Initiation of Antidumping Duty Investigations: Certain Pasta From Italy and Turkey

DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-818, A-489-805]

Initiation of Antidumping Duty Investigations: Certain Pasta From

Italy and Turkey

AGENCY: Import Administration, International Trade Administration,

Department of Commerce

EFFECTIVE DATE: June 8, 1995.

FOR FURTHER INFORMATION CONTACT: John Brinkmann at (202) 482-5288, or

Greg Thompson at (202) 482-3003, Office of Antidumping Investigations,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue NW.,

Washington, DC 20230.

Initiation of Investigations

The Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act (URAA).

The Petition

On May 12, 1995, the Department of Commerce (the Department)

received a petition filed in proper form by Borden, Inc., Hershey Foods

Corp., and Gooch Foods, Inc. (the petitioners), three U.S. producers of

certain pasta. Supplements to the petition were filed on May 26 and

June 1, 1995.

In accordance with section 732(b) of the Act, the petitioners

allege that imports of certain pasta from Italy and Turkey are being,

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

within the meaning of section 731 of the Act, and that such imports are

materially injuring, or threatening material injury to, a U.S.

industry.

The petitioners state that they have standing to file the petition

because they are interested parties, as defined under section 771(9)(C)

of the Act.

Determination of Industry Support for the Petition

Section 732(c)(4)(A) of the Act requires the Department to

determine, prior to the initiation of an investigation, the domestic

industry supports an antidumping petition. A petition meets this

requirement if (1) the domestic producers or workers who support the

petition account for at least 25 percent of the total production of the

domestic like product; and (2) the domestic producers or workers who

support the petition account for more than 50 percent of the production

of the domestic like product produced by that portion of the industry

expressing support for, or opposition to, the petition.

A review of the industry support data provided in the petition and

other production information readily available to the Department

indicates that the petitioners account for more than 25 percent of the

total production of the domestic like product and for more than 50

percent of that produced by companies expressing support for, or

opposition to, the petition. The Department received no expressions of

opposition to the petition from any interested party. Accordingly, the

Department determines that this petition is supported by the domestic

industry.

Scope of the Investigations

The Department has inherent authority to redefine and clarify the

scope of an investigation, as set forth in a petition, whenever it

determines that the petition language is overly broad, or

insufficiently specific to allow proper investigation, or is in any

other way defective. See NTN Bearing Corp. v. United States, 747 F.

Supp. 726 (CIT 1990). We revised the petitioners' proposed scope to

eliminate channel of trade as a scope criterion in order to ensure that

it would be clear and administrable.

The scope of these investigations consists of certain non-egg dry

pasta in packages of five pounds (or 2.27 kilograms) or less, whether

or not enriched or fortified or containing milk or other optional

ingredients such as chopped vegetables, vegetable purees, milk, gluten,

diastases, vitamins, coloring and flavorings, and up to two percent egg

white. The pasta covered by this scope is typically sold in the retail

market, in fiberboard or cardboard cartons or polyethylene or

polypropylene bags, of varying dimensions.

Excluded from the scope of these investigations are refrigerated,

frozen, or canned pastas, as well as all forms of egg pasta, with the

exception of non-egg dry pasta containing up to two percent egg white.

The merchandise under investigation is currently classifiable under

items 1902.19.20 of the Harmonized Tariff Schedule of the United States

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

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

investigation is dispositive.

Italy

Export Price and Normal Value

The petitioners based export price on two sources. First, the

petitioners based export price on the average unit values (AUVs)

derived from the IM-146 monthly import statistics for HTSUS subheading

1902.19.20, published by the U.S. Department of Commerce, for the

months of December 1994 and January and February 1995. These AUVs

corresponded to the months the available home market price lists were

in effect. The AUVs, which represent the f.o.b. Italy price of the

subject pasta, were not adjusted for foreign inland freight. We find

the AUVs a reasonable basis for export price because 1) the HTSUS

subheading is inclusive of all sales of the subject merchandise, 2)

there were limited imports of non-subject pasta under this subheading,

and 3) a market research report submitted by the petitioners shows the

AUVs to be consistent with the average export values of non-egg pasta

from Italy to the U.S. [[Page 30269]]

The second methodology used by the petitioners was based on U.S.

retail prices obtained from 1) the domestic industry's weekly sales

reports compiled by the petitioners' own sales representative for

November and December of 1994, and 2) InfoScan Markets, which reports

published weekly prices charged by U.S. retailers for pasta for the

month of January 1995. The prices used were for brand name products of

two Italian producers, and were adjusted downward for U.S. ocean

freight and other movement charges.

The petitioners used Italian producer price lists to wholesale

customers obtained from a market research report as the basis for

normal value. For comparisons to the three U.S. retail prices, the

petitioners selected a single ``regular or regular cut'' pasta price

from the appropriate producer's price list. For comparisons to the U.S.

AUVs, the petitioners selected a single price from a producers' price

list. Because the prices were reported in Italian lire per kilogram

(kg), the petitioners calculated the lire per pound (lb) equivalent for

each product listed and then converted to U.S. dollars per pound using

the average exchange rate for the two month period that is used to

calculate the U.S. prices. The petitioners deducted a nine percent

quantity discount and 7.5 percent ``other discount'' based on the

Italian market research report. Finally, the petitioners made an

adjustment to normal value for U.S. and Italian imputed credit

expenses.

We find the petitioners' selection of home market prices not to be

representative comparisons to the U.S. export price to which they are

being compared. In the case of the AUVs, the petitioners have selected

a single price of a specific pasta type to compare to an export price

which is an average of all imports of the subject pasta from Italy. For

purposes of this initiation, we have revised the normal value to a

simple average of all of the subject pasta prices that are listed in

the producer's price list used by the petitioners in their fair value

comparisons. In the case of the export prices based on the three retail

prices described as ``regular or regular cuts,'' we have revised the

normal value to be a simple average of the subject pasta prices that

are listed in producer's price list used by the petitioners that are

described in that price list as ``regular'' pasta.

Based on comparisons of export price to normal value, the estimated

dumping margins for certain pasta from Italy range from 21.85 percent

to 71.49 percent.

Turkey

Export Price and Normal Value

The petitioners based export price on the AUVs derived from the IM-

146 monthly import statistics for HTSUS subheading 1902.19.20,

published by the U.S. Department of Commerce for the months of January

and February, 1995. Claiming that Turkey's economy is

hyperinflationary, the petitioners used AUVs for the month when the

comparison home market sales occurred as the basis for export price.

Specifically, petitioners state that Turkey experienced an annual

inflation rate of 70 percent during 1994, which rose to approximately

130 percent in early 1995. The AUVs were not adjusted for foreign

inland freight. We find the AUVs a reasonable basis for export price

for the same reasons stated above for Italy.

The petitioners based normal value on January and February 1995

prices between a Turkish producer and its wholesaler which were

obtained by a market researcher. The gross home market prices were

adjusted downward for the following costs: value added taxes, quantity

discounts, special annual rebate, and average delivery costs. The

petitioners converted the unit price quotes in Turkish lire to U.S.

dollars using the exchange rates that were in effect on or about the

time the home market sales occurred.

In accordance with Section 773(b)(2) of Act, the petitioners

alleged that sales of certain pasta in the home market were made at

prices below the cost of production (COP). The components of COP, as

enumerated in Section 773(b)(3) of the Act, are the cost of manufacture

(COM), packing and selling, general, and administrative (SG&A)

expenses. SG&A includes the company's net financing expense.

The petitioners calculated COM based on their own production

experience for January and February 1995, adjusted for known

differences between costs incurred to produce certain pasta in the

United States and production costs incurred for the merchandise in

Turkey. For SG&A expenses, the petitioners used their own 1994 audited

annual financial statements because they could not obtain financial

statements for a Turkish pasta or food processing company. The

Department normally uses cost information specific to the home market.

However, the petitioners documented that they attempted to obtain

financial statements through various sources but were unable to gather

financial data on the Turkish pasta or food processing industry.

The allegation that the Turkish producers are selling the foreign

like product in their home market at prices below its COP is based upon

a comparison of the adjusted home market prices with the calculated

COP. Based on this reasonably available information, we find reasonable

grounds to believe or suspect that sales of the foreign like product

may have been made at prices below COP in accordance with section

773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a

cost investigation with respect to Turkey.

The petitioners calculated a constructed value (CV) using the same

COM, packing and SG&A figures used to compute the Turkish home market

costs for pasta. The petitioners also added to CV an amount for profit.

To calculate profit, the petitioners relied on 1993 audited financial

statements reported by a major Italian producer. Although the

petitioners demonstrated significant efforts in attempting to obtain

Turkish specific financial data for the pasta and food processing

industries, we do not consider the profit of an Italian pasta producer

an acceptable alternative. For purposes of this initiation, we have

rejected the estimated margin based on CV, and have instead relied

solely on the comparison of export price to the home market price above

COP.

Based on this comparison of export price to normal value, the

estimated dumping margin for certain pasta from Turkey is 63.29

percent.

Fair Value Comparisons

Based on the data provided by the petitioners, there is reason to

believe that imports of certain pasta from Italy and Turkey are being,

or likely to be, sold at less than fair value. If it becomes necessary

at a later date to consider the petition as a source of facts

available, we may review the calculations.

Initiation of Investigations

We have examined the petition on certain pasta from Italy and

Turkey and have found that it meets the requirements of section 732 of

the Act, including the requirements concerning allegations of material

injury or threat of material injury to the domestic producers of a

domestic like product by reason of the complained-of imports, allegedly

sold at less than fair value. Therefore, we are initiating antidumping

duty investigations to determine whether imports of certain pasta from

Italy and Turkey are being, or are likely to be, sold in the United

States at less than fair value. Unless extended, we will make our

preliminary determinations by October 19, 1995. [[Page 30270]]

Distribution of Copies of the Petition

In accordance with section 732(b)(3)(A) of the Act, copies of the

public versions of the petition have been provided to the

representatives of the governments of Italy and Turkey. We will attempt

to provide copies of the public versions of the petition to all the

exporters named in the petition.

International Trade Commission (ITC) Notification

We have notified the ITC of our initiations, as required by section

732(d) of the Act.

Preliminary Determination by the ITC

The ITC will determine by June 26, 1995, whether there is a

reasonable indication that imports of certain pasta from Italy and

Turkey are causing material injury, or threatening to cause material

injury, to a U.S. industry. A negative ITC determination in either

investigation will result in the respective investigation being

terminated; otherwise, these investigations will proceed according to

statutory and regulatory time limits.

Dated: June 1, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-13982 Filed 6-7-95; 8:45 am]

BILLING CODE 3510-DS-P