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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-614-801]

Fresh Kiwifruit From New Zealand; Preliminary Results of

Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review.

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SUMMARY: In response to a request by the New Zealand Kiwifruit

Marketing Board (NZKMB), the respondent in this case, the Department of

Commerce (the Department) is conducting an administrative review of the

antidumping duty order on fresh kiwifruit from New Zealand. The review

covers one exporter of the subject merchandise to the United States for

the period June 1, 1993, through May 31, 1994.

We preliminarily determine that sales have been made below the

foreign market value (FMV). If these preliminary results are adopted in

our final results of administrative review, we will instruct the U.S.

Customs Service to assess antidumping duties equal to the difference

between the United States price (USP) and the FMV. Interested parties

are invited to comment on these preliminary results. Parties who submit

argument in this proceeding are requested to submit with the argument

(1) a statement of the issue, and (2) a brief summary of the argument.

EFFECTIVE DATE: October 23, 1995.

FOR FURTHER INFORMATION CONTACT: Paul Stolz or Thomas F. Futtner,

Office of Antidumping Compliance, Import Administration, International

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

Constitution Avenue NW., Washington, D.C. 20230; telephone (202) 482-

4195 or 482-3814, respectively.

Applicable Statute

The Department is conducting this review in accordance with section

751(a) of the Tariff Act of 1930, as amended (Act). Unless otherwise

indicated, all citations to the statute and to the Department's

regulations are in reference to the provisions as they existed on

December 31, 1994.

SUPPLEMENTARY INFORMATION:

Background

On June 2, 1992, the Department published the antidumping duty

order on fresh kiwifruit from New Zealand (57 FR 23203). On June 7,

1994, the Department published a notice of ``Opportunity to Request

Administrative Review'' of this antidumping duty order for the period

June 1, 1993, through May 31, 1994 (59 FR 29411). We received a timely

request for review by the respondent, NZKMB. On July 15, 1994, the

Department initiated a review of NZKMB (59 FR 36160). The period of

review (POR) is June 1, 1993 through May 31, 1994.

Scope of the Review

The product covered by this review is fresh kiwifruit. Processed

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

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

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

classifiable under subheading 0810.90.20.60 of the Harmonized Tariff

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

customs purposes, our written description of the scope of this order is

dispositive.

Verification

As provided in section 776(b) of the Tariff Act, we verified

information provided by the respondent by using standard verification

procedures, including onsite inspection of the grower's/seller's

facilities, the examination of relevant sales and financial records,

and selection of original documentation containing relevant

information. Our verification results are outlined in the public

versions of the verification reports.

United States Price

In calculating USP, the Department treated certain sales by the

respondent as exporter's sales price (ESP) sales, as provided in

section 772(c) of the Tariff Act. These sales to the United States by

NZKMB were made to the first unrelated party in the United States after

importation, and hence warranted ESP methodology.

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

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

deductions, where appropriate, for New Zealand inland freight

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

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

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

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

advertising allowances, special advertising allowances, market

adjustment discounts, advertising rebates which actually constituted

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

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

deductions, where appropriate, for agent commissions, broker

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

Indirect selling expenses included inventory carrying costs, repacking,

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

instore insurance, fire insurance, product liability and tamper

insurance, earthquake insurance, indirect advertising, quality control

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

incurred indirect expenses, and other New Zealand-incurred indirect

selling expenses associated with selling in the United States. We

increased the U.S. price to account for post sale price adjustments not

reflected in the gross price.

As provided in section 772(b) of the Tariff Act, we used purchase

price as the U.S. price for sales made directly by the NZKMB to

unrelated customers in the United States prior to importation.

Deductions were made, where appropriate, for ocean freight, foreign

inland freight, and inland/marine insurance in accordance with section

772(d)(2) of the Tariff Act.

Foreign Market Value

In order to determine whether there were sufficient sales of

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

FMV, we compared the volume of home market sales of kiwifruit by NZKMB

to its volume of

[[Page 54334]]

kiwifruit sales to third countries, in accordance with section

773(a)(1)(B) of the Act. We determined that home market sales did not

constitute a viable basis for calculating FMV. Therefore, in accordance

with 19 CFR sections 353.48 and 353.49(b), the Department chose sales

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

based on information submitted by the NZKMB. Neither the petitioner nor

the respondent in this review raised any other factor relevant to third

country selection, hence we did not consider any other factor in

determining the third-country market. The Department relied on monthly

weighted-average third country prices in the calculation of FMV.

Because many of the NZKMB's third country sales were found to have

been made at prices below the cost of production and were therefore

disregarded in the most recent review, the Department initiated a COP

investigation for the purposes of this administrative review. Just as

the Department found in the original investigation and the first

administrative review, we find that in comparing third-country sales to

COP, the reseller/exporter's acquisition prices are irrelevant because

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

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

incurred by kiwifruit farmers, the actual producers of the subject

merchandise, to calculate the COP benchmark.

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

kiwifruit during the POR, the Department determined that sampling was

both administratively necessary and methodologically appropriate to

calculate a representative cost of producing the subject merchandise

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

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

respondent, we decided to select kiwifruit growers as follows: Farms

were segregated by geographic regions into either the Bay of Plenty

region or non-Bay of Plenty regions. In selecting our sample of 25

growers, we determined that we would select 18 growers representing the

Bay of Plenty region and seven from the non-Bay of Plenty regions, in

order to reflect the relative proportion of kiwi production from each

of the two regions. Because the Department's purpose is to estimate the

average unit cost per tray of exported kiwifruit, as a second step we

have assigned selection probabilities to the growers on the basis of

the volume of kiwifruit each grower submitted to the NZKMB for export.

(See public document Proposed Sampling Methodology, August 26, 1994.)

We sent COP questionnaires through the NZKMB to 25 kiwifruit

growers, all but one of which responded to the Department's

questionnaire. The 24 responses submitted, along with supplemental

responses and verification results, were analyzed and relied upon,

where appropriate, in reaching the preliminary results of the review.

We calculated the cost of cultivation for each grower by summing

all costs for the 1993-1994 kiwifruit season. These costs included the

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

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

equivalents submitted by each grower to the NZKMB. (A tray equivalent

is a standard unit of measurement for kiwifruit. It is representative

of the kiwifruit which can fit into a standard packing tray.) We then

adjusted those costs to reflect the fruit loss of 8.8 percent, which

was disclosed by the NZKMB in its financial statement. We added the

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

per tray.

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

years. Where growers purchased an established orchard, the acquisition

price of the farm was treated as the start up cost.

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

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

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

allocating costs.

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

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

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

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

appropriate.

For the grower that did not submit a response, we used best

information available (BIA) to determine its COP, pursuant to 19 CFR

353.37(a). This BIA was based on the highest COP we calculated for all

responding growers.

We calculated a simple average COP from the sampled growers'

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

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

section 773(b) of the Tariff Act, in determining whether to disregard

home market sales made at prices below COP, we examined whether such

sales were made in substantial quantities over an extended period of

time, and whether such sales were made at prices which would permit

recovery of all costs within a reasonable period of time in the normal

course of trade.

When less than 10 percent of the third-country market sales of a

model in a POR were at prices below COP, we did not disregard any sales

of that model for that POR. When 10 percent or more, but not more than

90 percent, of the third-country market sales of a particular model in

a POR were determined to be below cost, we excluded the below-cost

third country market sales from our calculation of FMV for that POR,

provided that these below-cost market sales were made over an extended

period of time. When more than 90 percent of the third-country market

sales of a particular model were made below cost over an extended

period of time during a POR, we disregarded all third-country market

sales of that model in our calculation of FMV for that POR, in

accordance with section 773(a)(2) of the Tariff Act.

To determine whether sales below cost had been made over an

extended period of time, we compared the number of months in which

below-cost sales occurred for a particular model to the number of

months during a POR in which that model was sold. If the model was sold

in fewer than three months during a POR, we did not disregard below-

cost sales unless there were below-cost sales of that model in each

month sold. If a model was sold in three or more months in a POR, we

did not disregard below-cost sales unless there were sales below cost

in at least three of the months in which the model was sold during each

POR. We used CV as the basis for FMV when an insufficient number of

third-country market sales were made at prices above COP (see

Preliminary Results and Partial Termination of Antidumping Duty

Administrative Review: Tapered Roller Bearings, Four Inches or Less in

Outside Diameter, and Components Thereof, From Japan (58 FR 69336,

69338, December 10, 1993)).

There is no information on the record demonstrating that prices of

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

time.

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

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

minimum (see section 773(e) of the Act). We added actual selling,

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

cost per tray because the actual expenses were higher than the

statutory minimum of 10 percent.

[[Page 54335]]

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

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

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

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

credit charges were also deducted. We also deducted indirect selling

expenses including inventory carrying costs, New Zealand instore and

fire insurance, product liability and tamper insurance, indirect

advertising, and other indirect selling expenses when calculating FMV

for comparison to ESP transactions. This deduction for third country

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

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

353.56(b).

Preliminary Results of Review

We preliminarily determine that the following margin exists for the

period June 1, 1993, through May 31, 1994:

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Percent

Manufacturer/exporter margin

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New Zealand Kiwifruit Marketing Board......................... 10.97

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The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

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

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

appraisement instructions concerning the respondent directly to the

U.S. Customs Service.

Furthermore, the following deposit requirements will be effective

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

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

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

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

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

administrative review; (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

in the original less-than-fair-value (LTFV) 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; (4) If

neither the manufacturer nor the exporter is a firm covered in this or

any previous review conducted by the Department, the cash deposit rate

will be 98.60 percent, the ``all others'' rate established in the LTFV

investigation.

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

Interested parties may request disclosure within five days of the

date of publication of this notice, and may request a hearing within

ten days of the date of publication. Any hearing, if requested, will be

held as early as convenient for the parties but not later than 44 days

after the date of publication or the first work day thereafter. Case

briefs or other written comments from interested parties may be

submitted not later than 30 days after the date of publication of this

notice. Rebuttal briefs and rebuttal comments, limited to issues raised

in the case briefs, may be filed not later than 37 days after the date

of publication. The Department will publish the final results of this

administrative review, including the results of its analysis of issues

raised in any such written comments.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

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

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

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

353.22.

Dated: October 5, 1995.

Paul L. Joffe,

Deputy Assistant Secretary for Import Administration.

[FR Doc. 95-26209 Filed 10-20-95; 8:45 am]

BILLING CODE 3510-DS-P