and because correction

of that error would result in a change of at least 5 absolute

percentage points in, but not less than 25 percent of, the preliminary

margin for Grupo Andes, that error constitutes a significant

ministerial error under proposed 19 CFR 353.15(g)(4) (57 Fed. Reg.

1131, 1132 (January 10, 1992)), the Department's proposed regulation

for correcting significant ministerial errors in preliminary

antidumping and countervailing duty determinations. The Department thus

has determined to amend its preliminary determination to establish a

preliminary margin for Grupo Andes based upon its data on the

administrative record.

The Department further will (1) require Grupo Andes to submit its

home market sales listing; (2) investigate, if necessary, whether Grupo

Andes made home market sales at prices below its cost of production;

and (3) conduct verification of all information submitted.

B. Grupo Benilda

Two business days before the Department's preliminary

determination, Grupo Benilda filed a pre-verification submission which

appeared to contain such extensive additions and corrections to its

original response as to constitute an entirely new response. The

Department thus determined initially that the submission called into

question the integrity of the response as a whole and preliminarily

assigned Grupo Benilda a margin based on BIA. Subsequently, the

Department has determined that Grupo Benilda's September 8 submission,

rather than representing a new response, in fact contained minor data

corrections to its response. Because that initial determination in

regard to the September 8 submission was an unintentional error which

the Department considers to be ministerial, and because correction of

that error would lead to a change of at least 5 absolute percentage

points in, but not less than 25 percent of, the preliminary margin for

Grupo Benilda, that error constitutes a significant ministerial error

pursuant to the Department's proposed regulation outlined above. The

Department thus has determined to amend its preliminary determination

to establish a preliminary margin for Grupo Benilda based upon its data

on the administrative record prior to its September 8 submission.

C. All Others Rate

Because the preliminary dumping margins for Grupo Andes and Grupo

Benilda have changed, the preliminary weighted-average ``all others''

rate has also changed. (See Suspension of Liquidation section of this

notice, below.)

Use of Third Country Prices/Constructed Value

For a discussion of the proper basis for Foreign Market Value, see

the Department's September 12, 1994, preliminary determination (59 FR

48284, September 20, 1994).

Fair Value Comparisons

To determine whether sales of fresh cut roses from Colombia to the

United States were made at less than fair value, we compared the United

States price (USP) to the foreign market value (FMV), as specified in

the ``United States Price'' and ``Foreign Market Value'' sections of

this notice. For all U.S. prices, we used weighted-average monthly U.S.

prices (see the September 12, 1994, concurrence memorandum).

United States Price

For sales by both Grupo Andes and Grupo Benilda, we based USP on

purchase price, in accordance with section 772(b) of the Trade Act of

1930, as amended (``the Act''), when the subject merchandise was sold

to unrelated purchasers in the United States prior to importation and

when exporter's sales price (ESP) methodology was not otherwise

indicated.

In addition, where certain sales to the first unrelated purchaser

took place after importation into the United States, we based USP on

ESP, in accordance with section 772(c) of the Act.

We made company-specific adjustments, as follows:

A. Grupo Andes

For Grupo Andes, we calculated purchase price based on packed,

f.o.b. prices to unrelated customers in the United States. We made

deductions, where appropriate, for foreign inland freight.

We calculated ESP based on packed prices to unrelated customers in

the United States. We made deductions, where appropriate, for foreign

inland freight, air freight, U.S. Customs duties, U.S. and Colombian

indirect selling expenses including inventory carrying costs, and U.S.

direct selling expenses including credit expenses.

For roses that were further manufactured into bouquets after

importation, we adjusted for all value added in the United States,

including the proportional amount of profit or loss attributable to the

value added, pursuant to section 772(e)(3) of the Act. We added packing

to reported U.S. prices. For the cost of merchandise subject to further

manufacturing, in addition to the adjustments cited in the section on

FMV, below, for constructed value, we (1) corrected the U.S. general

expenses to reflect a percentage of cost of goods sold, and (2)

recalculated interest expense to exclude the CV offset.

B. Grupo Benilda

For Grupo Benilda, we calculated purchase price based on packed,

f.o.b. prices to unrelated customers in the United States. We made

deductions, where appropriate, for foreign inland freight.

We calculated ESP based on packed prices to unrelated customers in

the United States. We made deductions, where appropriate, for foreign

inland freight, air freight, U.S. customs duties, U.S. brokerage and

handling expenses, credit expenses, Colombian Flower Council expenses,

the greater of U.S. commissions to the related reseller or U.S.

indirect selling expenses incurred, Colombian indirect selling

expenses, including inventory carrying costs and other indirect selling

expenses. For those ESP sales where Grupo Benilda did not report

airfreight, U.S. duty, and U.S. brokerage and handling expenses, we

applied, as BIA, the highest reported value for each such expense (see

the Department's September 9, 1994, concurrence memorandum.)

Foreign Market Value

In order to determine whether there were sufficient sales of fresh

cut roses in the home market to serve as a viable basis for calculating

FMV, we compared the volume of home market sales of roses to the volume

of third country sales of roses in accordance with section 773(a)(1)(B)

of the Act. Based on this comparison, we determined that Grupo Benilda

had a viable home market with respect to sales of roses during the POI

and, therefore, we based FMV for Grupo Benilda on home market sales

where those sales were above the cost of production. For Grupo Andes,

we based FMV on constructed value (CV).

We based FMV for Grupo Benilda on two six-month periods. Period one

is January 1993 through June 1993, and period two is July 1993 through

December 1993. For a further discussion of these periods, see the

September 12, 1994, concurrence memorandum.

A. Grupo Andes

For Grupo Andes, we calculated FMV based on CV, in accordance with

section 773(e) of the Act. We calculated CV based on Grupo Andes' cost

of cultivation, plus general expenses, profit and packing in the United

States. For total general expenses, including selling and financial

expenses (SG&A), we used the greater of reported general expenses or

the statutory minimum of ten percent of the cost of cultivation. For CV

profit, we used the greater of the weighted-average reported profit

during the POI or statutory minimum of eight percent of the cost of

cultivation and general expenses, in accordance with 19 CFR

353.50(a)(2) and section 773(e)(B) of the Act. We adjusted Grupo Andes'

CV data (1) to correct the export quantity sold to agree to information

reported in the supplemental section A; and (2) to base selling and

packing expenses on information provided in the sales response.

For CV to purchase price comparisons, we made circumstance of sales

adjustments for direct selling expenses including credit expenses.

For CV to ESP comparisons, we made deductions, where appropriate,

for direct selling expenses including credit expenses. We also deducted

from CV the weighted-average indirect selling expenses, including

inventory carrying costs up to the amount of indirect selling expenses

incurred on U.S. sales, in accordance with 19 CFR 353.56(b)(2).

B. Grupo Benilda

Because we found ``reasonable grounds to believe or suspect'' that

Grupo Benilda sold roses in Colombia at prices below their COP, we

initiated a COP investigation to determine whether it had home market

sales that were made at less than their respective COPs, in accordance

with section 773(b) of the Act. (See the September 8, 1994, memorandum

from Richard W. Moreland to Barbara R. Stafford.)

In accordance with section 773(b) of the Act, we examined whether

Benilda sold roses below the cost of production in significant

quantities over an extended period of time. In keeping with our

practice involving perishable products, if more than 50 percent of

Grupo Benilda's sales of roses, on a model-specific basis, were at

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

pursuant to section 773(b) of the Act, because we determined that Grupo

Benilda's below-cost sales were not made in substantial quantities

within an extended period of time. (See Certain Fresh Winter Vegetables

From Mexico 45 FR 20512 (1980).) If between 50 and 90 percent of Grupo

Benilda's sales, on a model-specific basis, were at prices below the

COP, and the below cost sales were made within an extended period of

time, we disregarded only the below-cost sales. Where we found that

more than 90 percent of Grupo Benilda's sales, on a model-specific

basis, were at prices below the COP, we disregarded all sales and

calculated FMV based on CV.

In order to determine whether Grupo Benilda's home market sales

were above the COP, we calculated COP based on the sum of Grupo

Benilda's cost of cultivation, general expenses, and packing; we

calculated CV based on the sum of Grupo Benilda's COP plus profit. For

total general expenses, including selling and financial expenses,

(SG&A) we used the greater of reported general expenses or the

statutory minimum of ten percent of the cost of cultivation. For CV

profit, we used the greater of the weighted-average reported profit

during the POI or the statutory minimum of eight percent of the cost of

cultivation and general expenses, in accordance with 19 CFR

353.50(a)(2) and section 773(e)(B) of the Act. We adjusted Grupo

Benilda's COP and CV data to (1) correct an error in the company's

calculation of average interest expense; (2) include the entire amount

of the 1993 labor bonus; and (3) disallow the company's exclusion of

certain G&A expenses.

In accordance with 19 CFR 353.58, we compared Grupo Benilda's U.S.

sales to home market sales made at the same level of trade, where

possible.

For those home market sales above the cost of production, we based

FMV on packed, f.o.b. farm prices to unrelated customers.

For home market price to purchase price comparisons, pursuant to 19

CFR 353.56(a)(2), we made circumstance-of-sale adjustments, were

appropriate, for differences in credit expenses.

For home market price to ESP comparisons, we made deductions for

the weighted-average home market indirect selling expenses, including,

where appropriate, inventory carrying costs, up to the amount of the

greater of either indirect selling expenses incurred on U.S. sales or

related-party commissions paid on U.S. sales, in accordance with 19 CFR

353.56(b)(1). We also made deductions, for home market credit expenses.

For all price-to-price comparisons, we also deducted home market

packing costs and added U.S. packing costs, in accordance with section

773(a)(1) of the Act.

For CV to purchase price comparisons, we made circumstance of sales

adjustments for credit expenses.

For CV to ESP comparisons, we made deductions, where appropriate,

for credit expenses. We also deducted from CV the weighted-average home

market indirect selling expenses, including inventory carrying costs,

up to the amount of the greater of either indirect selling expenses

incurred on U.S. sales or related-party commissions paid on U.S. sales,

in accordance with 19 CFR 353.56(b)(2).

Currency Conversion

Because certified exchange rates for Colombia were unavailable from

the Federal Reserve, we made currency conversions for expenses

denominated in Colombian pesos based on the official monthly exchange

rates in effect on the dates of the U.S. sales as certified by the

International Monetary Fund.

Verification

As provided in section 776(b) of the Act, we will verify the

information used in making our final determination.

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, the Department

will direct the U.S. Customs Service to continue to require a cash

deposit or posting of bond on all entries of subject merchandise from

Colombia for Grupo Andes, Grupo Benilda and for the all-others rate at

the newly calculated rate, that are entered, or withdrawn from

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

notice in the Federal Register. The suspension of liquidation will

remain in effect until further notice. The weighted-average dumping

margins are as follows:

------------------------------------------------------------------------

Margin

Manufacturer/Producer/Exporter percent

------------------------------------------------------------------------

Grupo Andes................................................... 7.63

Grupo Benilda................................................. 9.89

All Others.................................................... 22.73

------------------------------------------------------------------------

ITC Notification

In accordance with section 733(f) of the Act, we have notified the

ITC of the amended preliminary determination. If our final

determination is affirmative, the ITC will determine whether imports of

the subject merchandise are materially injuring, or threaten material

injury to, the U.S. industry, before the later of 120 days after the

date of the original preliminary determination (September 12, 1994) or

45 days after our final determination.

Public Comment

As stated in our preliminary determination (59 FR 48284, September

20, 1994), and pursuant to our notice of postponement of the final

determination signed September 28, 1994, case briefs or other written

comments, in at least ten copies, must be submitted to the Assistant

Secretary for Import Administration no later than December 2, 1994, and

rebuttal briefs no later than December 9, 1994. In accordance with 19

CFR 353.38(b), we will hold a public hearing, in accordance with a

party's request, to give interested parties an opportunity to comment

on arguments raised in case or rebuttal briefs. Tentatively, the

hearing will be held on December 13, 1994, at 1:00 p.m. at the U.S.

Department of Commerce, Room 4830, 14th Street and Constitution Avenue,

N.W., Washington, D.C. 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 enter an appearance at the hearing

must submit a written request to the Assistant Secretary for Import

Administration, U.S. Department of Commerce, Room B-099, within ten

days of the publication of this notice in the Federal Register. Request

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. In accordance with 19 CFR 353.38(b), oral presentation will

be limited to issues raised in the briefs.

Dated: October 4, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-25220 Filed 10-11-94; 8:45 am]

BILLING CODE 3510-DS-P