Certain Fresh Cut Flowers From Colombia; Final Results of Antidumping Duty Administrative Review, and Notice of Revocation of Order (in Part)

DEPARTMENT OF COMMERCE

[A-301-602]

Certain Fresh Cut Flowers From Colombia; Final Results of

Antidumping Duty Administrative Review, and Notice of Revocation of

Order (in Part)

AGENCY: International Trade Administration/Import Administration,

Commerce.

ACTION: Notice of final results of antidumping duty administrative

review, and notice of revocation of the antidumping duty order in part.

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SUMMARY: On December 14, 1993, the Department of Commerce published the

preliminary results of its administrative review of the antidumping

duty order or certain fresh cut flowers from Colombia. The review

covers 186 producers and/or exporters of this merchandise to the United

States and the period March 1, 1990 through February 28, 1991.

We gave interested parties an opportunity to comment on the

preliminary results. Based on our analysis of the comments received and

the correction of certain clerical errors, we have made certain changes

for the final results. The review indicates the existence of dumping

margins for certain firms during the review period.

We are also revoking the antidumping duty order for the following

exporters/growers: Flores Colombianas Group (Agrosuba, Flores

Colombianas, Jardines De Los Andes, Productos El Cartucho) and Flores

Condor De Colombia Ltda.

EFFECTIVE DATE: May 31, 1994.

FOR FURTHER INFORMATION CONTACT: J. David Dirstine or Richard

Rimlinger, Office of Antidumping Compliance, International Trade

Administration, U.S. Department of Commerce, Washington, DC 20230;

telephone (202) 482-4733.

SUPPLEMENTARY INFORMATION:

Background

On March 18, 1987, the Department of Commerce (the Department)

published in the Federal Register (52 FR 8492) the antidumping duty

order on certain fresh cut flowers from Colombia. The Floral Trade

Council, the petitioner, and certain respondents requested in

accordance with 19 CFR 353.22 that we conduct an administrative review

of the period March 1, 1990 through February 28, 1991. We published a

notice of initiation of administrative review for this period on June

18, 1991 (56 FR 27944). On December 14, 1993, we published the

preliminary results of the administrative review (58 FR 65329).

We determined in the preliminary results of review to revoke the

antidumping duty order for the following exporters/growers: Flores

Colombianas Group (Agrosuba, Flores Colombianas, Jardines De Los Andes,

Productos El Cartucho), and Flores Condor De Colombia Ltda. These firms

have submitted requests in accordance with 19 CFR 353.25(b) to revoke

the order with respect to their sales of flowers to the United States.

Their requests where accompanied by certifications that they have sold

flowers to the United States at not less than foreign market value

(FMV) for at least a three-year period, including the subject review

period, and will not do so in the future. Because we have determined

that these firms have sold the subject merchandise at not less than

foreign market value in this review, and have never sold the subject

merchandise at less than FMV, including the required three-year period,

we revoke the order with respect to these companies, in accordance with

19 CFR 353.25(a).

The Department has now completed the administrative review in

accordance with section 751 of the Tariff Act of 1930, as amended (the

Tariff Act).

Scope of Review

Imports covered by this review are shipments of certain fresh cut

flowers from Colombia (standard carnations, miniature (spray)

carnations, standard chrysanthemums and pompon chrysanthemums). These

products are currently classifiable under item numbers 0603.10.30.00,

0603.10.70.10, 0603.10.70.20, and 0603.10.70.30 of the Harmonized

Tariff Schedule (HTS). The HTS item numbers are provided for

convenience and customs purposes. The written description remains

dispositive.

Although we initiated reviews on 189 named firms, this review

actually covers only 186 firms. Two of the names listed in the

initiation notice were the same company (Inversiones Targa Ltda. and

Inversiones Targa S.A.). Also, we initiated a review for Agricola La

Corsaria Ltda., but have terminated it because the firm's request for

review was withdrawn and there was no other review request received for

this firm. We also terminated the reviews initiated for Cultivos Del

Caribe, Floramerica S.A., Flores Las Palmas Ltda., and Jardines De

Colombia Ltda., because these firms were revoked from the antidumping

order in earlier reviews.

Sampling

Eighty-three firms covered by the initiation notice were requested

only by the petitioner. Due to the large number of firms and

transactions that were already under review, we used the following

sampling methodology: First, the 83 firms were divided into three

strata: Respondents with exports of fewer than 50,000 kilograms;

respondents with exports of greater than 50,000 kilograms but fewer

than 500,000 kilograms; and respondents with greater than 500,000

kilograms. We then assigned ``points'' in a sample pool to each of the

83 firms in proportion to the firm's share of total exports to the

United States, with each point representing one-quarter of one

percentage point of total exports. For example, a company than

represented 5 percent of exports to the United States would receive 20

points and go ``into the hat'' 20 times. A company that comprised one

percent of total exports would receive four points and go ``into the

hat'' four times. In this way, a company with a greater volume of

exports had a much greater chance of being selected than the company

with a smaller volume of exports. We then chose 10 percent of the

points from each of the three strata to comprise the actual sample. The

companies selected to be analyzed have received their own rates. The

remaining 54 companies in the non-sampled pool were assigned the

weighted average sample margin (any firm chosen for the sample more

than once had its dumping rate counted as many times as the firm was

selected).

Initially, 31 firms were selected for the Department's sample.

However, after selecting our sample group, we determined that two

companies in the sample, Manjui Ltda., and Alstrodflores Ltda., had no

shipments of the subject merchandise during the period of review (POR).

We have eliminated these two firms from the sample pool. In addition,

the Department determined during verification that Inversiones Targa

Ltda., a company chosen for the sample pool, was a related entity of

the Bochica Group, which self-requested a review. Therefore, we have

collapsed the response of Inversiones Targa Ltda., as part of the

Bochica Group, and eliminated this company from the sample pool.

Twenty-eight firms were ultimately used in the Department's sample

pool. Due to the elimination of Manjui Ltda., Alstrodflores Ltda., and

Inversiones Targa Ltda., the sample no longer was self-weighting.

Therefore, to estimate the average dumping margin of the population of

54 remaining firms, we weight-averaged the sample means of the three

strata. The weight assigned to each sample mean was that stratum's

share of total exports.

Flores Estrella Ltda., and Flores Mountgar Ltda., both chosen as

part of the sample pool, submitted certifications to the Department

that they are no longer in business and, therefore, could not respond

to the Department's questionnaire. The Department determined that these

companies could not respond, and therefore applied as second-tier Best

Information Available (BIA) a rate of 7.56 percent to Flores Estrella,

the highest calculated rate in this review, and a rate of 43.02 percent

to Flores Mountgar, the highest rate ever received by that company in

any prior review (see our response to Comment 40, below). The BIA

margin for these two companies have been included in the contributing

weight in the sample pool margin.

During the course of this review, we learned that several

respondents were sufficiently related for the Department to collapse

these firms, or groups of firms, into one entity for purposes of

calculating a dumping rate. The firms we considered one entity are:

Agricola Las Cuadras and Flores De Hacaritama; Exportaciones Bochica/

Floral Ltda., Inversiones Targa, S.A., Flores Del Cauca, Agro Bosque,

S.A., and Productos El Zorro (Agro Bosque, S.A. and Productos El Zorro

were not in our initiation notice but have become a part of this

administrative review due to the collapsing of the Bochica Group);

Florex and Santa Helena; Queen's Flowers Ltda., Jardines De Chia Ltda.,

and Jardines De Fredonia Ltda.; and Rosa Sabanilla Ltda., Inversiones

La Serena and Agricola La Capilla (Agricola La Capilla was not in our

initiation notice but has become a part of this administrative review

due to the collapsing of the Rosas Sabanilla Group). See Mamoranda to

file dated March 11, 1994.

Best Information Available

The Department conducted verification of responses submitted by

Cultivos Miramonte, Exportaciones Bochica/Floral Ltda., Flores

Colombianas, Flores Condor, Flores de Suba, Flores del Campo, Las

Amalias/Pompones Ltda., Flores de Hunza, Flores la Sabana, Inversiones

Targa, Ltda., and the Santana Group. At verification we detemined that

there were several interrelationships between Las Amalias/Pompones

Ltda. and another flower exporter, as well as interrelationships with

other importers that were not disclosed to the Department in the

response (see Las Amalias Varification Report (October 19, 1993)).

Consequently, Las Amalias/Pompones Ltda., did not report the correct

U.S. price (USP) for the overwhelming majority of its sales. As a

result, we have used BIA to calculate the dumping margin for this firm.

Also, as previously indicated in the Sampling section of this notice,

we are applying second-tier BIA rates to sales made by Flores Estrella

Ltda. and Flores Mountgar Ltda. These firms are no longer in business

and failed to respond to the Department's questionnaire.

United States Price

Pursuant to section 777A of the Tariff Act, we determined that it

was appropriate to average U.S. prices on a monthly basis in order (1)

to use actual price information that is often available only on a

monthly basis, (2) to account for large sales volumes, and (3) to

account for perishable product pricing practices (see Final Results of

Antidumping Duty Administrative Review; Certain Fresh Cut Flowers from

Colombia, 56 FR 50554 (October 7, 1991)).

In calculating USP, we used purchase price (PP) when sales were

made to unrelated purchasers in the United States prior to the date of

importation, or exporter's sales price (ESP) when sales were made to

unrelated purchasers in the United States after the date of

importation, both pursuant to section 772 of the Tariff Act.

We calculated purchase price based on the packed price to the first

unrelated purchaser in the United States. The terms of PP sales were

either f.o.b. Bogota or c.i.f. Miami. We made deductions, where

appropriate, for foreign inland freight, air freight, brokerage and

handling, U.S. customs duties, and return credits.

ESP, for sales made on consignment or through a related affiliate,

was calculated based on the packed price to the first unrelated

customer in the United States. We made adjustments, where appropriate,

for foreign inland freight, brokerage and handling, air freight, box

charges, credit expense, returned merchandise credits, royalties, U.S.

duty, and either commissions paid to unrelated U.S. consignees or

indirect U.S. selling expenses of related consignees.

Foreign Market Value

Section 733(a)(1)(A) of the Tariff Act requires the Department of

compare sales in the United States with viable home market sales of

such or similar merchandise sold in the home market or a third country

market in the ordinary course of trade. Although some companies

reported home market sales of subject flowers, we found that these

sales consisted either of mostly cull quality sales, or were sales to

resellers for export to the United States. Furthermore, although some

companies reported viable third country markets, consistent with the

reasoning in the Final Results of Antidumping Duty Review; Certain

Fresh Cut Flowers from Colombia, 55 FR 20491 (May 17, 1990), we have

concluded that home market and third country sales are not an

appropriate basis for foreign market value (FMV). See our response to

Comment 4, below.

Accordingly, in calculating FMV, we used constructed value as

defined in section 773(e) of the Tariff Act for all companies. The

constructed value represents the average per-flower cost for each type

of flower, based on the costs incurred to produce that type of flower

over the review period.

The Department used the materials, fabrication, and general

expenses reported by respondents. The per-unit average constructed

value was based on the quantity of export quality flowers actually sold

by the grower/exporter in all markets. The non-export quality flowers

(culls) that are produced in conjunction with export quality flowers

are considered by-products. Therefore, revenue from the sales of culls

was used as an offset against the cost of producing the export quality

flowers.

For cases in which actual general expenses exceeded the statutory

minimum of 10 percent of the cost of materials and fabrication, we used

the actual general expenses to calculate constructed value. For cases

in which actual general expenses were less than the statutory minimum

of 10 percent of the cost of materials and fabrication, we used the

statutory minimum of 10 percent. When imputed credit was included in

constructed value, the actual interest expense was reduced to prevent

double counting.

When respondents indicated that the actual profit for merchandise

of the same general class or kind could not be calculated or was less

than eight percent of the sum of the cost of production and general

expenses, the Department used the eight percent statutory minimum for

profit. We added U.S. packing to constructed value. Adjustments to

constructed value were made for credit and indirect selling expenses.

Briefs and rebuttal briefs were submitted by the FTC and

Asocolflores. A hearing was held on February 1, 1994.

General Issues Raised by the Floral Trade Council

Comment 1: The Floral Trade Council (FTC) argues that floral

bouquests should be covered by this order. According to the FTC,

respondents are attempting to create a loophole in the order by selling

covered flowers to a third party, who then packages them with other

flowers for shipment and sales as ``bouquets'' in the United States.

Respondents have considered such sales as home market sales, and not as

sales for export to the United States. Other respondents made the

bouquets themselves for sale to the United States, but did not report

these sales.

The FTC argues that flowers sold in bouquets are within the scope

of the original petition and the antidumping duty order. Citing text

from the original petition, the FTC claims that the order made no

distinction between flowers sold by the stem or in bouquets and it

notes that the only physical difference between flowers sold in

bouquets and those sold individually is how they are packaged. The FTC

denies that the bouquet making industry is a separate, downstream

industry, and claims that while bouquet makers add value to the

flowers, bouquets can be disaggregated from non-covered flowers to

calculate the U.S. price applicable to the flowers covered by the

order. The FTC also notes that in its injury determination, the

International Trade Commission (ITC) did not distinguish between a

flower sold by the stem, bunch, or bouquet. Finally, the FTC asks that

the Department reject the questionnaire responses of those respondents

that failed to report bouquet sales, and instead resort to an adverse

rate of BIA.

Asocolflores responds that bouquets are not within the scope of the

original order. It notes that the original petition mentioned bouquets

only as a use for fresh cut flowers, and claims that the ITC never

addressed the issue in its injury determination. Furthermore, the FTC

never requested a scope determination, nor did it analyze the relevant

factors specified in the Department's scope regulation except in the

most cursory fashion.

Asocolflores argues that the FTC's request that the Department use

a BIA rate for those companies that did not report bouquet sales should

be denied. No company failed to provide information that was asked of

it by the Department. Because the Department did not ask firms to

report bouquet sales, the Department should not penalize firms for not

reporting them. Asocolflores also argues that the Department has

previously ruled that sales of certain mixed bouquets are not covered

by the order. See Certain Fresh Cut Flowers From Colombia, 55 FR 20,499

(May 17, 1990). Asocolflores asserts that bouquets were excluded

because they are a high value-added product.

Asocolflores argues that the ITC's arguments for determining that

each flow type is a separate like product produced by a separate

industry apply to mixed bouquets as well, and that, if anything, mixed

bouquets are more ``unlike'' the individual like products than the

individual like products with respect to each other. Asocoflores also

argues that the FTC's examples to prove its case do not apply to this

case, and that its analysis of the Diversified Products criteria--

physical differences, channels of trade, ultimate consumers, and end

uses--is cursory and not backed by evidence. Asocolflores argues that

bouquets are essentially dissimilar to fresh-cut flowers in each of the

aforementioned criteria.

Asocolflores maintains that bouquets are a separate downstream

industry, and notes that U.S. bouquet makers were considered separate

from U.S. flower producers by the ITC. Asocolflores further argues that

separate kinds of flowers, such as roses and carnations, are considered

separate products, that bouquets are even less alike and have less

substitutability than flowers sold by the stem, and that bouquets do

not compete against domestically produced carnations, pompons, or mums

sold individually. Furthermore, companies in the Untied States that

make bouquets are not the same ones producing fresh-cut flowers,

further indicating that bouquets are a downstream industry.

Asocolflores notes that there have been no investigations into whether

bouquets have been dumped, and claims that domestic bouquet makers have

no wish to see bouquets included within the scope of the order.

Asocolflores concludes that mixed bouquets are a distinct article

of commerce that do not fall under the scope of the order, and that

this is borne out by the ITC's like product and industry analysis, the

statutory distinction between industries producing raw and processed

agricultural products, and by analysis under the Diversified Products

criteria in the Department's scope regulation.

Las Amalias (Lasa) argues that bouquets were not in the scope of

either the original order or the original petition, and that the

original order made no mention of bouquets whatsoever. Furthermore, the

only time the Department addressed this issue, it determined that home

market sales of subject flowers to bouquet makers were to be reported

as home market sales. finally, because the Department did not request

information on bouquets, it should not penalize companies that did not

report bouquets by applying a BIA rate.

Department's Position: We agree with petitioner that sales of

subject flowers incorporated in mixed bouquets are covered by the

order. We base this determination on an analysis of the petition, the

final determination of sales at less than fair value, the antidumping

duty order, prior administrative reviews, and the ITC injury

determination. Because we find that the information on the record is

dispositive, it was not necessary to analyze the Diversified Products

criteria in 19 CFR 353.29(i)(2). Therefore, although petitioner and

respondents commented on the Diversified Products criteria, we have not

addressed those issues here.

The petition covered certain fresh cut flowers whether imported by

the stem, by the bunch, or by the bouquet, and quoted the relevant

TSUSA description: ``Cut flowers, fresh; bouquets, wreaths, sprays, or

similar articles * * *'' (FTC Antidumping Duty Petition, at 11 (May 21,

1986).)

In the Final Determination of Sales at Less Than Fair Value, the

department stated:

The products covered by this investigation are fresh cut

miniature (spray) carnations, currently provided for in item 192.17

of the Tariff Schedules of the United States (TSUSA), and standard

carnations, gerbera, alstroemeria, standard chrysanthemums, pompon

chrysanthemums, and gypsophila currently provided for in item 192.21

of the TSUSA. (52 FR 6843).

The same language is contained in the antidumping duty order (52 FR

8492) except that gerbera, alstroemeria, and gypsophila were excluded

because of the ITC's negative injury determination.

Although the ITC did not speak directly to the issue of whether

mixed bouquets incorporating covered flowers constitute a separate like

product, or whether there is a separate and distinct ``bouquet

industry,'' a careful reading of the ITC's Determination of the

Commission in Investigations Nos. 731-TA-327 Through 331 (Final),

Publication 1956 (March 1987), shows that if the ITC had addressed

these issues squarely, it would have decided both in the negative. We

can reasonably infer from the report and the statistics relied upon in

that report, taken as a whole, that the ITC did not consider any

potential distinction between individual flower stems and those grouped

together in bunches or bouquets significant enough even to mention,

much less to conduct a separate analysis of them.

For example, in Table 8 of that report (page A-39 and A-40), the

ITC looked at U.S. producers' shipments of fresh cut flowers and noted

that ``[q]uantities in bunches of [subject merchandise] are converted

to stems [for purposes of comparison].'' On page A-41, the ITC states

that in response to its questionnaires ``U.S. growers reported their

domestic shipments of flowers grown in their establishments. Quantities

reported were in stems or bunches,'' and on page A-43 the report

states, regarding U.S. producers' exports, ``[d]ata are available

describing exports of all fresh cut flowers and bouquets.''

Although the ITC did not state that the above data included

anything but subject merchandise, we conclude that the ITC considered

all of the data relevant to its analysis. Where the ITC analyzed data

involving basket categories including nonsubject merchandise, it made a

specific reference to this. See e.g., footnote 4 of Table 1, where the

ITC specifically pointed out that certain data relevant to its analysis

included nonsubject merchandise. (Id. at A-24.)

In another section, the ITC stated:

The major retail outlets for fresh cut flowers are florists,

garden centers and nurseries, and mass merchandisers such as

supermarkets. A 1985 study showed florists with 63 percent of the

value of floral sales, mass merchandisers with 18 percent, garden

centers and nurseries with 12 percent, and other outlets with 7

percent. Mass merchandisers have increased their share of the

market, which was 6 percent in 1980, primarily at the expense of

independent florists. Encouraged by increasing consumer demand,

these outlets buy in bulk directly from growers, bypassing the

wholesalers that service smaller florists. Imports have bolstered

this trend by providing a year-round, low-cost source of supply.

Supermarkets accounted for the largest portion of 1985 sales by mass

merchandisers, with 8.6 percent of the market, followed by discount

stores with 6.2 percent and department stores with 3.5 percent. In

their questionnaire responses, importers verified that mass

merchandisers have become increasingly important as purveyors of

imported flowers. (Id. at A-19).

This analysis should be viewed in conjunction with the following

statement by Asocolflores:

Most imported bouquets are sold through supermarkets directly to

consumers in the form in which they are imported. Most individual

fresh cut flowers are sold through wholesalers and retailers, and do

not reach the consumer in the form in which they are imported.

Instead, the retailer generally fashions them into arrangements,

and, in some instances bouquets (but generally not mass market

bouquets). (Asocolflores Rebuttal Brief at 23 (January 25, 1994).)

While nothing in either of these passages suggests that

supermarkets buy and sell bouquets exclusively, or that florists buy

and sell individual stems exclusively, uncontroverted evidence on the

record submitted by Asocolflores indicates that bouquets are generally

sold through supermarkets. In addition, from the passages cited above,

it is clear that the ITC analyzed domestic sales data that included

individual stems, bunches, and bouquets, and that the ITC considered

all mass merchandisers, including supermarkets, to be part of the

distribution chain of the subject merchandise. Therefore, we deduce

that the ITC did in fact consider flowers incorporated in bouquets in

its injury analysis.

Asocolflores argues that the ITC's determination that separate

flowers constitute separate like products indicates that bouquets would

be even more ``unlike'' the like products of which they are made. We

find this argument strained and unsupported by any record evidence.

Nothing in the ITC's report indicates that covered flowers sold in

groups constitute a separate like product. On the contrary, as

explained above, the only logical conclusion to be drawn from the

report is that the ITC was indifferent to whether flowers were sold

individually or in groups.

Both the FTC and Asocolfores argue that the Department, with

respect to the Department's determinations in prior reviews, has

already decided the bouquet issue in their respective favors. The first

time we referred to bouquets was in Certain Fresh Cut Flowers From

Colombia; Final Results of Antidumping Duty Administrative Review, 55

FR 20499 (May 17, 1990), comment 49. The second time we dealt with the

issue was in Certain Fresh Cut Flowers From Colombia; Final Results of

Antidumping Duty Administrative Review and Revocation in Part of the

Antidumping Duty Order, 56 FR 50555 (October 7, 1991), comment 3.

Although we did not affirmatively state in these prior determinations

that covered flowers in mixed bouquets are covered by the order, our

commentary and analysis clearly indicate that the Department has always

considered covered flowers incorporated in mixed bouquets to be subject

to the order.

In the 1990 review, we treated Pompones' sales of subject flowers

to an unrelated bouquet maker as home market sales. Nowhere in the

position did we state that subject flowers incorporated into mixed

bouquets are not covered by the order. We merely determined that

because the unrelated reseller combined Pompones' flowers with

purchases of other flowers from other producers, and because the value

of Pompones' product in relation to the product imported into the

United States was relatively small, there was no need to consider

Pompones' to be the seller of the U.S. product. See Certain Fresh Cut

Flowers From Colombia; Final Results of Antidumping Duty Administrative

Review, 55 FR 20499 (May 17, 1990). We determined that these sales

could be considered home market sales. This in no way implies that

subject flowers (such as those Pompones sold to the reseller)

eventually sold in the United States by the reseller, in no matter what

form (stem, bunch, solid bouquets, or mixed bouquets), were not covered

by the order; nor does it imply that the unrelated reseller had

``substantially transformed'' Pompones' flowers into a product not

covered by the order (bouquets). On the contrary, any covered flowers

purchased by the unrelated reseller from Pompones or any other flower

grower that were included in the bouquets sold in the United States

were subject to the order and antidumping duties.

Our ruling with respect to Pompones is consistent with a principle

we have applied in other cases: The relative costs of items

incorporated in a combination article are not dispositive as to whether

an item is covered by the scope of an order. See, e.g., Funai Electric

Co., Ltd., v. United States, 713 F. Supp. 420, 422 (1989) (``the

technique of combining a putatively dumped article with a more costly

related article could become a significant method of eva[sion]''), as

cited in the FTC case brief at 5.

In the 1991 review, the issue was how SunPetals (a related U.S.

selling agent of the Floramerica Group) allocated costs among the

components of its bouquets. See Certain Fresh Cut Flowers From

Colombia; Final Results of Antidumping Duty Administrative Review and

Revocation in Part of the Antidumping Duty Order, 56 FR 50555 (October

7, 1991). There was no question that the Floramerica Group reported

covered flowers in such bouquets as U.S. sales or that the Department

considered covered flowers in such bouquets to be U.S. sales. SunPetals

derived a U.S. price (USP) for the subject flowers in the bouquets by

subtracting the cost of the other components. The petitioner's

complaint was that no profit was allocated to those other components,

thereby making USP higher than if profit had been allocated. We chose

not to recalculate USP for subject flowers in bouquets because the

amount of such an additional deduction was so small that it would have

had less than a de minimis impact on the firm's margin. Far from

implying any kind of blanket exclusion for bouquets, this position

demonstrates that subject flowers incorporated in mixed bouquets are

covered by the order. If they were not, there would have been no need

to calculate a USP for such flowers or to consider the issue of the

potential effect of deducting additional profit from that USP.

These prior determinations support our conclusion that bouquets are

included in the scope of this order.

Respondents make much of the packaging, composition, and value

added of mixed bouquets. As we have discussed, and as the following

analysis makes clear, these issues are irrelevant to this scope

determination.

At the outset, we note that no party to this proceeding has ever

argued that bunches or bouquets made of several stems of a single

(covered) flower type (hereafter, ``bunches'' and ``solid bouquets'')

are not covered by the order. On the contrary, Asocolflores has

admitted that such flowers incorporated in solid bouquets are in the

scope of the order. See Memorandum to File dated March 14, 1994. At

verification we found that bunches and solid bouquets were sold and

duly reported by respondents as sales of covered merchandise. See,

e.g., Bochica/Floral Public Verification Report at 5, (October 8,

1993). As we saw at various verifications, typically bunches and solid

bouquets contain several bound stems wrapped or stapled in cellophane

sleeves and packed in a box with similar bunches or bouquets. See,

e.g., Bochica/Floral Public Verification Report, at 8 and 13 (October

8, 1993); Flores del Campo Public Verification Report, at 7 (October

17, 1993); Las Amalias Public Verification Report, at 9 (October 19,

1993); Flores de Suba Public Verification Report, at 10 (November 1,

1993). Thus, the packaging and presentation of subject flowers in

bunches and solid bouquets do not transform them into merchandise

outside the scope of the order. See also Final Determination of Sales

at Less Than Fair Value; Red Raspberries from Canada, 50 FR 19768,

19771 (May 10, 1985) (differences in packaging do not transform a

product into different classes or kinds of merchandise). In fact, we

require respondents to disaggregate sales of bunches and solid bouquets

and to quantify the number of individual stems contained in them.

Likewise, Customs disaggregates bouquets and collects duties on

individual flower stems.

Mixed-flower bouquets are in most cases prepared very similarly to

solid bouquets and bunches. A group of flower stems is bound and

wrapped, usually in cellophane sleeves, and packed in a box. See, e.g.,

Issues Hearing Transcript in the Matter of Certain Fresh Cut Flowers

from Colombia, at 11-12, (February 1, 1994). Flores Condor's bouquets

are made up of approximately six stems of carnations and one stem each

of minicarnations, statice, gypsophila and alstroemeria. See Condor

Public Verification Report, at 3 (December 14, 1993). Flores de la

Sabana's bouquets were ``partial bouquets'' that consisted of only two

pompon chrysanthemums and two carnations. See Flores de la Sabana

Public Verification Report, at 10 (October 25, 1993). Flores de Suba's

bouquets were comprised of carnations, pompons, gypsophila, and

statice. See Flores de Suba Public Verification Report, at 3 (November

1, 1993).

The mixed bouquets produced by Flores de la Sabana consist of all

covered flowers. This points up the absurdity of the position that

mixed bouquets per se are not covered. According to this position, if

two different covered flowers come in separately, they would be subject

to the order, but if the two covered flowers are combined into a

bouquet, they would not be subject to the order. As petitioner points

out, when products subject to an antidumping duty order are combined or

aggregated with other products, they are still covered by the order.

See, e.g., Final Result of Administrative Review; Drycleaning Machinery

from West Germany, 50 FR 32154, 21156 (1985); and Preliminary

Determination of Sales at Less Than Fair Value; Cellular Mobile

Telephones and Subassemblies from Japan, 50 FR 24554, 24555 (1985).

As noted above, the ITC separated each flower type into different

like products. However, the Department has always treated the subject

merchandise (covered flowers) as one class or kind of merchandise. We

cannot logically conclude that the inclusion of different flower types

belonging to the same class or kind of merchandise hinges on whether

those flowers are imported individually or grouped together in bunches

or bouquets.

Finally, we agree with respondents that the use of BIA would be

inappropriate for companies that did not provide sales data for mixed

bouquets. Although some companies reported bouquet sales, we did not

request these data in this review. Nevertheless, we are proceeding with

our final results because we have determined that an analysis of

bouquet data would have a negligible impact on respondents' margins in

this review. Based on a weight-averaged analysis of the companies that

we verified, we find that both flowers sold to converters and those

sold directly to the United States in mixed bouquets constituted only

1.66 percent of those respondents' total sales to the United States

during the period of review. See Memorandum to the file dated March 7,

1994. Because the firms picked for verification represent a cross-

section of all respondents, we conclude that these data would not vary

significantly for respondents that were not verified. We also note that

because Customs requires deposits on all subject flowers regardless of

how they are imported (including those imported in mixed bouquets), our

calculated duty rates will be also assessed on flowers incorporated in

mixed bouquets. However, in subsequent reviews, beginning with the

1991/1992 review, we will request and analyze respondents' sales data

for subject flowers incorporated into mixed bouquets.

Comment 2: The FTC asks that the interest rate used to calculate

credit costs not be adjusted for currency devaluation, as was done in

the preliminary results. The FTC contends that where there was actual

borrowing to finance sales, the actual rates paid should be used, and

that when a U.S. importer incurred the borrowing costs and no actual

loans can be identified, a U.S. rate should be imputed. The FTC claims

that prepayment of interest is frequent in Colombia, and where it is

required, interest would have been paid in pre-devaluation pesos. The

FTC asks that, because this practice is frequent, peso-denominated

loans should be assumed to have had the interest paid in advance except

where the record shows otherwise. The FTC argues that unless specific

loans are related to financing accounts receivables, the Department

should not relate gains from devaluation to those loans. Finally, the

FTC argues that because the Department applies the exchange rate on a

monthly basis, there is no need to ``devaluate a peso interest rate''.

The FTC asks that the Department use either the related importers'

U.S. interest rate on actual borrowing or, when no borrowing is

claimed, the average rate paid by other similar importers. The FTC also

asks that the Department use the Colombian producers' interest rate on

short-term borrowing, unadjusted for devaluation.

Asocolflores responds that the argument concerning prepaid interest

is not relevant here because the respondents reported their actual

effective peso borrowing rates, which were verified by the Department.

Asocolflores also maintains that credit expenses are not actual but

imputed expenses and thus impossible to relate to specific loans, and

that these expenses are a calculation of opportunity costs. Finally,

Asocolflores notes that imputed credit is calculated in terms of

dollars, and thus does not obviate the need to account for devaluation.

Asocolflores contends that it is entirely possible to have very low or

even negative imputed credit expenses when the dollar appreciates

against the peso at a rate approaching or exceeding the peso-

denominated borrowing rate.

Department's Position: We agree with respondents. The respondents

were instructed to report information concerning their actual short-

term borrowing rate, whether that rate was in dollars or pesos. The

credit expense is an imputed expense, not an actual expense, and is

calculated and reported in U.S. dollars. Credit expense is the

hypothetical cost to the flower producer for not receiving immediate

payment for the U.S. sale. In reporting the interest rate, if a flower

grower, or its related U.S. importer, had U.S. dollar borrowings, this

rate was reported and used in the credit calculation. However, where

there were no U.S. dollar borrowings, we used the actual peso borrowing

rate, adjusted to reflect the fact that the credit expense was incurred

in dollars and not pesos. We adjusted the peso by the rate of

depreciation of the peso to the dollar during the POR in order to

reflect the cost of borrowing in pesos to finance sales made in

dollars. However, where no short-term borrowings were reported, we used

the U.S. prime rate during the POR.

An unadjusted peso borrowing rate does not have any correlation to

the cost of borrowing dollars or financing dollar expenses. It would

make no commercial sense for a flower producer in Colombia to borrow at

a 20 to 35 percent interest rate in Colombia when it could borrow in

the United States at a much lower dollar interest rate, unless the

dollar appreciates enough against the peso to offset the difference in

interest rates. Thus, if the Department is to presume that a flower

producer would borrow in pesos to finance U.S. dollar sales, we must

use the real cost of borrowing, which includes the devaluation of the

peso with respect to the dollar. It is the Department's practice to

make monetary corrections in such circumstances. See, e.g., Final

Results of Administrative Review: Gray Portland Cement and Clinker From

Mexico, 58 FR 25806 (April 28, 1993).

Comment 3: The FTC asks the Department to use the transaction

values in the U.S. Custom Service's informational bulletins for

consignment entries when calculating the assessment rate, the estimated

duty deposit rate, and any percentage duty rate applied to consignment

sales. The FTC argues that if the calculated U.S. price is used instead

of the relevant values in the Customs bulletins, then there is a danger

that antidumping duties will be undercollected.

Asocolflores responds that the above argument is irrelevant because

the Department has previously assessed duties as a specific amount per

stem or bunch as opposed to on an ad valorem basis and, from the

preliminary results, appears to be set to do this in this review. While

the Department calculates the cash deposit rate on an ad valorem basis,

Asocolflores notes this rate is only an estimate used for deposit

purposes and not actual duty assessments. Asocolflores argues that

Customs obtains its pricing data by surveying importers and that the

margins are as likely to be overstated as understated. Finally,

Asocolflores contends that the FTC is asking the Department to

unlawfully delegate its responsibility to Customs.

Department's Position: With respect to assessment rates for

consignment sales, we will divide the total margin amount by either the

U.S. Customs bulletin values or customs entered values derived from

these bulletins to calculate an ad valorem antidumping assessment rate,

or by total quantity and assess antidumping duties on a per unit basis.

This would be consistent with the Department's practice of calculating

assessment rates on the basis on which they are collected--entered

value. See, e.g., Antifriction Bearings (Other Than Tapered Roller

Bearings) and Parts From France et al., 57 FR 28362 (June 24, 1992).

This methodology eliminates the potential undercollection of

antidumping duties in instances when USP is greater than entered value

and assessment rates are based on USP. However, we will continue to

calculate estimated cash deposit rates on the basis of USP.

Comment 4: Petitioner argues that, while the questionnaire requires

reporting of home market sales if the home market ``export quality''

sales of a particular flower type by volume are greater than five

percent of sales of the same flower type to the United States and five

percent of sales of the same flower type to other countries, the

Department directed respondents to base margin calculations on CV for

all flower types sold regardless of whether the home market is viable

for any flower. Therefore, according to the FTC, respondents have

concluded that it is no longer necessary to report home market or third

country sales. Furthermore, petitioner claims that although the

Department did not consider the European market comparable to the U.S.

market in prior reviews, it must reconsider its position in this review

prior to rejecting home market or third-country prices as an adequate

base for foreign market value. Finally, the petitioner states that the

Department should require a complete reporting of all home market sales

and third country sales of export quality merchandise in future

administrative reviews.

Respondents counter that no flower company had a viable home market

and that the Department rejected the use of third-country sales as the

basis of foreign market value not because of viability, but rather

because of the extraordinary circumstances of the industry.

Department's Position: We determine that none of the companies had

viable home markets. Questionnaire responses on the record indicate

that with the exception of one company, Las Amalias, nearly all home

market sales are sales of culls. In the case of Las Amalias, the

company sells export quality flowers to converters with the knowledge

that these converters make mixed bouquets for export to the United

States, which means that they are essentially U.S. sales. See our

response to Comment 1, above. In those infrequent cases where export

quality flowers are sold domestically, the buyers, essentially private

street vendors, go to the farms on the chance that there are flowers

available due to excess production. The availability of such flowers is

unpredictable, and neither the growers nor the buyers can plan on these

sales. The growers incur no sales expenses on these unpredictable sales

and generally the buyers end up purchasing culls. See Cultivos

Miramonte Verification Report (September 15, 1993), and Inversiones

Targas Verification Report (September 20, 1993). Therefore, we continue

to consider such sales to be not in the ordinary course of trade.

Furthermore, consistent with the final results of the second and

third reviews, we determine that there continue to be fundamental

differences between the U.S. and European markets (the major third

country market for most companies) that support using CV as FMV instead

of third country sales. See Final Results of Antidumping Duty

Administrative Review: Certain Fresh Cut Flowers from Colombia, 55 FR

20491 (May 17, 1990), and Final Results of Antidumping Duty

Administrative Review: Certain Fresh Cut Flowers from Colombia, 56 FR

50554 (October 7, 1991). In addition, the CIT upheld the use of CV in

these circumstances. See Floral Trade Council v. United States, 775 F.

Supp. 1492, 1497 (1991), appeal docketed, No. 94-1019 (Fed. Cir.).

There is no evidence on the record that the differences between the

United States market and the European market have been eliminated. As

described in detail in earlier reviews, the United States market

continues to be one of peaks during traditional gift-giving holidays

and valleys during the off-season while the European market is

relatively stable throughout the year. Because of this price and volume

volatility of the United States market as compared with the stability

of the European market and other factors detailed in our determinations

from previous reviews, we continue to consider third-country prices as

inappropriate bases for FMV. However, if the FTC provides additional

information supporting its contention that third country markets are an

appropriate basis for FMV, we will consider such information in future

reviews.

Comment 5: The FTC notes that in the preliminary results, the

Department did not indicate whether it increased gross U.S. sales price

by the amount of ``other revenue'' received on those sales. The FTC

contends that in response to being asked to ``[p]rovide any rebates of

antidumping or other duties in a separate column'' (ITA Quest. at G.I.-

3), certain respondents have increased the U.S. price by the amount of

antidumping duties included in the U.S. invoice price. The FTC argues

that it is to the respondents' advantage to do so, as it allegedly

reduces or eliminates the overall size of any dumping margin. The FTC

asks that this be remedied by adjusting the U.S. price downward in all

cases where the record evidence establishes that U.S. importers are not

paying antidumping duties but are being reimbursed by the Colombian

growers or exporters, in accordance with 19 CFR 353.26(a).

Asocolflores responds that importers have added a surcharge to the

basic price of the flowers in order to account for the possibility of

an additional antidumping duty liability. This surcharge is paid for by

the first unrelated U.S. purchaser, and has nothing to do with actual

duty assessments. Its only immediate effect has been to raise U.S.

prices, and is in no way a ``reimbursement'' of assessed duties by the

producer.

Department's Position: If an importer is being reimbursed by the

seller for the payment of antidumping duties, it would be appropriate

for the Customs Service to assess these duties again. However, because

the item in question is a charge, not a rebate, no doubling of

antidumping duties is mandated. Therefore, we have not adjusted USP

downward as the FTC suggests, since the additional amount is part of

the price the U.S. importer pays. If, upon liquidation, the appropriate

certificate regarding reimbursement is not provided, Customs will make

the necessary change in its assessment of the duties.

Comment 6: The FTC contends that allowing respondents to report

amortized preproduction costs subjects the margin calculation to

manipulation. The FTC claims that ``[i]f a respondent expensed

preproduction costs in the third review but amortized preproduction

costs during the fourth review, preproduction costs would be

understated.'' The FTC requests that the Department determine whether

these costs have been properly reported over time.

Asocolflores responds that the respondents which amortized their

preproduction costs did so in order to more accurately match costs with

sales, and notes that the Department approved this methodology in the

third review. Asocolflores claims that, if anything, expensing

preproduction costs in one review and amortizing them in the next will

result in double-counting of costs, which would be to the petitioner's

advantage. Asocolflores also notes that the Department regularly does

confirm that costs have been properly reported through verification.

Department's Position: We agree with Asocolflores. It is generally

accepted accounting procedure in Colombia to allow firms to amortize or

expense preproduction expenses. Therefore, we have accepted either

methodology if that methodology was used by the firm in its normal cost

accounting procedures. Furthermore, even if a firm chose to expense

preproduction costs in an earlier period, this would not detract from

the reasonableness of amortizing such costs in the current review.

Finally, there are no respondents that expensed preproduction costs in

the previous review who have now amortized such costs in this review.

Comment 7: The FTC claims that certain respondents have reported

export documentation fees, export register charges, export license

fees, and phytosanitary fees as indirect selling expenses. The FTC

argues that because these are shipment specific expenses attributable

to specific sales, they should be included in freight charges, not

indirect selling expenses.

Asocolflores responds that, in Colombia, export registers must be

purchased and thus are charged at the purchase of the register, not

when exports are made. This charge is made even if the register is not

used, but if it is, a number of shipments can be reported on a single

register. Therefore, the export register fee cannot be tied to specific

exports and are thus indirect selling expenses.

Department's Position: Based on the evidence in the responses and

our verification reports, we conclude that the expenses in question--

export documentation fees, export register charges, export license

fees, and phytosanitary fees--are selling expenses because they are

incurred prior to movement of the merchandise and are not incident to

transportation of the flowers. See Flores del Campo Verification Report

at 8 (October 15, 1993) and Flores de Suba Verification Report at 2

(November 1, 1993). In addition, these expenses cannot be linked to

particular sales. Therefore, we have treated these expenses as indirect

selling expenses.

Comment 8: The FTC asks that the Department disregard respondents'

claims that all of their short-term interest income is related to

flower production. The FTC argues that the Department should determine

whether a respondent has other businesses, and whether they have linked

their interest income to accounts receivable on flower sales. The FTC

claims that after such determinations have been made, only that

interest income which is demonstrated to be related to flower

production should be allowed as a direct offset to interest expenses in

constructed value.

Asocolflores responds by claiming that all respondents demonstrated

that interest income was related to flower production. Asocolflores

notes that the example cited by the FTC, Santana Flowers Group, is

engaged exclusively in flower production, and as a result, all interest

income must be related to such production.

Department's Position: Only short-term interest income related to

flower operations is allowed as an offset to interest expenses. We

allow this adjustment to arrive at an effective short-term interest

expense. For firms where we have determined that reported short-term

interest income is not related to production of subject merchandise, we

have disallowed that income. This is standard Department practice that

has been followed in many cases. See e.g., Gray Portland Cement and

Clinker from Mexico; Final Results of Antidumping Duty Administrative

Review, 58 FR 25805, Comment 2 (April 28, 1993).

Comment 9: The FTC asks that the Department impute the highest

reported royalty payment as the BIA for those respondents that either

failed to report royalties or claim to have paid no royalties without

explanation. The FTC argues that it is to the respondents' advantage

not to report royalties on U.S. sales, and for that reason the burden

should be on them to furnish evidence that they paid no royalties, or

else a specific amount of royalties.

Asocolflores responds that companies did report royalty expenses,

and in case where no royalties were paid, there is nothing to report.

Asocolflores claims that the Department verified via sampling that the

respondents answered truthfully, and contends that there is no further

burden of proof on respondents with respect to this issue.

Department's Position: We agree with Asocolflores. There is no

record evidence that Colombian flower producers were obliged to make

royalty payments, and our verifications indicated no discrepancies in

the reporting of royalties. In the absence of evidence suggesting that

certain Colombian flower growers made unreported royalty payments, we

cannot assume that such payments were made.

Comment 10: The FTC contends that when calculating U.S. selling

expenses incurred in Colombia, some respondents allocated movement,

selling, and production costs on the basis of the number of boxes

shipped rather than sold (the FTC cites Cultivos Miramonte, Flores

Colombianas Group, and Soagro Group as particular examples). The FTC

notes that this approach was rejected by the Department during the

original investigation. The FTC argues that the Department should

recalculate the expenses, or use the highest reported freight and

packing expenses as BIA.

The FTC also contends that because respondents seem to rely on

boxes rather than reusable plastic containers to transport their

flowers, and that because those boxes are necessary for the flowers to

be transported, constructed value should include boxes in packing

expenses as part of cultivation materials.

Asocoflores responds that the practice of allocating costs by boxes

shipped is done to determine how to allocate the expense among

customers. Whether the allocation is done by boxes shipped or boxes

sold, the total freight costs will be the same. Because inland freight

is incurred whether a box is sold or not, it is reasonable to allocate

by boxes shipped.

Asocolflores claims that the case the FTC cites to support its

argument regarding whether boxes and packing costs be included in

cultivation expenses (see Washington Red Raspberry Commission v. United

States, 657 F. Supp. 537, 542 (1987)) does not apply to fresh cut

flowers. In the above-cited case, the product would be destroyed if not

packaged in special containers. Flowers do not need to be shipped in

the boxes, and because the boxes are nonessential, they should be

considered a packing expense, not a production cost.

Department's Position: We agree with petitioner that movement,

selling, and production costs should be allocated on the basis of boxes

sold rather than boxes shipped. Because companies recoup their costs

through sales, costs should be allocated on the basis of sales. See

Certain Fresh Cut Flowers From Colombia; Final Results of Antidumping

Duty Administrative Review, 55 FR 20491 (May 17, 1990). However, we

checked the questionnaire responses of the companies cited by the FTC

and found that they did in fact allocate the costs in question over

sales. The FTC may be confusing the companies' quantification of these

costs with the allocation of them. The companies properly quantified

their costs on the basis of boxes shipped, because expenses are

incurred on boxes shipped. However, in determining the per unit cost,

the expenses must be allocated over boxes sold, for the reasons stated

above.

We disagree with petitioner's view that the cost of boxes used to

ship flowers should be reported as cultivation materials. Boxes are

used for transportation purposes only and are not part of the product.

Therefore, they are correctly reported as packing costs.

Revocation for Condor and Colombianas

Comment 11: The FTC argues that the Department should not revoke

the antidumping duty order with respect to imports from Flores Condor

and Flores Colombianas. The FTC contends first that the two companies

have not met the Department's regulatory requirement that a producer be

found to have sold covered merchandise at not less than FMV for a

period of at least three years. The FTC notes that data is not yet

available for the period February 28, 1991, the end of the current POR,

to December 14, 1993, the date of the preliminary determination to

revoke, and argues that without these data, it cannot be determined

whether or not these producers have met this requirement. The FTC

further argues that the Department's findings in the second

administrative review (1988-1989) should be disregarded until the FTC's

legal challenge of the review has been resolved. The FTC requests that

the Department not rely on a certification to immediate reinstatement

in the order if dumping is found after revocation.

Asocolflores responds that both Condor and Colombianas have met the

tests for revocation, and that the FTC's claims that the data is

``stale'' are not relevant. Because the revocation is made effective at

the end of the third consecutive POR, it is not necessary to examine

sales after that review. Though the Department used to require such

data, that was before a change in the test for eligibility for

revocation. Further, Asocolflores notes that it has not been Department

policy to await the results of appeals to grant revocation. Finally,

Asocolflores characterizes the FTC's argument that the Department

should not rely on certification as described above as a complaint with

the Department's regulations, and not a concern regarding the

eligibility of Condor or Colombianas for revocation.

Department's Position: We agree with Asocolflores that both firms

have met the requirements for revocation. Under 19 CFR 353.25(a)(1)(i),

the Department is required to find sales at not less than foreign

market value for a period of at least three consecutive years. Our

determination in this review that both companies had zero margins,

combined with similar findings in the two prior reviews, satisfies this

requirement. Although the regulations in effect prior to 1989 required

a review for the period between the end of the consecutive-year base

period and the tentative determination to revoke (19 CFR 353.54(f)

(1988)), the current regulations have eliminated this requirement. In

addition, it is not the Department's policy to delay granting

revocation because of pending court appeals.

Comment 12: The FTC asserts that Flores Condor cannot establish

that it sold covered flowers at fair value during the 1990-1991 period,

because it failed to report all sales of flowers contained in bouquets

during this period. The FTC suggests that Condor may be attempting to

avoid the duty by re-packaging its flowers as bouquets. The FTC also

claims that Condor has not demonstrated that it will not engage in

dumping once the order is revoked.

Asocolflores responds that because the Department did not require

Condor to report bouquet sales, Condor's response cannot be considered

deficient. Furthermore, by pricing and production practices, Condor has

demonstrated that it will not engage in dumping subject flowers in the

future.

Department's Position: Although Flores Condor did not report United

States sales of flowers sold in bouquets (because we did not

specifically request this information), the value of such flowers

incorporated into bouquets sold in the United States amounts to an

insignificant portion of Condor's total United States sales. See

Memorandum to the file dated March 7, 1994. Also, Condor has never made

sales at less than fair value in the past. Considering these facts, and

the lack of evidence supporting the allegation that Flores Condor may

be attempting to avoid the duty by re-packaging, we have determined

that Flores Condor sold subject flowers at not less than foreign market

value during the current POR. Furthermore, we have determined that

Flores Condor has demonstrated through its past pricing practices that

it is not likely to sell subject flowers at less than fair value in the

future. Therefore, we are revoking the antidumping duty order with

respect to Flores Condor.

Comment 13: The FTC argues that the Department should recalculate

Condor's preproduction costs. It claims that because Condor allocated

its costs to all export quality flowers produced and not to flowers

sold, the unit cost per flower sold is understated to the extent that

all flowers were not sold. The FTC is also concerned that because

Condor's cost accounting system expenses preproduction costs according

to a projected, rather than actual figure, Condor's reported costs may

be understated. The FTC also notes that Condor may not have properly

allocated preproduction costs to the POR.

Asocolflores responds that although Condor allocates costs on the

basis of flowers produced for internal reasons, it calculated

constructed value by dividing total costs by flowers sold, and is

therefore consistent with the Department's requirements.

Department's Position: We agree with respondent. We verified Flores

Condor's preproduction cost calculation and found that the company

allocated total preproduction costs by flowers sold, in accordance with

the Department's requirements as stated in the questionnaire. Because

firms cover their costs only through sales, we require allocations

according to sales rather than production.

Comment 14: The FTC is concerned that Colombianas will serve as a

conduit for flowers grown by other producers to evade the antidumping

order. The FTC claims that this is already happening, and that

Colombianas sells more flowers to the United States that it purchased

from other producers than flowers that it produced itself. The FTC also

claims that Colombianas has reported its flower purchases as direct

material costs, and notes that those purchase prices may be below the

suppliers' costs of production.

Asocolflores responds that the FTC is wrong in believing that

Colombianas is acting or will act as a conduit for flowers from other

firms. Asocolflores maintains that sometimes producers have a shortage

of certain flowers and must purchase a small amount of them from other

producers. Colombianas did have to buy carnations in 1990, but sales of

carnations to the United States constituted an insignificant percentage

of total sales to the United States. Respondent further states that it

did not export more purchased flowers than produced flowers. Finally,

such purchases were correctly reported as direct material costs. There

is no evidence that Colombianas purchased flowers at below the

supplier's cost of production, and in fact, the average value of

purchased pompons is greater than Colombianas' own per unit cultivation

costs.

Department's Position: We disagree with the FTC's claim that

Colombianas is evading the antidumping order. First, although

Colombianas does purchase a majority of its export quality carnations

and minicarnations, the group is primarily a producer and seller of

pompons and mums. See Colombianas' Questionnaire Response, at 25 (March

24, 1992). Colombianas' sales of carnations and minicarnations

constitute an insignificant percentage of its total sales to the United

States of within-scope flowers. See Flores Colombianas' Verification

Report, at 3 (October 25, 1993). Also, Colombianas has consistently

stated that its flower suppliers have no foreknowledge that these

purchased flowers are destined for any specific export market. Second,

the Department has not received any evidence that Colombianas has

purchased flowers at below suppliers' cost of production. In fact,

after surveying the average prices of flowers purchased from selected

Colombianas suppliers, we found these average prices to be above the

suppliers' respective constructed values for those flowers. Finally, if

we receive information that Colombianas is serving as a conduit for

other Colombian flower growers, we will take appropriate action, which

could include reinstatement in the order and referral to the U.S.

Customs fraud division.

Comment 15: The FTC argues that the data Colombianas supplied in

response to the questionnaire is inaccurate and incomplete and that,

without further clarification, Colombianas cannot be shown to have

ceased selling covered flowers in the United States at less than FMV.

As in the case of Flores Condor, the FTC asserts that Colombianas has

provided inadequate data because it failed to include sales of flowers

packaged in bouquets. The FTC asserts that Colombianas has included

sales of pompon cuttings in its reporting of sales of non-export

quality flowers or culls, and argues that cuttings should be reported

separately from culls. The FTC also notes that Colombianas' materials

are expensed based on a weighted-average per unit cost, and asks that

the Department not accept ``average'' costs unless they are adjusted by

a variance to actual costs.

The FTC claims that Colombianas has departed from its usual

accounting methodology in calculating its cost of production by

amortizing preproduction expenses over the ``productive portions of the

plants' lifecycles.'' The FTC asks that, if Colombianas amortized its

preproduction in the third administrative review, the Department not

permit Colombianas to expense all preproduction costs without

accounting for the amortized costs from the previous review. The FTC

further ask that the Department carefully review the questionnaire

responses to determine if all costs have been captured, and also

confirm that they have been properly allocated to sales of the subject

merchandise.

Asocolflores responds that it has argued earlier that bouquet sales

do not need to be reported, and that no reporting them should not be

the basis for applying a BIA rate. Also, Colombianas has demonstrated

through its business practices that it will not engage in dumping in

the future.

Asocolflores asserts that Colombianas has reported using cull

revenue to offset cultivation costs in the four previous years and that

no objection was raised at the time. Because all expenses associated

with producing cuttings are included in its constructed value,

Asocolflores maintains that it is appropriate to offset the cost of

production by revenue generated from sales of those cuttings.

Asocolflores states that because materials are expensed on the

basis of the actual weighted-average per unit costs, it is unnecessary

to adjust average unit cost by their variance to actual costs, because

there is no variance.

Asocolflores claims that the methodology used by Colombianas to

calculate preproduction expenses is the same as that used in prior

reviews, and that the Department has verified this methodology.

Asocolflores also states that only one of the group's members amortizes

preproduction costs while the rest of the group's members expense their

preproduction costs.

Finally, Asocolflores states that the FTC's concerns that all costs

have not been properly allocated are mistaken and that the FTC has

misread the questionnaire responses. The Department has conducted

verification of Colombianas' cost and found that all were correctly

reported.

Department's Position: See our response to Comment 1, above, with

regard to our handling of the issue of bouquets in this review.

We agree with Colombianas' reporting of cuttings revenue as part of

cull revenue. Expenses related to cuttings production are included in

Colombianas' constructed value; hence, an offset for revenue generated

from the sales of these cuttings if appropriate.

We agree with Colombianas' expensing material costs based on a

weighted-average actual per unit cost because these costs are

calculated on an actual cost basis, which requires no variance

adjustment. See Flores Colombianas' Verification Report at 7 (October

25, 1993).

We agree with respondent with regard to Colombianas' amortization

of its preproduction costs for this review. The FTC misinterprets the

statement from our verification report concerning the amortization of

preproduction costs to mean all Colombianas group members. This

statement refers to Flores Colombianas Ltda. and Agrosuba Ltda.

Jardines de los Andes, another member of the Colombianas group, does

amortize its preproduction costs. The Department's verification report

states that ``no preproduction costs are separately reported in the

group's response because all costs are expensed in the month that the

activity takes place.'' See Flores Colombianas' Verification Report, at

7 (October 25, 1993). We verified the group's preproduction expense

methodology and found no discrepancies. Furthermore, Flores Colombianas

Group's preproduction cost reporting methodology in this administrative

review was clearly consistent with that reported in previous

administrative reviews.

Finally, during our verification, we carefully reviewed

Colombianas' source documents and accounting records, and we are

satisfied that Colombianas captured all costs.

Other Company-Specific Comments

Comment 16: The FTC argues that Flores De Suba (Suba) has

understated its U.S. sales in response to the questionnaire. First, the

FTC claims that Suba has not reported flowers sold to the United States

as components of bouquets. Second, the FTC asserts that Suba has sold

its flowers to other Colombian exporters that have lower cash deposit

rates. The FTC claims that Suba lists these flowers as third country

sales, though it knows that the likely ultimate destination of these

flowers would be the United States. Asocolflores responds that, as

argued above, the criticism regarding bouquets is invalid. Asocolflores

claims that there is no evidence that Suba knew or had reason to know

that flowers sold to other producers would be sold in the United

States. Furthermore, Suba does not have a ``practice'' of selling to

other exporters, but only does so occasionally.

Department's Position: See our response to Comment 1 with regard to

our handling of the issue of bouquets in this review.

Second, Suba has always acknowledged that it has had sales of some

export quality flowers to other Colombian flower exporters. However,

Suba knows only that these flowers are destined for export, not

specifically for the United States market. See Flores de Suba

Questionnaire Response, at 1 (May 1, 1992). There is no evidence that

the company has understated its U.S. sales in response to the

Department's questionnaire.

Comment 17: The FTC asserts that Suba has included proceeds from

the sales of excess wood and plastic as cull revenue. The FTC requests

that the Department confirm that Suba has offset costs attributable to

packing, and not total costs, in its constructed value calculation.

Asocolflores responds that the wood and plastic in question was for

use in constructing greenhouses, and that this has been certified by

the Department. Because greenhouses are used in the production of

flowers, Asocolflores maintains that the Department correctly

considered wood and plastic expenses to be an offset to total costs.

Department's Position: Suba stated in its response to the

Department's questionnaires that its sales of excess wood and plastic

were included in its cull revenue. Because we verified that these

materials are used in general construction of greenhouses, we agree

with respondent that these costs should be taken as an offset to total

costs.

Comment 18: The FTC notes that Santana Flowers Group (Santana)

sells some of its flowers under several separate brand names. The FTC

requests that the Department inform Customs of all brand names under

which Santana flowers are sold to ensure that antidumping duties are

properly collected.

Asocolflores responds that brand names have nothing to do with the

way in which flowers enter the United States. Customs' forms ask for

the producer of merchandise, and Santana has reported itself as the

producer.

Department's Position: We agree with Asocolflores that the use of

brand names does not affect the assessment of antidumping duties on

covered entries. Customs relies on information relating to the identity

of the producer or exporter of this merchandise when liquidating

entries according to our instructions.

Comment 19: The FTC claims that Santana has failed to support its

calculation of the number of days between shipment and payment for the

purpose of computing credit expenses on export sales prices. The FTC

asks that the Department use the highest reported number of days

between shipment and payment as BIA.

Asocolflores responds that Santana reported the appropriate number

of days, but when asked by the Department at verification, Santana

could not find the worksheet that it used to determine that number.

Santana decided not to recalculate its credit expenses. Asocolflores

maintains that Santana should not be penalized for this because the

decision to report the higher number of days is to its disadvantage as

it increases the amount of credit expenses applicable to U.S. sales.

Department's Position: We verified that the number of days between

shipment and payment was less than that reported by Santana for its

U.S. sales. The scenario described by Asocolflores is accurate. Santana

chose not to recalculate its credit expenses, which would have

increased USP and therefore been more favorable to Santana. As a

result, we used Santana's overstated credit expense, which lowers USP

and raises Santana's dumping margin, as originally reported in its

response. See Santana Flowers Group Verification Report at 10 (October

13, 1993).

Comment 20: The FTC asserts that some of the data supplied by

Santana is inaccurate. First, the FTC claims that Santana did not

report flowers sold in bouquets. Second, because Santana has not

reported royalty costs by flower type, the Department should use the

highest reported royalty expense for each flower type as BIA. Finally,

the FTC argues that the costs for destruction, spraying, and

incineration, which were not reported by Santana, constitute a regular

selling expense for the producer. The FTC requests that the Department

confirm that Santana has reduced its U.S. price accordingly.

Asocolflores argues that the idea that different flower types will

have different levels of royalties is mere speculation and not backed

by evidence. Asocolflores notes that the royalties reported by Santana

were verified by the Department, and the costs for destruction,

spraying, and incineration were in fact reported in Table 1, Column AA

of Santana's response.

Department's Position: See our response to Comment 1, above, with

regard to our handling of the issue of bouquets in this review. Also,

Santana did in fact properly report costs for destruction, spraying,

and incineration in its response. We determined that Santana's royalty

reporting methodology is acceptable.

Comment 21: The FTC asserts that some of the data supplied by

Cultivos Miramonte (Miramonte) is inaccurate. First, the FTC claims

that Miramonte may have routed subject flowers through a related firm,

and asks that the Department confirm whether or not such routing took

place. Second, Miramonte claimed bank fees for the conversion of U.S.

dollars to Colombian pesos as indirect selling expenses. The FTC argues

that because such payments directly correspond to a sale of subject

merchandise, thee fees should be treated as direct selling expenses.

Third, Miramonte has treated its Colombia Flower Council fees as

``other expenses,'' and the FTC asks that the Department ensure that

these fees are treated as U.S. selling expenses. Finally, the FTC is

concerned that Miramonte may have included the sales of cuttings in the

cull revenue as an offset to constructed value, and asks that the

Department ensure that this is not the case.

Asocolflores responds that Miramonte sold only cuttings to a

related firm, and that because Miramonte has a zero cash deposit rate,

there was no need to avoid payment of deposit rates. Second, because

Miramonte receives payment in lump sums, conversion fees cannot be tied

to any specific sales, and thus are correctly reported as indirect

selling expenses. Third, Miramonte's Colombia Flower Council fees were

reported in Table 1, Column AA. Last, Asocolflores characterizes the

FTC's assertion that Miramonte may have included the sale of cuttings

in the cull revenue as speculation, and maintains that the Department

has verified otherwise.

Department's Position: We agree with Asocolflores regarding the

FTC's allegation that Miramonte sold covered flowers to the United

States through a related firm. We found no evidence at verification to

contradict Miramonte's claim that only cuttings were sold to its

related firm. Second, because bank fees are paid in lump sums and do

not necessarily correspond to the sales made in a particular month, we

have treated them as indirect selling expenses. Third, although these

fees are reported under ``other expenses,'' this item is combined with

U.S. selling expenses and both items are subtracted from U.S. price and

subject to offset. Finally, we disagree with petitioner that Miramonte

included in its cull revenue the sale of cuttings. We found no evidence

at verification to support petition's claim.

Comment 22: The FTC requests that the Department reject Flores

Cajibio's (Cajibio) allocation methodology for general and

administrative expenses. The FTC claims that Cajibio reported these as

indirect sales expenses by surveying the time that administrative

personnel spent on export sales for one week. The FTC notes that the

month in which the week occurred could affect the amount of time

attributable to sales activities. The FTC also wonders how Cajibio

could assume that its administrative staff spent only 20 percent of its

time on activities related to U.S. export sales when the U.S. market

accounts for a large percentage of Cajibio's sales for all flowers. The

FTC argues that the Department should assume that all general and

administrative expenses were U.S. selling expenses as BIA.

Asocolflores responds that because there are a number of

administrative and management personnel who are not involved with

selling, it is not unreasonable for a firm to have only 20 percent of

administrative personnel engaged in this activity.

Department's Position: We agree with the FTC that Cajibio failed to

established that its allocation methodology for quantifying indirect

selling expenses was representative of how these costs related to sales

activities during the entire POR. Because Cajibio indicates in its

response that all administrative personnel spent time in communications

for U.S. sales, we have classified all general and administrative

expenses incurred in Colombia and attributable to U.S. sales as

indirect selling expenses.

Comment 23: The FTC asserts that Cajibio deducted air freight

expenses from its ``production expense,'' claiming their air freight is

paid for by the importer in the United States. The FTC claims that it

is not clear that air freight has been included in Cajibio's response,

whether paid for by Cajibio or the importer. The FTC argues that the

Department should use the highest reported air freight expenses as BIA.

Asocolflores responds that these data were reported in Table 1,

Column AF, and that it was correctly excluded from production expenses.

Department's Position: We agree with Asocolflores that Cajibio

accounted for air freight expenses under ``other charges'' of Table 1

of its May 7, 1992, response.

Comment 24: The FTC asserts that Cajibio claims to post all

expenses to the record as they occur, and not to amortize them over the

useful life of the product, yet in its supplemental response Cajibio

indicated that it depreciated all its assets based on the useful life

of each product taking into account the purchase value of the asset.

The FTC argues that as it is unclear how Cajibio accounted for its

assets with a useful life of over one year, the Department should use

the highest reported depreciation costs as BIA.

Asocolflores responds that amortization is performed on expenses

and that depreciation is performed on assets; therefore, there is no

contradiction here.

Department's Position: We have determined that there is no

inconsistency in Cajibio's decision not to amortize certain expenses

and to depreciate its assets, because amortization of expenses applies

to intangible assets and deferred charges, and depreciation applies to

fixed assets. Therefore, Cajibio's treatment of amortization expenses

has nothing to do with depreciation.

Comment 25: The FTC claims that Cajibio has not explained how it

distinguished costs directly attributable to open field grown yucca

plants from those attributable to plants grown in greenhouses.

Furthermore, according to the FTC, Cajibio claims not to keep records

of the amounts of fertilizer used, and conducted a two-week study to

make a determination of fertilizer consumption. The FTC asserts that

this study did not account for the stage of production or the growing

seasons, and argues that because the study is not representative, the

Department should instead use relative area under cultivation to

reallocate those costs.

Asocolflores responds that most producers are able to identify

those materials used only in the production of one type of product,

that Cajibio used its best efforts to determine the allocation of

fertilizer, and that, therefore, the FTC's allegations are unfounded.

Department's Position: The evidence on record from Cajibio's

responses indicates that the firm, for the most part, kept product-

specific cost records. However, with respect to certain costs such as

fertilizer expenses, Cajibio had to use its best estimates based on

work surveys to quantify the expense in questions. Based on our

analysis of the factual information in Cajibio's responses, including

the amount of land devoted to open field yucca production and the

number of flower beds devoted to production of various types of

flowers, we find Cajibio's estimates to be reasonable.

Comment 26: The FTC argues that the Department should recalculate

Cajibio's packing and box expenses for the POR, as Cajibio's figures

may be inaccurate. First, Cajibio reported that it had a ``negative

cost of packing'' in some months because it used the boxes before the

POR but accounted for the expense during the POR. The FTC argues that

if this is so, the cost of packing should be zero or equal to the

amount of expenses incurred during the POR. Second, Cajibio should not

be allowed to reduce box expenses by the amount of box charges

collected by its related consignee because the consignee also sells

Ecuadorian flowers. Third, Cajibio should not be allowed to make an

expense adjustment for boxes that were later sold to Ecuador, and thus

``do not belong to Flores Cajibio.'' Finally, the FTC claims that

Cajibio calculates its packing labor costs by multiplying an average

labor cost by two to account for the fact that they have two packers,

and argues that Cajibio should simply use the actual salaries of the

two workers.

Asocolflores responds that the apparent anomaly of negative packing

expenses in certain months is a result of the use of actual monthly

expenses. Second, Cajibio did not reduce box expenses, it included the

charges in Table 1, Column I of its May 7, 1992, response. Third, boxes

shipped to Ecuador are not a part of the cost incurred on shipping

flowers to the United States, so the costs of these boxes were not

included. Finally, Asocolflores argues that the FTC's assumption that

Cajibio employed the same two workers in packing for the entire review

period is not the case, and because all labor costs not included in

packing are included in direct production costs, there is no

distortion.

Department's Position: Cajibio did report negative packing totals

for certain months in Table 4C of its May 7, 1992, response. However,

in this same response, Cajibio recalculated packing expenses by using a

weighted-average per unit packing charge based on total packing charges

during the POR and these final figures were used for comparison

purposes.

We find that Cajibio properly accounted for its box charges and was

correct in reporting only expenses that were incurred on U.S. sales.

Finally, we agree with Asocolflores that using an average per worker

salary to calculate packing labor is reasonable because the workers

assigned to packing are rotated.

Comment 27: The FTC asks that the Department reallocate reported

air freight costs for Flores Aguila Ltd. (Aguila) because Aguila

allocated the costs according to the number of boxes shipped, not the

number of boxes sold, as should have been done.

Asocolflores responds that as long as total air freight costs are

reported, how they are allocated does not matter. See Comment 10,

above.

Department's Position: We disagree with the FTC. As Flores Aguila

explained in its response, air freight charges are incurred on flowers

shipped. Therefore, Flores Aguila allocated its air freight charges

among flower types based on relative quantities shipped in order to

derive the total air freight expenses for each flower type. See Flores

Aguila section C Questionnaire Response, at 6 (April 23, 1992), and

Flores Aguila Supplemental section C Response (October 3, 1993). Flores

Aguila then reported these air freight costs in its U.S. sales

worksheets. These were divided by flowers sold and deducted from U.S.

price. Thus, we accepted Flores Aguila's methodology.

Comment 28: The FTC argues that the Department should not accept

some of the data Aguila supplied in response to the questionnaire.

First, the cost data allocated on the basis of cultivation area should

be rejected, given several inconsistencies, and re-allocated according

to relative cultivation area. Second, because Aguila appears to have

failed to report certain costs, the highest reported cost of materials

should be used as BIA. Finally, because Aguila failed to specify the

type of packing materials used for sales and failed to explain its

allocation methodology for these costs, the Department should either

require that Aguila supply this information or resort to the highest

reported packing costs as BIA.

Asocolflores responds that it is impossible for a firm to account

separately for the thousands of purchases of materials made during the

POR and that some summarization is necessary. Asocolflores also claims

that documentation of this information is usually provided at

verification and not in a questionnaire response.

Department's Position: The FTC's allegations are speculative in

nature and do not establish inconsistency in Aguila's response. For

example, the FTC notes a discrepancy between the ratio of area in

hectares under cultivation for each flower type and the ratio of the

number of flower beds planted for each flower type. These ratios are

only slightly different. More significantly, there is no reason that

the area under cultivation for each flower type as measured in hectares

should be exactly the same as the area when measured according to the

number of flower beds because the size of the flower beds may vary by

flower type.

With respect to Aguila's cost of materials, the information

submitted conforms to the format of the questionnaire that the

Department issued to all respondents in this review. Although Aguila

does summarize all costs found within each category of expense found in

the questionnaire format, there is no evidence on the record that

Aguila failed to report all costs.

Finally, with respect to packing materials, our questionnaire did

not require a detailed listing of all packing materials used by Aguila.

Instead, Aguila was instructed to report the total of all costs of

packing or otherwise preparing the merchandise for shipment to the

United States customer. Because Aguila followed the format of the

questionnaire with respect to packing costs, we find no reason to

reject the firm's packing costs.

Comment 29: The FTC asserts that Daflor has failed to describe its

material or labor costs, failed to provide worksheets illustrating the

allocation methodologies used to report these costs, and failed to

support the indirect selling expenses reported. The FTC argues that

absent further clarification, the Department should use the highest

reported costs and indirect selling expenses as BIA.

Asocolflores responds that not all companies distinguish among all

costs incurred, and that total itemization is not required by the

Department. Furthermore, Asocolflores maintains that most Colombian

producers have relatively low indirect selling expenses because sales

are usually handled for them by their importer.

Department's Position: Daflor's initial questionnaire response was

deficient in that it did not identify the components of its material

and labor costs, did not explain its allocation methodology, and did

not identify the components of its indirect selling expenses. However,

in the supplemental response of October 4, 1993, Daflor corrected these

deficiencies. Therefore, we have not resorted to BIA with respect to

Daflor.

In addition, because Daflor has related and unrelated importers in

the United States that take care of all of its sales-related

activities, it is reasonable for Daflor's indirect selling expenses

incurred in Colombia to be relatively small.

Comment 30: The FTC argues that the Department should reject some

of the data supplied by the Soagro Group (Soagro). First, Soagro

purchases cuttings from another related company, but has not

established that the prices used are at arm's-length or greater than

arm's-length pursuant to 19 U.S.C. 1677b(e)(2) & (3). In this case, the

Department should use the highest reported material costs as BIA.

Second, Soagro imports some mother plants from Holland, yet does not

report any royalty expenses. The FTC argues that the Department should

impute an amount for royalty expenses as BIA. Finally, Soagro's crop

adjustment methodology may be resulting in the improper elimination of

preproduction costs during the POR. The FTC asks that the Department

expense all preproduction costs in the POR or use BIA.

Asocolflores responds that the first two points are speculation on

the part of the FTC, and that there is no evidence to support them. As

for preproduction costs, Asocolflores explains that the value of the

increase in cultivated area is in effect amortized and distributed to

the next year, but it is also included in the material, labor, and

indirect costs reported in the next year's responses. While this is

different from the methodology of other companies, Asocolflores

observes that it was used by Soagro in the previous review.

Department's Position: We agree with Asocolflores. Because Soagro

purchases cuttings from only a related party, it was not possible to

conduct an arm's-length test based on purchases made by Soagro.

However, we compared the price of Soagro's related party purchases of

cuttings to other flower companies' unrelated purchases of cuttings. We

found that Soagro's prices were on average equal or higher. Although

Soagro purchases mother plants from Holland and does not report any

royalty expenses, there is no evidence that Soagro incurs royalty

expenses. As for the preproduction costs, the value of the increase in

cultivated area is in effect amortized and distributed to the POR and

to following years. We have accepted this methodology in previous

reviews as reasonable.

Comment 31: The FTC claims that Flores Del Campo Ltda. (Campo) has

included in its total U.S. shipments value the quantity and value of

flowers that are ultimately shipped to Canada through Miami. The FTC

argues that this may distort the margin percentage and that Canadian

sales should be excluded.

Asocolflores responds that because Customs cannot distinguish

between those flowers coming into Miami that are destined for Canada

and those destined for the United States, it assesses a cash deposit

and, ultimately, a duty on them all. Asocolflores argues that the

Department should take this into account by including the volume and

value of Canadian sales when calculating Campo's per unit assessment

rate. If this is not done, Asocolflores asserts that the correct amount

of duties will not be collected.

Department's Position: With respect to consignment sales made by

Flores del Campo to its U.S. agent, certain flowers were entered into

the United States but ultimately sold in Canada. Because there were no

U.S. sales prices for these sales, we calculated Flores del Campo's

antidumping margin based only on entries of subject flowers from Flores

del Campo that were entered and sold in the United States. Flores del

Campo's deposit rate is based only on U.S. sales because at the time of

entry, we do not know which, if any, flowers will be sold in Canada.

That is, the cash deposit rate is equal to the total dumping duties due

on sales in the United States divided by only the sales value of

flowers sold in the United States. However, because Flores del Campo's

antidumping duty assessment rate will be applied to entries of flowers

sold in both Canada and the United States, and because we know which

flowers were sold in Canada during the POR, we have factored into the

assessment rate Canadian sales totals to prevent over-collection of

antidumping duties. That is, the assessment rate is equal to the total

dumping duties due on U.S. sales divided by all flowers entered into

the United States, including those ultimately sold in Canada.

Comment 32: The FTC claims that Campo reported a total cull revenue

for the POR that was different from that reported in its financial

statements for 1990 and 1991. The FTC argues that the Department should

reject Campo's offset to cost of production for cull revenue because of

this discrepancy.

Asocolflores states that the Department has verified that the

amount reported by Campo is correct.

Department's Position: We agree with Asocolflores. Although we find

that there is a difference between the amount of cull revenue reported

in the financial statements and the amount reported in Campo's

response, during verification we inspected Campo's cull revenue records

and found Campo's response to be accurate. See Flores Del Campo

Verification Report (October 17, 1993).

Comment 33: The FTC argues that the Department should not accept

data from The Bochica Group unless it has been specifically verified.

According to the FTC, the Department found Bochica/Floral's response to

have many errors, and while those may have been corrected, the FTC

questions the accuracy of the rest of the data.

Bochica/Floral responds that the FTC has exaggerated the extent of

the errors found in the response. Many of the errors cited were not

errors at all, and those that were errors were very small, often

amounting to a variance of less than one percent. Bochica/Floral notes

that the Department's verification report makes it clear that

Department officials regarded the response to be accurate.

Department's Position: We agree with Bochica/Floral. We thoroughly

verified the company's response and found its data to be accurate. See

Bochica/Floral Verification Report (October 8, 1993). The discrepancies

found at verification were corrected on site and in subsequent

submissions made by Bochica/Floral. Because the verification process

involves spot-checking data submitted in the response, and because we

found the verified data to be essentially accurate, we have no reason

to question the accuracy of the rest of the data submitted.

Comment 34: The FTC asserts that Bochica/Floral did not report all

applicable royalty expenses. The FTC asks that the Department reject

Bochica/Floral's figures and instead use the highest reported royalty

expenses as BIA.

Department's Position: We disagree. At verification, we determined

that Bochica/Floral accurately reported royalty expenses.

Comment 35: The FTC contends that Bochica/Floral may not have

included expenses related to its Meristem Laboratory in its response.

It is also unclear to the FTC whether all expenses for cuttings have

been properly included. In addition, Bochica/Floral claimed to have no

R&D expenses during the POR, but that any research ``skills'' involved

were included in ``production.'' The FTC requests that the Department

confirm that the above expenses were included in Bochica's response.

Bochica/Floral responds that Meristem did not produce cuttings in

commercial quantities until after the POR, and that expenses associated

with start-up operations during the POR were included in the direct

material costs.

Department's Position: We verified that the Meristem laboratory did

not produce cuttings in commercial quantities until after the POR and

that the expenses associated with the start-up operations are included

in the direct material costs. See Memorandum to File dated March 14,

1994.

Comment 36: The FTC requests that the Department reject Floralex's

claim that interest income should be used to reduce interest expenses,

as Floralex has not demonstrated that the short-term interest income is

related to flower production.

Floralex responds that it is in the business of producing flowers,

and that it is thus reasonable to assume that short-term interest

income is related to flower production. Moreover, the Department never

asked for more details about this income, nor did it bother to verify

the response, and it would be unfair to penalize Floralex for failing

to provide information it was not asked to supply.

Department's Position: Floralex reported its interest income as

revenue directly related to flower production. There is no evidence on

the record, nor has petitioner provided any, contradicting Floralex's

reported interest income. Therefore, we have accepted Floralex's claim

as stated in its response and have adjusted the company's short-term

interest expenses by its interest income.

Comment 37: Petitioner requests that the Department resolve a

number of inconsistencies in Flores Marandua's (Marandua) questionnaire

response. Petitioner maintains that Marandua has not reported freight

expense from the farm to the airport in its U.S. sales listing, nor has

it reported direct or indirect selling expenses, though it sells

through a related importer. Petitioner further states that Marandua has

not reported all of its cultivation costs, and that it has not itemized

material, labor or indirect costs. Petitioner also argues that Marandua

has not explained why it accounts for a negative ``last period

amortization cost'' for every month during the review period.

Department's Position: Marandua did not incur an inland freight

(from farm to airport) expense because an independent cargo agent

commissioned by the air carrier picked up Marandua's flowers and

delivered them to the airport at no cost to Marandua. Marandua's U.S.

selling expenses are incurred by its related importer in Miami, and

these expenses are captured by the commission expense reported by

Marandua. Marandua's reported material, labor, and indirect costs were

acceptable. Finally, what the petitioner refers to as ``negative''

amortization cost are not negative costs at all, but additions to cost

that generally pertain to overhead.

Comment 38: The FTC asserts that the Department's analysis

memorandum was incorrect in that it indicated that an adjusted peso

borrowing rate was used to calculate credit expenses for Flores Arco

Iris (Arco Iris). The FTC further states that the actual rate used by

the Department was the U.S. prime rate during the POR.

Department's Position: We agree. Because Arco Iris had no dollar or

peso short-term borrowings during the POR, we used the U.S. prime rate

to calculate credit expenses for the firm.

Comment 39: The FTC claims that the Department should reject Flores

Tomaine's and Becerra Castellanos's questionnaire responses as

materially deficient because neither company clearly stated in their

responses that they sold subject flowers to the Flores Colombians Group

during the POR. The FTC claims that the Department should therefore

apply a BIA rate to these companies.

Department's Position: We disagree. Becerra Castellanos reported

these sales as third country sales, which is not inconsistent with

Colombianas' claim that its suppliers do not have foreknowledge as to

which export market their flowers are sent. Although Flores Tomaine did

not report these sales in its response, we do not explicitly require a

detailed reporting to third country sales. Because Tomaine did not have

foreknowledge that this merchandise was destined for sale to the United

States, and foreign market value is based upon CV, not home market or

third country sales, the issue of Tomaine's reporting these sales is

moot. In addition, the average prices of Flores Tomaine's and Becerra

Castellanos's carnation sales to Colombianas were above their CV. For

these reasons we conclude that BIA is not appropriate in this case.

General Issues Raised by Respondents

Comment 40: Asocolflores protests the Department's assignment of

72.35 percent as the BIA rates for Flores Mountgar (Mountgar) and

Flores Estrella (Estrella). Asocolflores claims that neither firm was

able to respond to the Department's questionnaire for the POR (1990-

1991). Mountgar had been liquidated, and Estrella was on the verge of

liquidation at the time they received the Department's questionnaire.

Though not actually out of business, Estrella had no means to reply to

the request as it had no money to obtain legal or accounting help.

Asocolflores argues that, in accordance with the Court of Appeals

for the Federal Circuit's decision on Allied-Signal Aerospace v. United

States, 996 F.2d. 1185, 1193 (Fed. Cir. 1993), the Department should

not have used first-tier BIA, i.e., the highest rate found for any

company in any prior review or the current review, because neither

company was able to respond. Instead, the Department should have used

the second tier, i.e., either the highest rate ever applied to the

company in question or the highest rate applied to any company in the

current review.

Asocolflores argues that using the 72.35 BIA rate for the two

companies as components of the sample group rate unfairly penalizes the

other companies in the sample. Asocolflores asserts that the 72.35 rate

was not even calculated by the Department, but was a figure cited by

the petitioner in the original petition, which included flower types

not included in the antidumping duty order. Because neither company was

able to respond, and because the 72.35 rate was not a figure calculated

by the Department, Asocolflores maintains that it should be discarded.

Asocolflores suggests assigning the BIA rate for both companies on the

basis of the highest rate calculated for a company in the current

review, in this case, 7.56 percent.

The FTC responds that the BIA rate used in the preliminary results

was appropriate. The FTC asserts that 19 U.S.C. 1677e(b) specifically

provides for use of the petition's rate as BIA, that the Department's

standard practice is to apply a first-tier BIA rate to companies that

do not respond to the questionnaire, and that this choice of BIA is

consistent with its choice in the original investigation. The FTC

claims that Mountgar and Estrella have failed to support their claims

of bankruptcy, and that, in fact, both companies still exist according

to readily available information from public sources. The FTC contents

that both companies apparently continued to ship subject flowers during

the 1992-1993 POR. Not only did both companies not respond to the

Department's questionnaire, the FTC observes that neither reported

experiencing difficulty until after the Department chose them for

inclusion in the sample group. Finally, the FTC rejects the argument

that Allied Signal v. United States applies in this case, as that case

was one of a respondent that was unable to provide a complete response

but offered what information it could provide, whereas neither Mountgar

nor Estrella made an attempt to provide any information.

The FTC suggests that the Department use the 72.35 percent BIA

rate, or, if it must apply the second tier, that it use the highest

rate ever applicable to the firm from either the investigation or any

prior review, and not the highest rate applicable to another firm in

the current review. Because Mountgar was assigned a rate of 43.02

percent during the third review, the FTC asserts that this rate should

be applied if the Department relies on second-tier BIA.

Department's Position: We have reconsidered the use of first-tier

BIA for Mountgar and Estrella. In the preliminary results of review, we

solicited comments on our proposal concerning the appropriate BIA rate

to apply to companies that exported during the POR but that later went

out of business. Based on our proposal and the comments received, we

sent questionnaires to Asocolflores and the Colombian Government Trade

Bureau regarding the status of the two companies. Asocolflores

responded with a sworn declaration from its international manager.

With respect to Mountgar, Asocolflores stated that it was unable to

contact any former representatives of the company, that the company did

not resume operations after October 1990, that the company's plants

(i.e., flowers) were left unattended or destroyed, that the land owned

by the company and the greenhouses on that land were sold to a group of

investors unrelated to the former owners of Mountgar, and that the new

owners planted only roses (not subject to the order) in the greenhouses

formerly owned by Mountgar. Asocolflores also confirmed with the

Colombian Customs Agency, DIAN, that Mountgar registered no exports of

flowers to the United States or any other country after 1990. See

``Declaration of Maria Isabel Patino'' submitted in a letter to the

Department from counsel for respondent dated March 3, 1994.

The information provided by Asocolflores comports with that

provided by the assistant general manager of Mountgar at an earlier

stage of this administrative review. See ``Declaration of Luis Hernan

Garcia'' submitted in a letter to the Department from counsel to

respondent dated May 7, 1992.

With respect to Estrella, Asocolflores stated that the company went

out of business when its two former owners left Colombia and that

Estrella is currently undergoing certain legal procedures that must be

followed before a company can be officially dissolved. On January 12,

1994, Asocolflores received a communication from the Colombian Circuit

Court confirming that Estrella's assets are being liquidated in a

proceeding called a ``concordato.'' Asocolflores explained that, under

Colombian law, a concordato is an official liquidation procedure, not a

reorganization proceeding, by which a court oversees the final

distribution of the company's assets to its creditors. Because

Asocolflores is a creditor of Estrella, it received the official court

notice. Asocolflores stated that, as a creditor of Estrella, it

understands that there are virtually no assets to distribute and that

Estrella rented, rather than owned, the land on which it produced

flowers. Finally, Asocolflores reported that Colombian Customs (DIAN)

confirmed that Estrella did not register any exports of flowers to the

United States or any other market after 1992. See ``Declaration of

Maria Isabel Patino,'' supra.

This information comports with that provided by Estrella's then

general manager at an earlier stage of this administrative review. See

``Declaration of Augusto Hoyos'' submitted in a letter to the

Department from counsel to respondent dated May 8, 1992. This

declaration indicated that Estrella would file a request for a

``concordato'' on May 12, 1992. In addition, the declaration stated

that Estrella's related importer, Airport Floral, was liquidated in

July 1991, that since 1990 Airport Floral stopped making payments to

Estrella, or made only partial payments, and that as a result Estrella

had to lay off 40 employees.

In choosing an appropriate BIA for these two companies, we focused

on the following factors and how they applied to the two companies at

the time they received our questionnaires (in this case, March 4,

1992): The extent to which the companies continued to operate,

including current production and export levels, the number of persons

employed by the firms, the disposition of the companies' assets, the

relationship of the companies to other exporters continuing in

business, the current legal status of the bankruptcy, liquidation, or

reorganization proceedings, and the potential for reorganization

(including the likelihood that the companies would resume production

and exports).

The record evidence indicates that Flores Mountgar ceased

production and exports well before the end of the POR, that it was in

liquidation proceedings at the time it received the Department's

questionnaire, and that the company's assets were sold to unrelated

parties who subsequently produced merchandise not subject to the order.

According to Asocolflores, under Colombian law, all of the resources of

a company involved in liquidation proceedings must be devoted to

satisfying creditors. Based on this information, we conclude that

Flores Mountgar was incapable of responding to our questionnaire.

With respect to Flores Estrella, the record evidence indicates

that, at the time the company received the Department's questionnaire,

it had not yet entered into liquidation proceedings and that the

company's assets had not yet been disposed of. In fact, a Colombian

court did not issue official notification that the company's assets

were to be liquidated until January 4, 1994--almost two years after the

company received our questionnaire. Although the former general manager

of Estrella reported in May 1992 that the company had to lay off 40

employees, he gave no indication of the number of employees remaining,

nor did he suggest that the remaining employees were monopolized by the

bankruptcy proceedings. Moreover, Colombian Customs indicated that

Flores Estrella ceased exporting only as of the end of 1992, which is

nine months after the company received our questionnaire. This

indicates that Estrella most likely continued to operate at the time it

received the Department's questionnaire.

Based on this information, we cannot conclude that Flores Estrella

was incapable of responding to the questionnaire. Nonetheless, we

recognize that the company was subject to financial and personnel

constraints at that time. In his declaration, then general manager of

Estrella indicated that Estrella requested its U.S. importer to provide

to the Department information regarding U.S. sales. He stated, ``If the

Department so agrees, Flores Estrella would be willing to make an

effort and provide partial information regarding constructed value and

U.S. price according to what I stated above.'' See ``Declaration of

Augusto Hoyos,'' supra.

The record demonstrates that the Department did not respond to this

suggestion and that the Department did not request any additional

information regarding Flores Estrella until February 24, 1994. By this

time, liquidation proceedings with respect to Estrella had already

begun. Thus, in February 1994, Flores Estrella was in circumstances

similar to those of Flores Mountgar in March 1992, and similar to those

of the respondent that was the subject of the CAFC's decision in Allied

Signal, supra, (cooperative BIA to be applied to respondent incapable

of providing complete response but which provided partial response

consistent with company's limited resources).

For these reasons, we have determined that second-tier BIA rates

are appropriate for both companies. Second-tier BIA rates comprise the

higher of (1) the highest rate ever applied to that company from any

prior review or the LTFV investigation, or (2) the highest rate

calculated for any other company in the current review. See Final

Results of Antidumping Duty Administrative Review; Antifriction

Bearings (Other Than Tapered Roller Bearings) and Parts From France, et

al., 57 FR 28379 (June 24, 1992). We are applying a BIA rate of 7.56

percent, the highest rate calculated in this review, to Flores

Estrella. We are applying a BIA rate of 43.02 percent to Flores

Mountgar, the highest rate that this company has received in any

previous review. In reaching this decision, we were not persuaded by

petitioner's claim that Estrella and Mountgar continue to exist as

flower producers and exporters. Petitioner's information is

circumstantial and conjectural. With respect to petitioner's claim that

these firms ``apparently'' continued to ship flowers subject to the

order during the 1992-93 POR, the absence of a statement of no

shipments during either POR is not evidence of sales during the POR.

Comment 41: Asocolflores argues that because Mountgar and Estrella

are no longer in business, they should be excluded from the sample

group for purposes of calculating the sample group rate. Asocolflores

notes that because they are out of business, neither company will be

penalized by the rates, but that all of the other ``innocent''

companies in the sample will be penalized. Asocolflores requests that

the Department exclude the two companies from the sample. If that is

impossible, Asocolflores asks that the Department assign BIA rates at

7.56 percent.

Asocolflores enumerates reasons why Mountgar and Estrella should be

excluded from the sample. First, the sample is required to be

``representative of the transactions under investigation'' (19 U.S.C.

1677f-1(b)), and a BIA rate cannot be considered to be representative.

Second, the use of the BIA rates would violate the Department's

practice of not basing sample, average, or ``all other''-type rates on

BIA information, especially when there are reasons for non-cooperation.

The FTC responds that Mountgar and Estrella should be incorporated

in the sample. The FTC claims that because both companies did not

respond to the questionnaire, it is impossible to know whether 72.35

percent is representative. Furthermore, the FTC asserts that it is not

uncommon for there to be a certain percentage of companies on the verge

of going out of business in any industry, especially when there are

many firms in that industry. Finally, the FTC also contends that there

is precedent and judicial endorsement of the use of BIA rates in

samples.

Department's Position: The inclusion of BIA rates in a sample group

rate cannot per se be prohibited. If it were, we would have to keep

picking companies for a sample until we had only companies that would

submit complete, verifiable responses. This would be administratively

unfeasible because, at the time we chose the sample, we would not know

which companies were willing and able to produce complete responses.

More importantly, to choose in such a selective fashion would

constitute a corruption of the integrity of the original random sample.

Such corruption would violate 19 U.S.C. 1677f-1(b), which, as

respondents point out, requires that a sample be representative.

We disagree with Asocolflores that, because Estrella and Mountgar

are out of business, they should be excluded from the sample group. The

sample group represents the universe of all growers and resellers that

exported to the United States during the POR. Because Estrella and

Mountgar exported during the POR, they are part of that universe.

Regardless of what happened after the POR, nothing can change the fact

that they are, and always will be, part of that universe. In selecting

the sample, we cannot tamper with the population that the sample

represents, nor can we tamper with the randomness of the sample

selected. If we were to pick and choose firms selected at random for

the sample based on qualitative factors, that sample would no longer be

representative.

The selection of BIA and the selection of a sample are entirely

unrelated issues. Respondents have objected to our selection of BIA for

Estrella and Mountgar, and we dealt with their concerns in our response

to Comment 40. Once we determine that appropriate BIA for the two

firms, we cannot accept the proposition that the chosen BIA is suitable

for one purpose but not another. Having reasonably determined the

appropriate BIA for Estrella and Mountgar, having inescapably concluded

that Estrella and Mountgar are part of the sample universe, and having

randomly selected Estrella and Mountgar for the sample group, we

conclude that the BIA rates for the two firms must be included in the

sample group.

We disagree with respondents that the Department has a practice of

not basing sample rates on BIA. In many cases, we have included BIA in

our sample rate calculations. See e.g., Sweaters Wholly or in Chief

Weight of Man-Made Fibers from Hong Kong, Preliminary Results of

Administrative Review of Antidumping Duty Order, 58 FR 63913 (December

3, 1993). With respect to all other rates, while the Department did

have a practice of not including BIA in the all others rates

established in administrative reviews, the all others rate is not

generally established in the LTFV investigation and remains in effect

throughout the life of the proceeding. The all others rate from the

LTFV investigation may include BIA rates.

Comment 42: Asocolflores contends that the Department lacks the

legal authority to sample among companies. Asocolflores claims that the

statute by which the Department claims such authority, section 777A of

the Tariff Act, 19 U.S.C. 1677f-1, limits sampling to instances

involving either ``a significant volume of sales'' or ``a significant

number of adjustments to prices,'' and that it does not extend to

reviews involving a significant number of companies. Asocolflores

further claims that the sampling of companies is not representative of

the transactions being reviewed, and therefore violates the statute and

the intent of Congress.

Asocolflores also contends that sampling without notice and

applying adverse BIA rates to innocent companies violates the due

process clause of the Fifth Amendment to the United States

Constitution. Asocolflores maintains that every importer has a

constitutional right to antidumping duty assessments/cash deposits at

rates and in amounts that reflect their individual levels of dumping.

Asocolflores does not ask that the Department cease sampling by

companies, but rather that it notify companies that sampling will be

conducted and to offer individual analysis to companies that request

it.

The FTC agrees that the Department should not sample companies in

administrative reviews.

Department's Position: We disagree with Asocolflores and the FTC.

Section 777A of the Tariff Act specifically authorizes the Department

to use generally recognized sampling techniques in administrative

reviews. Consistent with the final results of the second review we

determine that the use of sampling techniques did not in any way

preclude Colombian exporters from seeking and obtaining company-

specific rates. See Final Results of Antidumping Duty Administrative

Review: Certain Fresh Cut Flowers from Colombia, 55 FR 20496 (May 17,

1990). Furthermore, an exporter had the choice of (1) requesting a view

and paying duties that reflect the exporter's actual margin of dumping

during the review period, or (2) not requesting a review and risking

duty assessment at a rate calculated on the basis of sample results.

Because this choice rested entirely with the exporter, the risk

associated with sampling was completely avoidable. See also Sweaters

from Hong Kong, supra.

Comment 43: Asocolflores claims that the methodology that the

Department used to calculate the sample group rate was flawed. First,

Asocolflores maintains that the calculation should be weighted by

value, as is done in calculations of antidumping margins for individual

companies. The Department, in calculating the sample group rate, made

the calculation using volume data. Because the Department is

calculating a rate of difference between FMV and U.S. price,

Asocolflores argues that using volume data is inappropriate.

Furthermore, because flowers are not sold by weight, but by stems or

bunches, different flowers sell for different amounts by volume.

Asocolflores also objects to the ``points'' methodology the

Department used to assign weights. First, Asocolflores believes that

the use of points created bias because it used rounded rather than

actual figures. Second, because the points were picked at random before

each company's weights were assigned, Asocolflores views the results as

a random average rate, not a true weighted-average. Finally,

Asocolflores criticizes the Department's excessive reliance on INCOMEX

data, which is incomplete and erroneous, with such errors as

approximation and double counting of companies.

Asocolflores maintains that the Department should calculate an

average sample group margin by weight--averaging the margin found for

each of the sample group companies by shipment value.

The FTC responds that the Department should not weight margins in

the sample by sales value. In the FTC's opinion, a value-based sample

would understate the actual amount of dumping because the more a

company dumps, the less its value of sales will be. Consequently, the

FTC argues that the higher the dumping margin for a company, the less

weight it will be assigned in a value-based sample.

The FTC argues that because the Department has not released

information on how it assigned ``points'' in the sample, it is

difficult to determine whether the Department's methodology is

appropriate. The FTC agrees that the Department may have been wrong to

rely on INCOMEX data, and asks why the Department did not use data from

the Colombian National Department of Statistics, the U.S. Customs

Service, or the Department of Commerce, Bureau of the Census.

The FTC requests that the Department abandon its use of three

strata in choosing companies for the sample and return to using two

strata. The FTC contends that Asocolflores's objection on the grounds

that ``companies with less than 6 percent of the total exports could be

selected to the first stratum, which has over 70 percent of total

exports'' is invalid because where an industry is comprised of many

small firms, a small company may well be representative for use in the

sample. The FTC also asks that the Department not accept objections

from interested parties to firms chosen for the sample after the sample

is chosen. Rather, the FTC maintains that objections should be

entertained only before the sample is chosen.

Department's Position: We agree with the FTC that sampling should

be done on the basis of volume because values can be distorted if they

represent dumped prices.

Asocolflores is incorrect in stating that the Department picked

points at random before each company's weights were assigned. As we

explained in the Sampling section, points were assigned in proportion

to each firm's share of total exports to the United States. Only then

did the number of points relevant to the selected firm go ``into the

hat.'' As for Asocolflores's contention that using rounded numbers

produces a bias, each point represents a quarter of a percentage point

of total exports to the United States. Therefore, if any bias was

created, it was insignificant. Finally, with respect to the INCOMEX

data, it is not unreasonable to rely on data provided by an official

Colombian government agency, and these data were the only information

available at the time we chose the sample.

Comment 44: Asocolflores contends that the ``all others'' cash

deposit rate of 3.10 percent from the LTFV investigation should not

apply in this review. Previously, the rate for all other companies,

i.e., companies that previously shipped but had not been reviewed and

companies that did not ship prior to the date of the Department has

been updating the ``all other'' rate in each review. Asocolflores also

claims that entries from unreviewed ``all other'' companies should be

liquidated at the cash deposit rate paid at the time of entry.

The FTC responds that the 3.10 rate is the proper ``all other''

rate because it was the rate established in the original investigation.

The FTC agrees that the rate cannot be changed from one review to

another, but also agrees with the Department's decision to return to

the original rate. Because the ``all other'' rate cannot be changed, it

is logical to apply to unknown firms, for cash deposit purposes, the

initially established rate, not the rate from the previous review.

Department's Position: In Floral Trade Council v. United States

(822 F. Supp. 771), the Court of International Trade stated that 19 CFR

353.22(e) ``prevents abandonment of LTFV `all other' rates for `old

shippers' which have never been investigated or reviewed.'' In the LTFV

investigation of this case, the Department determined the ``all other''

rate to be 4.40 percent, but this was later modified to 3.10 percent in

accordance with the remand ordered by the Court of International Trade

in Asociacion Colombiana de Exportadores de Flores v. United States,

717 F. Supp. 834 (June 29, 1989), Remand Aff'd, August 8, 1989.

The 3.10 percent all others rate will take effect prospectively

only with the date of publication of this notice in the Federal

Register. Any entries from unreviewed companies through the date of

publication of this notice will be liquidated at the cash deposit rate

in effect at the time of entry.

Comment 45: Asocolflores argues that the Department's practice of

comparing annual constructed values to monthly average U.S. prices to

determine whether dumping has occurred unfairly penalizes foreign

producers. Flower prices are driven by demand, which is highly

seasonal. This can result in price fluctuations of up to 250 percent

between peak and off-peak months. Furthermore, flowers are perishable

and cannot be stored or diverted. This being the case, producers have

to look to make their profits during seasonal peaks, because there will

be months where flower prices will be below production costs.

Asocolflores maintains that this is standard business practice for

the industry and contends that the Department has recognized this in

its ``50 percent rule.'' When home market sales prices of agricultural

products are used to determine FMV, the Department has allowed up to 50

percent below cost sales. In the past, the Department has applied this

rule over the entire POR, and not on a monthly basis.

Asocolflores dismisses the Department's reason for using the

monthly average U.S. prices, which is to avoid having dumping masked by

allowing high prices in peak months to offset low prices in other

months. This logic ignores the realities of the flower market, and

ignores the rationale behind the 50 percent rule. Asocolflores suggests

that the Department compare annual constructed value to annual average

U.S. prices to determine whether dumping has occurred, or, at a

minimum, implement its 50-percent rule if it is concerned about masked

dumping.

The FTC responds that the use of average monthly prices is

consistent with Department precedent and has been affirmed in the

courts. The FTC notes that the Department has reviewed this issue in

the original investigation and in all subsequent reviews, and has found

that the use of average monthly prices best strikes a balance between

the perishability and seasonality issues on the one hand and the

concerns of masked dumping on the other. The Court of International

Trade has upheld the Department's decision in this matter in all

challenges.

According to the FTC, the Department's goal was to use as short a

period as possible for averaging, and yet to account for perishability

and seasonality. Though perishability could be accounted for by prices

averaged on a weekly basis, monthly averaged prices would account for

seasonality. Monthly averaged prices also had the advantage that actual

price information for flower sales is generally only available on a

monthly basis.

The FTC contends that Asocolflores is merely repeating arguments

that have been rejected in previous reviews, and has introduced no new

data or arguments that would justify a change in Department policy on

the matter. In light of this, the FTC urges the Department to continue

to use the methodology adopted in the original investigation and

subsequent reviews.

Department's Position: We agree with petitioner. We believe that

monthly averaged U.S. prices adequately account for the characteristics

of the flower industry, without overcompensating. Respondents'

assertion that our use of monthly averaged U.S. prices conflicts with

our use of a modified cost test (as applied to agricultural products)

misconstrues the statute and theory underlying the exclusion of below-

cost sales from foreign market value. The statute makes allowances for

below-cost sales only when the Department is relying upon home market

and third country sales. These standards are intended to guide the

Department in determining when to consider home market and third

country sales and when to disregard them. Once a decision is made to

use CV, such sales are irrelevant to a determination of foreign market

value. Nothing in the statute, the legislative history, or the

Department's practice (including Final Determination of Sales of Not

Less Than Fair Value: Fresh Winter Vegetables From Mexico, 45 FR 20512

(March 24, 1980)) supports the broad notion of annual averaged U.S.

prices. Annual averaging would allow exporters to dump for entire

months when demand is sluggish, so long as they recoup their losses

during months of high demand. The Department is not required to measure

whether profits are made upon an annual basis, especially not in an

administrative review, when margins are normally determined on a sale-

by-sale basis (not annually).

Contrary to respondents' assertions, the Department's approach is

broad enough to eliminate, to a reasonable degree, a finding of

technical dumping, without overcompensating for the characteristics of

the flower industry. The Department's use of monthly averaging ensures

that an entire range of distress and non-distress sales prices are

covered, and is consistent with its established practice in this case,

which has been upheld by the Court of International Trade. See Floral

Trade Council v. United States, 704 F. Supp. 237 (CIT 1988), and Accord

Asociacion Colombiana de Exportadores de Flores v. United States, 704

F. Supp. 1114 (CIT 1989).

Company-Specific Comments

Comment 46: Asocolflores asserts that the Department should not

have collapsed the Florex Group and Santa Helena into a single entity

for the purpose of calculating a single weighted-average percent margin

because the two entities are separate and operate independently.

Asocolflores argues that the Florex Group and Santa Helena does not

meet any of the Department's four criteria for collapsing two entities.

Department's Position: We disagree with Asocolflores. In

Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts

From France, et al., 57 FR 28393 (June 24, 1992), the Department stated

that ``where the type and degree of relationship is so significant that

we find a strong possibility of price manipulation,'' it is the

Department's practice to collapse related parties. For purposes of our

analysis we have used the methodology most recently applied in Carbon

Steel from Japan (1993) and recently upheld in another case by the

Court of International Trade in Nihon Cement Co., Ltd., et al. v.

United States and The Ad Hoc Committee of Southern California Producers

of Gray Portland Cement, et al., Slip Op. 93-80 (CIT 1993):

* * * the Department considered the following questions in a

decision whether to collapse related parties: (1) Do the related

manufacturers have interlocking boards of directors; (2) do they

have similar production processes, facilities or equipment so as to

facilitate shifting of production between facilities; (3) do they

operate as separate and distinct entities; (4) do they share

marketing and sales information or offices; and (5) are they

involved in the pricing or production decision of the other entity?

In Carbon Steel from Japan, the Department also stated that it

``need not show all of these factors exist in order to collapse

sufficiently related to create the possibility of price manipulation.''

See Final Determinations of Sales at Less than Fair Value: Certain Hot-

Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel

Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products

from Japan, 58 FR 37154, 37158-37159 (July 9, 1993).

We have determined that Santa Helena and the Florex Group meet

three out of the five criteria relating to the above collapsing test.

For further details, please see the Department's Collapsing Related

Parties Memo to the file dated March 11, 1994.

In addition, we have collapsed the Santa Helena and Florex Group

data by combining the constructed value information for the same flower

types and combining the sales information for the same flower types

sold through the same importer.

Comment 47: Asocolflores argues that the Department should have

used Santa Helena's devalued peso borrowing rate to calculate imputed

credit. Asocolflores notes that although the Department claims that

these data were not included in Santa Helena's response, the data was

in fact included in Table 1.4 of the company's original March 31, 1992

response.

Although it did not respond specifically to this company-specific

issue, the FTC has argued that the Department should not adjust peso

interest rates for peso devaluation against the dollar. See FTC Public

Brief at 17-19.

Department's Position: We agree with respondent and have used the

Group's actual peso borrowing rate, adjusted for devaluation, to impute

the credit expense for the collapsed Santa Helena/Florex Group. See our

response to Comment 2, above.

Comment 48: Asocolflores claims that the Funza Group incorrectly

reported the peso devaluation rate over the POR, and asks that the

Department use the rate that it verified.

The FTC responds that the Department is under no obligation to

correct data supplied by respondents. The FTC also notes that it has

argued against the practice of adjusting interest rates for

devaluation.

Department's Position: We agree with respondent that the peso

devaluation rate for the POR used in the preliminary results was

incorrect. We have corrected the Funza Group's credit expense

calculation in these final results accordingly. See our response to

Comment 2, above.

Comment 49: Las Amalias SA (Lasa) argues that it is not related to

Ha Fleurette (LFC), CFX, or Agrowconsult, and that the Department

should not collapse Lasa with these companies.

Lasa claims that it is not related to La Fleurette under the

definition provided by the Tariff Act of 1930, section 771(13). Lasa

claims that La Fleurette was not the agent or principal of Lasa, that

neither entity owned the other's stock, and that no person or persons

owned 20 percent or more of either company. The only links between the

two are that La Fleurette leased space and purchased subject flowers

from Lasa at arm's-length, that Lasa provided certain administrative

services and kept the books for La Fleurette for an arm's-length fee,

and that there is one common shareholder who owned 7.5 percent of Lasa

and 17.5 percent of La Fleurette during the POR.

Lasa claims that it is not related to CFX under the above

definition. Lasa made sales directly to CFX, and these transactions

constitute the only relationship Lasa has with CFX.

Finally, Lasa contends that it is not related to Agrowconsult. The

only links between the two are that Lasa paid the owner of Agrowconsult

a one-time consultant fee, that the two share office space that each

entity pays for in accordance with their respective use of the space,

and that the two used the same independent contractor for accounting

services.

The FTC responds that, based on the data provided by Lasa itself,

Lasa is clearly related to all of the companies with which it has been

collapsed. The FTC makes particular note that Lasa handled La

Fleurette's bookkeeping and export documentation, and managed its

checking account. Because La Fleurette is related to CFX and

Agrowconsult, the FTC contends that as Lasa is related to La Fleurette,

it is also related to these companies.

Department's Position: We agree with the FTC that, based on the

information provided by Las Amalias (Lasa), Lasa is related to all of

the companies and should therefore be collapsed into one entity. We

applied the standards outlined above in our response to Comment 46.

We have determined that Las Amalias/Pompones meets four out of the

five criteria relating to the collapsing test outlined in our response

to Comment 46. For a complete analysis of Lasa's interrelationships

with LFC and CFX and with Agrowconsult, see the Department's Memorandum

to File dated March 11, 1994.

Comment 50: Lasa maintains that the Department's use of BIA instead

of the data supplied in its response is improper. Lasa argues that even

if it were related to LaFleurette, CFX, or Agrowconsult, none of these

companies sold subject flowers to the United States. Therefore, any

relationship between Lasa and these companies does not affect the data

Lasa supplied to the Department in its response, and the Department

should use that data.

The FTC responds that Lasa did not report its relationships to La

Fleurette (LFC), CFX, or Agrowconsult, and that it did not report

flowers sold in bouquets made by La Fleurette. Therefore, the

Department should reject Lasa's questionnaire response and use an

adverse rate of BIA.

Department's Position: We agree with petitioner. Because the

Department has determined that Lasa is related to LFC and CFX, and to

Agrowconsult, and that subject flowers sold in mixed bouquets are

within the scope of the antidumping order (see our response to Comment

1), the overwhelming majority of Lasa's sales are ESP transactions, not

purchase price transactions. Because Lasa reported its sales to related

parties in the United States as purchase price sales, when it should

have reported the sales of its U.S. related parties to their customers

(i.e., the first unrelated parties in the United States), we find the

use of BIA to be justified. However, because Lasa substantially

cooperated with our requests for information, including verification,

but failed to provide the information in the form required, we are

applying a second-tier BIA rate to Lasa. In Lasa's case, this is the

highest calculated rate in this review, 7.56 percent.

Comment 51: Lasa contends that the information it supplied in the

questionnaire shows that it is entitled to a zero margin in the review.

Lasa argues that because this will be the third consecutive review with

zero margins, it is entitled to revocation under the regulations.

The FTC responds that because Lasa failed to report either its

relationships with other companies or its sales to the United States in

the form of bouquets, it did not have a zero margin. Therefore, Lasa is

not entitled to revocation.

Department's Position: We agree with petitioner. Lasa is not

entitled to revocation under the Department's regulations because it

has not received three consecutive years of zero margins, as required

by the regulations. 19 CFR 353.25(a)(1)(i).

Comment 52: The Agrodex Group Farms, Floralex, Ltda., and Flores La

Union-Gomez Arango & Cia. S. en C. all claim that the Department has

not made full disclosure of its preliminary calculation methodology,

and that as a result it is impossible to provide detailed comments. The

above firms ask that the Department make a full disclosure and provide

the opportunity to make comments.

The FTC responds that it reserves the right to respond to a

supplemental case brief if accepted by the Department.

Department's Position: Agrodex received disclosure materials in

time to submit its case brief. While it is true that the firm was

unable to pose questions to the case analyst, who was away on official

business until January 24, 1994, we note that the company could have

directed any questions to the analyst's supervisors, but chose not to

do so. We also note that, although the case analyst returned to the

office on January 24, 1994, counsel to Agrodex did not contact the

analyst with questions about the disclosure materials until January 31,

1994. See Memorandum to file dated February 1, 1994. According to this

memorandum, the analyst was able to answer the relatively minor

questions posed by counsel to Agrodex.

At the hearing held on February 1, 1994, respondents indicated that

their interests were prejudiced by the late disclosure and that they

might want to submit further comments. However, the nature of the

additional comments was not specified. Although we did not give a

formal reply as to whether we would accept additional comments, we

received no communication regarding plans to submit comments until just

prior to a submission made on behalf of Agrodex on March 2, 1994. This

submission was made well beyond the time period other parties had to

submit their case briefs and well beyond any reasonable time extension

that could be afforded under these circumstances. See Memorandum to

File dated March 4, 1994 and attached letter. Therefore, we rejected

the comments as untimely.

Comment 53: Velez De Monchaux e Hijos y Cia. S. en C. claims that

the Department used the wrong data in its calculations for that

company. Velez De Monchaux maintains that the data did not include the

corrections submitted on a computer diskette on May 14, 1992, and asks

that the Department use the corrected submission for these final

results.

Department's Position: We agree with respondent that the Department

used the wrong disk for its calculation. We have used the corrected

data that was substituted on a computer diskette on May 14, 1992, for

its final results.

Final Results of Review

As a result of our review of the comments received, we determine

that there are margins in the amounts listed below for the period March

1, 1990 through February 28, 1991.

The following firms requested and received individual reviews:

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

Margin

Producer/exporter (percent)

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

Agricola Cardenal S.A........................................ 0.14

Agricola De La Fountana Ltda................................. 1.56

Agricola El Jardin........................................... 0.00

Agricola Las Cuadras Ltda.................................... 0.30

Flores De Hacaritama

Agricola Los Arboles S.A..................................... 2.08

Agrodex Group................................................ 0.00

Agricola El Retiro Ltda.

Agricola Los Gaques Ltda.

Agrodex Ltda.

Degaflores Ltda.

FlorLinda Ltda.

Flores Camino Real Ltda.

Flores Colon Ltda.

Flores De La Maria Ltda.

Flores De Las Mercedes Ltda.

Flores De Los Amigos Ltda.

Flores De Los Arrayanes Ltda.

Flores De Pueblo Viejo Ltda.

Flores Del Gallinero Ltda.

Flores Del Potrero Ltda.

Flores Dos Hectareas Ltda.

Flores El Lobo Ltda.

Flores El Puente Ltda.

Flores El Trentino Ltda.

Flores Juanambu Ltda.

Flores La Conejera Ltda.

Inverflores Ltda.

Inverpalmas

Inversiones Santa Rosa Arw Ltda.

Agropecuria Cuernavaca Ltda.................................. 2.70

Amalias Group................................................ 7.56

Las Amalias Ltda.

Pompones Ltda.

Bochica Group................................................ 1.35

Agro Bosque, S.A.

Exportaciones Bochica S.A.

Floral Ltda.

Flores Del Cauca

Inversiones Targa Ltda.

Productos El Zorro

Becerra Castellanos y Cia. Ltda.............................. 1.49

Claveles Colombianas Group................................... 1.45

Claveles Colombianos Ltda.

Fantasia Flowers Ltda.

Splendid Flowers Ltda.

Sun Flowers Ltda.

Cultivos Tahami Ltda......................................... 2.52

Dianticola Colombiana Ltda................................... 1.73

Florandia Herrera Camacho y Cia.............................. 0.00

Flores Aurora Ltda........................................... 0.16

Flores Colombianas Group..................................... 0.00

Agrosuba.

Flores Colombianas Ltda.

Jardines De Los Andes S.A.

Productos El Cartucho

Flores Condor De Colombia Ltda............................... 0.00

Flores De La Vega Ltda....................................... 3.42

Flores De Serrezuela Ltda.................................... 0.45

Flores Del Rio S.A........................................... 0.16

Flores Depina Ltda........................................... 0.00

Flores El Zorro Ltda......................................... 1.19

Flores La Union Gomez Arango................................. 0.00

Flores La Valvanera Ltda..................................... 0.26

Flores Las Caicas............................................ 1.09

Flores Sagaro................................................ 0.04

Flores Tiba S.A.............................................. 0.48

Flores Tibati Ltda........................................... 0.00

Flores Urimaco............................................... 2.26

Florex Group................................................. 0.22

Agricola Guacari

Flores Altamira S.A.

Flores De Exportacion S.A.

Santa Helena S.A.

Floricola La Guitana S.A..................................... 0.00

Funza Group.................................................. 0.09

Flores Alborada.

Flores De Funza S.A.

Flores Del Bosque Ltda.

Grupo Andes.................................................. 1.47

Agricola Arenales Ltda.

Cultivos Buenavista Ltda.

Flores De Los Andes Ltda.

Flores Horizante Ltda.

Inversiones Penas Blancas Ltda.

Guacatay Group............................................... 0.13

Agricola Guacatay S.A.

Jardines Bacata Ltda.

Happy Candy Group............................................ 0.46

Flores Tropicales Ltda.

Happy Candy Ltda.

Mercedes Ltda.

Rosas Colombianas Ltda.

Hosa Group................................................... 2.18

Horticultura De La Sabana S.A.

Innovacion Andina S.A.

Minispray S.A.

Industrial Agricola Ltda..................................... 0.00

Ingro Ltda................................................... 7.31

Inversiones Cubivan.......................................... 1.28

Linda Colombiana Ltda........................................ 0.19

Papagayo Group............................................... 1.19

Agricola Papagayo Ltda.

Inversiones Calyposo S.A.

Queen's Flowers De Colombia.................................. 0.03

Queen's Flowers De Colombia Ltda.

Jardines De Chia Ltda.

Jardines De Fredonia Ltda.

Rosas Sabanilla Group........................................ 0.49

Rosas Sabanilla Ltda.

Inversiones La Serena

Agricola La Capilla

Santa Rosa Group............................................. 1.96

Flores Santa Rosa Ltda.

Floricola La Ramada Ltda.

Tuchany S.A.................................................. 0.00

Uniflor Ltda................................................. 2.52

Velez De Monchaux e Hijos Y Cia. S. en C..................... 2.08

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

The following firms were among those requested by the petitioner

and were selected for our sample:

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

Margin

Producer/exporter (percent)

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

First Stratum:

Flores Arco Iris Ltda...................................... 3.59

Second Stratum:

Agricola De Los Alisos Ltda................................ 5.36

Agromonte Ltda............................................. 4.40

Claveles De Los Alpes Ltda................................. 0.70

Daflor Ltda................................................ 0.00

Floralex Ltda.............................................. 0.00

Flores Aquila Ltda......................................... 0.00

Flores Arco Iris Ltda...................................... 3.59

Flores De Cajibio Ltda..................................... 0.30

Flores De Hunza Ltda....................................... 6.04

Flores De La Sabana S.A.................................... 3.87

Flores De Suba Ltda........................................ 1.86

Flores Del Campo Ktda...................................... 3.05

Flores El Arsenal Ltda..................................... 0.76

Flores Estrella, Ltda...................................... 7.56

Flores Marandua Ltda....................................... 0.00

Flores Mountgar, Ltda...................................... 43.02

Flores Tomine.............................................. 1.13

Inversiones Targa S.A. (Bochica Group)..................... 1.35

Jardines Del Muna.......................................... 7.56

Los Geranios Ltda.......................................... 2.28

Soagro Group............................................... 1.45

Agricola El Mortino Ltda.

Flores Aquaclara Ltd.

Flores Del Monte Ltda.

Flores La Estancia Ltda.

Jaramillo Y Daza Ltdg.

Third Stratum:

Cultivos Miramonte S.A..................................... 0.48

Santana Group.............................................. 0.02

Hacienda Curibital Ltda.

Inversiones Istra Ltda.

Santana Flowers Ltda.

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

The following firms were among those requested only by the

petitioner but were not selected in the sample. They will receive the

sample group rate of 3.13 percent.

Producer/Exporter

Abaco Tulipanex de Colombia

Agricola Benilda Ltda.

Agricola Bojaca Ltda.

Agricola El Cactus S.A.

Agricola El Redil Ltda.

Agricola Malqui Ltda.

Agro Koralia Ltda.

Agroindustrial Del Riofrio Ltda.

Cienfuegos Ltda.

Conflores Ltda.

Crop S.A.

Cultivos Medellin Ltda.

Del Tropico Ltda.

Flora Bellisima Ltda.

Flores Alfaya Ltda.

Flores Cigarral Ltda.

Flores De La Montana.

Flores De La Pradera Ltda.

Flores De Nemecon Ltda.

Flores De Suesca Ltda.

Flores Del Lago Ltda.

Flores El Rosal Ltda.

Flores Estrella Ltda.

Flores Gicro Ltda.

Flores Guaicata Ltda.

Flores Hana Ichi De Colombia Ltda.

Flores Juncalito Ltda.

Flores La Cabanuela.

Flores La Conchita De German-Ribon y Cia.

Flores La Frangancia S.A.

Flores Monserrate Ltda.

Flores Mountgar Ltda.

Flores Petaluma Ltda.

Flores Santa Fe Ltda.

Flores Tairona Ltda.

Flores Tocarinda Ltda.

Flores Tokai Hisa

Groex S.A.

Inpar Ltda.

Interflora Ltda.

Inversiones Miraflores Ltda.

Inversiones Oro Verde S.A.

Inversiones Santa Rita Ltda.

Iturrama S.A.

Jardines Carolina

M.G. Consultores Ltda.

Monteverde Ltda.

Plantaciones Delta Ltda.

Plantas Ornamentales De Colombia

Rosas De Exportacion Ltda. (Rosex)

Rosas Y Flores Ltda.

Shasta Flowers Y Cia Ltda.

Sunset Farms

Toto Flowers Ltda.

The Department will instruct the Customs Service to assess

antidumping duties on all appropriate entries. Individual differences

between United States price and foreign market value may vary from the

percentage as stated above. The Department will issue appraisement

instructions on each exporter directly to the Customs Service.

Furthermore, the following deposit requirements will be effective

upon publication of these final results of administrative review for

all shipments of the subject merchandise entered, or withdrawn from

warehouse for consumption, as provided by section 751(a)(1) of the Act:

(1) The cash deposit rate for the reviewed companies will be the rates

as listed above; (2) for previously reviewed or investigated companies

not listed above, the cash deposit rate will continue to be the

company-specific rate published for the most recent period; (3) if the

exporter is not a firm covered in this review, a prior review, or the

original less-than-fair-value investigation, but the manufacturer is,

the cash deposit rate will be the rate established for the most recent

period for the manufacturer of the merchandise; and (4) the cash

deposit rate for all other manufacturers or exporters will be the ``all

other'' rate of 3.10 percent. This is the rate established during the

LTFV investigation.

These deposit requirements shall remain in effect until publication

of the final results of the next administrative review.

This notice also serves as a final 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 notice also serves as the only reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the return or destruction of proprietary information

disclosed under APO in accordance with 19 CFR 353.34(d). Failure to

comply is a violation of the APO.

This administrative review, revocation in part, 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, 353.25.

Dated: March 25, 1994.

Joseph Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-7714 Filed 3-30-94; 8:45 am]

BILLING CODE 3510-DS-P-M