Initiation of Antidumping Duty Investigation: Fresh Garlic From the People's Republic of China

DEPARTMENT OF COMMERCE

[A-570-831]

Initiation of Antidumping Duty Investigation: Fresh Garlic From

the People's Republic of China

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: February 28, 1994.

FOR FURTHER INFORMATION CONTACT: Jennifer Stagner or Diane Mazur,

Office of Antidumping Investigations, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue NW, Washington, DC, 20230; telephone

(202) 482-1673 or 482-3534, respectively.

Initiation of Investigation

The Petition

On January 31, 1994, we received a petition filed in proper form by

the member companies of the Fresh Garlic Producers Association

(collectively petitioner). In accordance with 19 CFR 353.12, the

petitioner alleges that fresh garlic from the People's Republic of

China (PRC) is being, or is likely to be, sold in the United States at

less than fair value within the meaning of section 731 of the Tariff

Act of 1930, as amended (the Act), and that these imports materially

injure, or threaten material injury to, a United States industry.

The petitioner has stated that it has standing to file the petition

because it is an interested party, as defined under section 771(9)(C)

of the Act, and because the petition is filed on behalf of the U.S.

industry producing the product subject to this investigation. If any

interested party, as described under paragraphs (C), (D), (E), or (F)

of section 771(9) of the Act, wishes to register support for, or

opposition to, this petition, it should file a written notification

with the Assistant Secretary for Import Administration.

Scope of Investigation

The products covered by this investigation are all grades of fresh

garlic, whether or not chilled or frozen, and include whole garlic,

whole garlic that has been separated into constituent cloves (cracked

garlic), and peeled garlic (skin removed), whether or not packed in any

substance. The differences between the grades are based on color, size,

sheathing and level of decay.

Fresh garlic is used principally as a food product and for

seasoning. Fresh garlic, whether or not chilled or frozen, is currently

classifiable under subheadings 0703.20.0000, 0710.80.7060, and

0710.80.9750 of the Harmonized Tariff Schedule of the United States

(HTSUS). Although the HTSUS subheadings are provided for convenience

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

proceeding is dispositive.

United States Price and Foreign Market Value

Petitioner based United States price (USP) on October 1993 invoices

from U.S. importers of the subject merchandise from the PRC. In

calculating USP, petitioner deducted amounts for the following: U.S.

duties, ocean freight, marine insurance, foreign inland freight

expenses, brokers' commission, harbor maintenance and U.S. merchandise

processing fees, and commissions charged by the U.S. importers.

Petitioner alleges that the PRC is a non-market economy (NME)

country within the meaning of section 773(c) of the Act. The Department

has determined the PRC to be an NME, within the meaning of section

771(18)(A) of the Act, in previous cases (see e.g., Final Determination

of Sales at Less than Fair Value: Certain Compact Ductile Iron

Waterworks Fittings and Accessories Thereof from the PRC, 58 FR 37908

(July 14, 1993). In accordance with 771(18)(C) of the Act, that

determination continues to apply for purposes of this initiation. In

the course of this investigation, parties will have the opportunity to

address this NME determination and provide relevant information and

argument on this issue.

Further, because of the extent of central government control in an

NME, the Department considers that a single antidumping margin, should

there be one, is appropriate for all exporters from the NME. Only if

individual NME exporters are free of central government ownership and

can demonstrate an absence of central governmental control with respect

to the pricing of exports, both in law and in fact, will they be

considered eligible for separate, owner-specific deposit rates. (See

Final Determination of Sales at Less Than Fair Value: Helical Spring

Lock Washers from the People's Republic of China, 58 FR 48833

(September 20, 1993) for a discussion of the information the Department

considers appropriate to warrant calculation of separate rates.)

Petitioner based foreign market value on the PRC's factors of

production for producing the subject merchandise. To value the factors

of production, petitioner used India as a surrogate country. Petitioner

argues that India is a country at a comparable level of economic

development as the PRC and India is a significant producer of

comparable merchandise pursuant to section 773(c)(4) of the Act.

Further, India's garlic production is labor intensive and relies on

rudimentary agricultural techniques similar to agricultural methods

used in the PRC. For purposes of this initiation, we have accepted

India as an appropriate surrogate country selection. There appear to be

no other countries with comparable economies to the PRC that produce

the subject merchandise. In addition, the Department has used India as

an appropriate surrogate country selection in other investigations

involving merchandise from the PRC. (See Final Determination of Sales

at Less Than Fair Value: Sulfanilic Acid from the People's Republic of

China (57 FR 29705, July 6, 1992).

Petitioner first attempted to value the factors of production using

Indian information. Where this was not possible, petitioner valued the

factors of production using the U.S. industry's costs, where it was

determined that this provided a reasonable basis upon which to value

certain factors of production. Petitioner valued the factors of

production of the subject merchandise in the PRC as follows:

For material costs (seed and fertilizer), petitioner

relied on Indian factors based on its foreign market research, using

public information whenever possible.

For most labor costs (seed cracking, field preparation,

planting, weed control, fertilization, irrigation, digging, windrowing

and harvesting), petitioner relied on an industry expert's estimate of

Chinese factors which was based on the expert's knowledge of the

Chinese industry and the expert's own experience with nonmechanized

garlic production, using public information whenever possible.

Petitioner valued such labor costs on the basis of Indian production

experience as developed in its foreign market research. For other labor

costs related to hauling, sorting, grading, inspecting, and shrinkage,

petitioner relied on the U.S. industry's cost-per-pound for these

operations.

Petitioner added an amount for all other manufacturing

costs and related overhead equal to 10 percent of direct material and

labor costs.

Petitioner added an amount for shrinkage loss of 7 percent

of the cost of production, based on U.S. experience.

For selling, general and administrative expenses (SG&A),

petitioner used the statutory minimum of ten percent of the cost of

production.

For profit, petitioner used the statutory minimum of eight

percent of the cost of manufacture plus SG&A.

Petitioner added an amount for packing based on the

average, actual experience of the U.S. industry.

Based on petitioner's calculations, the dumping margins range from

266.73 to 376.67 percent. For purposes of this initiation, no

adjustments were made to petitioner's calculations.

Initiation of Investigation

We have examined the petition on fresh garlic and have found that

the petition meets the requirements of section 732(b) of the Act.

Therefore, we are initiating an antidumping duty investigation to

determine whether imports of fresh garlic from the PRC are being, or

are likely to be, sold in the United States at less than fair value.

International Trade Commission (ITC) Notification

Section 732(d) of the Act requires us to notify the ITC of this

action and we have done so.

Preliminary Determination by the ITC

The ITC will determine by March 17, 1994, whether there is a

reasonable indication that an industry in the United States is

materially injured, or is threatened with material injury, by reason of

imports of fresh garlic from the PRC. A negative ITC determination will

result in a termination of the investigation; otherwise, the

investigation will proceed according to statutory and regulatory time

limits.

This notice is published pursuant to section 732(c)(2) of the Act

and 19 CFR 353.13(b).

Dated: February 22, 1994.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-4503 Filed 2-25-94; 8:45 am]

BILLING CODE 3510-DS-P