Certain Fresh Cut Flowers From Mexico; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-601]

Certain Fresh Cut Flowers From Mexico; Final Results of

Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative

review.

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SUMMARY: On January 9, 1997, the Department of Commerce (the

Department) published the preliminary results of its administrative

review of the antidumping duty order on certain fresh cut flowers from

Mexico. The review covers one manufacturer/exporter and the period

April 1, 1995 through March 31, 1996.

We gave interested parties an opportunity to comment on our

preliminary results. Based on our analysis of the comments received, we

have not changed the results from those presented in the preliminary

results of this review.

EFFECTIVE DATE: May 19, 1997.

FOR FURTHER INFORMATION CONTACT: G. Leon McNeill or Maureen Flannery,

Import Administration, International Trade Administration, U.S.

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

Washington, D.C. 20230; telephone: (202) 482-4733.

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). In addition, unless otherwise

indicated, all citations to the Department's regulations are to the

current regulations, as amended by the interim regulations published in

the Federal Register on May 11, 1995 (60 FR 25130).

SUPPLEMENTARY INFORMATION:

Background

On January 9, 1997, the Department published in the Federal

Register (62 FR 1318) the preliminary results of its administrative

review of the antidumping duty order on fresh cut flowers from Mexico,

52 FR 13491 (April 23, 1987). The Department has now completed this

administrative review in accordance with section 751 of the Act.

Scope of Review

The products covered by this review are certain fresh cut flowers,

defined as standard carnations, standard chrysanthemums, and pompon

chrysanthemums. During the period of review, such merchandise was

classifiable under Harmonized Tariff Schedule of the United States

(HTSUS) items 0603.10.7010 (pompon chrysanthemums), 0603.10.7020

(standard chrysanthemums), and 0603.10.7030 (standard carnations). The

HTSUS item numbers are provided for convenience and U.S. Customs

(Customs) purposes only. The written description of the scope of the

order remains dispositive.

This review covers one manufacturer/exporter of fresh cut flowers

from Mexico, Rancho Del Pacifico (Pacifico), and the period April 1,

1995 through March 31, 1996.

Duty Absorption

As part of this review, we are considering, in accordance with

section 751(a)(4) of the Act, whether Pacifico absorbed antidumping

duties. See the preliminary results of this review. For these final

results of review, we determine that there is no dumping margin on any

of Pacifico's sales during the period of review and, therefore, find

that antidumping duties have not been absorbed by Pacifico on its U.S.

sales.

Analysis of the Comments Received

We gave interested parties an opportunity to comment on the

preliminary results of review. We received a case brief from the

petitioner, The Floral Trade Council.

Comment 1: Petitioner argues that the Department should revise its

cash deposit instructions to Customs from those issued in prior

reviews. Petitioner suggests that, in order to discourage circumvention

of the antidumping duty

[[Page 27220]]

order, the Department instruct Customs to collect cash deposits at the

higher of the grower or exporter's rate or, if the exporter has sourced

through multiple growers, at the highest of the growers' or exporter's

rate. Where the grower is unknown, petitioner contends, the Department

should collect cash deposits at the highest rate. In addition,

petitioner asserts that the Department should publish the exact

language of its cash deposit instructions in its determinations so that

interested parties would have an opportunity to comment on those

instructions.

Petitioner notes that, for the 1993/1994 administrative review--the

most recently completed administrative review involving Pacifico--the

Department issued the following cash deposit instructions to Customs

that were not included in its published determination:

If any entries of this merchandise are exported by a firm other

than the manufacturer then the following instructions apply: (A) If

the exporter of the subject merchandise has its own rate, use the

exporter's rate for determining the cash deposit rate; (B) If the

exporter of the subject merchandise does not have its own rate, but

the manufacturer has its own rate, the cash deposit rate will be the

manufacturer's rate; (C) Where neither the exporter nor the

manufacturer currently has its own rate, or the manufacturer is

unknown, use the ``all others'' rate for establishing the cash

deposit rate.

(Petitioner cites to the Cash Deposit Instructions dated September 12,

1996, and Certain Fresh Cut Flowers from Mexico; Final Results of

Antidumping Duty Administrative Review, 61 FR 40604 (August 5, 1996).)

Petitioner contends that part A of the cash deposit instructions

does not account for the situation in which both producer and exporter

have their own rates. Petitioner argues that the name of an exporter

stated in part A could merely be the name of a flower grower subject to

an antidumping duty rate of zero percent who has exported the flowers

of another grower that has a much higher rate.

Petitioner argues that the Department's current cash deposit

instructions undermine the remedial purpose of the statute, which is to

remedy dumping through the application of antidumping duties.

Petitioner contends that, for that reason, the Department has refused

to allow exporters that are excluded from an antidumping duty order to

export merchandise produced by companies subject to that order. As

support for its argument, petitioner cites Jia Farn Manufacturing Co.,

Ltd. v. United States, 817 F. Supp. 969 (CIT 1993), where, petitioner

asserts, the Department indicated that a company originally excluded

from an antidumping duty order would immediately be subject to a cash

deposit if it exports merchandise produced by another company subject

to the order. Petitioner further cites Certain Fresh Cut Flowers from

Colombia; Final Results of Administrative Review and Notice of

Revocation of Order (in Part), 59 FR 15159, 15167 (March 1, 1994),

where, petitioner notes, the Department states that evidence that

revoked companies are serving as conduits for other Colombian flower

growers would call for appropriate action, which could include

reinstatement of the order and referral to the Customs fraud division.

Petitioner notes that part C of the cash deposit instructions

directs Customs to use the ``all others'' rate in cases in which the

producers or exporters of the merchandise are unknown. Petitioner

maintains that selection of the ``all others'' rate for unknown

producers is a clear invitation for a producer with higher dumping

margins to route merchandise through growers/exporters that do not have

company-specific rates. Petitioner also maintains that the Department's

instructions contradict Customs' prior practice of assigning the

highest rate whenever entry documentation did not provide the name of

grower. In addition, petitioner asserts that Customs has explained that

both producer and exporter should be identified on entry documentation,

filed electronically and physically, in order to properly collect

estimated antidumping duty deposits.

Department's Position: We disagree with the petitioner. Part A of

the Department's standard cash deposit instructions does allow for the

situation in which both producer and exporter have their own rates; in

this situation, the exporter's rate is used as the cash deposit rate.

This is because the exporter, who sets the price for the sale to the

United States, is the potential price discriminator. The exporter's

sales--in this case, Pacifico's sales--form the basis of the margin

calculation; therefore, it is appropriate that cash deposits be

collected at that margin on an exporter-specific basis. If we receive

any evidence that Pacifico is serving as a conduit for other Mexican

flower growers, i.e., that Pacifico is exporting merchandise produced

and sold for export to the United States on behalf of other growers, we

will consider this a case of potential evasion of the antidumping duty

order and will take appropriate action. We will also take appropriate

action if we receive evidence that an exporter without a company-

specific margin is serving as a conduit for a grower/exporter which has

a higher, company-specific margin. See, e.g., Sebacic Acid from the

People's Republic of China; Final Results of Antidumping Duty

Administrative Review, 62 FR 10532 (March 7, 1997).

It has been the Department's longstanding practice not to

incorporate in Federal Register notices a verbatim copy of the cash

deposit instructions that it transmits to Customs. However, it is our

practice to include in the Federal Register a summary of our planned

instructions, as we did in the preliminary results of this review.

Furthermore, we note that it is evident from this summary that deposits

are to be collected on the basis of the exporter's rate, rather than

the producer's rate, when the exporter has a rate. Interested parties

have an opportunity to comment on that summary of instructions. We find

no reason to change our current practice.

Comment 2: Petitioner contends that, for purposes of calculating

constructed export price profit, the Department should reallocate

Pacifico's costs on the basis of relative cultivation area rather than

on bunches of flowers produced per month. Petitioner argues that

Pacifico's methodology allocates an equal amount of costs on the basis

of quantity produced without taking into consideration that certain

flower varieties are more expensive to grow. For example, petitioner

maintains, Pacifico's methodology would allocate the same costs to both

what would appear to be field crops and greenhouse crops.

Petitioner maintains that cultivation area, not bunches produced,

is the method commonly used to allocate flower costs. As support for

its argument, petitioner cites Floral Trade Council v. United States,

822 F. Supp. 766, 772 (Floral Trade); Certain Fresh Cut Flowers from

Mexico; Final Results of Antidumping Duty Administrative Review, 57 FR

19597, 19599 (May 7, 1992); and Fresh Cut Roses from Colombia; Final

Determination of Sales At Less Than Fair Value, and Notice of

Revocation of Order (in Part), 60 FR 6980, 7010, 7012 (February 6,

1995) (Colombian Flowers). Petitioner argues that the statute and the

Statement of Administrative Action (SAA) instruct the Department to

consider whether a respondent has historically used an allocation

methodology in determining whether a cost allocation methodology is

acceptable, citing 19 U.S.C. 1677(F)(1)A and the SAA at 835.

Petitioner suggests that the Department should require Pacifico to

[[Page 27221]]

explain whether it maintains product-specific cost data such as the

``rose plant'' cost data already reported in its questionnaire

response. Petitioner maintains that, unless the respondent uses bunches

produced in its ordinary books and records to allocate costs, the

Department should require Pacifico to report its costs based on

cultivation area.

Department's Position: We disagree with petitioner that Pacifico's

costs should be reallocated on the basis of cultivation area. The Court

of International Trade in Floral Trade states that ``allocation is * *

* an inexact science, and is simply a way to estimate the costs

incurred by the firm to manufacture the product, complete the process,

or deliver the service,'' and that ``allocation methods vary even among

firms in the same industry.'' Floral Trade Council v. U.S., 822 F.Supp.

766, 772 (CIT 1993). The final review results for Mexican flowers cited

by petitioner only indicate that in that instance we found the grower's

use of cultivation area to be an acceptable allocation basis for

certain costs (61 FR 40604). This does not stand for the proposition

that relative area is the correct method of allocating growing costs.

In the instant proceeding, we find no evidence that Pacifico used

cultivation area as a basis of allocation in its books and records, or

that flowers produced by Pacifico are field crops. Furthermore, the

record does not support petitioner's claim that Pacifico's production

cost allocation methodology distorts costs. See Colombian Flowers at

7010, where the Department made a similar determination. Therefore, for

these final results, we have accepted Pacifico's methodology of

allocating costs because Pacifico's allocation is reasonable and there

is no evidence that it distorts Pacifico's costs.

Final Results of review

As a result of our review, we have determined that the following

weighted-average margin exists:

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

Margin

Manufacturer/exporter Period of review (percent)

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Rancho Del Pacifico....................... 4/1/95-3/31/96 0.00

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The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Upon completion

of this review, the Department will issue appraisement instructions

directly to the Customs Service.

Furthermore, the following deposit requirements shall be effective

for all shipments of the subject merchandise that are entered or

withdrawn from warehouse, for consumption on or after the publication

date of these final results, as provided by section 751(a)(1) of the

Act: (1) the cash deposit rate for the reviewed company shall be the

above rate; (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 (LTFV) investigation, but the manufacturer is, the

cash deposit rate shall be the rate established for the most recent

period for the manufacturer of the merchandise; and (4) if neither the

exporter nor the manufacturer is a firm covered in this or any previous

review, the cash deposit rate will be 18.20 percent, the all others

rate established in the LTFV investigation (52 FR 6361, March 3, 1987).

These deposit rates shall remain in effect until publication of the

final results of the next administrative review.

This notice 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.

Notification to Interested Parties

This notice also serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d). Timely written notification of

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and the terms of an APO is a sanctionable violation.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

Dated: May 9, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-13058 Filed 5-16-97; 8:45 am]

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