Fresh and Chilled Atlantic Salmon From Norway; Final Results of New Shipper Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-403-801]

Fresh and Chilled Atlantic Salmon From Norway; Final Results of

New Shipper Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of new shipper antidumping duty

administrative review.

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SUMMARY: On October 4, 1996, the Department of Commerce (the

Department) issued preliminary results in the 1995 new shipper

administrative review of the antidumping duty order on fresh and

chilled Atlantic salmon from Norway (61 FR 51910). The review covers

one manufacturer/exporter Nordic Group A/L (Nordic) of the subject

merchandise to the United States. The period of review (POR) is May 1,

1995, through October 31, 1995.

We gave interested parties an opportunity to comment on our

preliminary results and received a case brief from petitioner and a

rebuttal brief from respondent. The final results remain unchanged from

the preliminary results. The final dumping margin for the reviewed firm

is listed below in the section entitled ``Final Results of Review''.

EFFECTIVE DATE: January 10, 1997.

FOR FURTHER INFORMATION CONTACT: Todd Peterson or Thomas Futtner, AD/

CVD Enforcement, Import Administration, International Trade

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

Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-

4195 or (202) 482-3814, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

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).

Background

On October 4, 1996, the Department issued preliminary results (61

FR 51910) of its new shipper review of the antidumping duty order on

fresh and chilled Atlantic salmon from Norway. The preliminary results

indicated that Nordic sold subject merchandise at not less than normal

value during the POR. We invited parties to comment on the preliminary

results.

The Department has now conducted this review in accordance with

section 751 of the Act and section 353.22 of its regulations (19 CFR

353.22).

Scope of the Review

The merchandise covered by this review is fresh and chilled

Atlantic salmon (salmon). It encompasses the species of Atlantic salmon

(Salmo salar) marketed as specified herein; the subject merchandise

excludes all other species of salmon: Danube salmon; Chinook (also

called ``king'' or ``quinnat''); Coho (``silver''); Sockeye

(``redfish'' or ``blueback''); Humpback (``pink''); and Chum (``dog'').

Atlantic salmon is whole or nearly whole fish, typically (but not

necessarily) marketed gutted, bled, and cleaned, with the head on. The

subject merchandise is typically packed in fresh water ice (chilled).

Excluded from the subject merchandise are fillets, steaks, and other

cuts of Atlantic salmon. Also excluded are frozen, canned, smoked or

otherwise processed Atlantic salmon. Fresh and chilled Atlantic salmon

is currently provided for under Harmonized Tariff Schedule (HTS)

subheading 0302.12.00.02.09. The HTS item number is provided for

convenience and Customs purposes. The written description remains

dispositive.

Analysis of Comments Received

We gave interested parties an opportunity to comment on our

preliminary results. We received a case brief from petitioner and a

rebuttal brief from respondent.

Comment 1:

Petitioner contends that Nordic's one sale was made prior to the

POR on April 28, 1995, and not on June 30, 1995, as claimed by

respondent. Petitioner argues that the essential terms (i.e. price and

quantity) of Nordic's sale to its U.S. customer were set in a letter

dated April 28, 1995, and not changed substantially before completion

of the transaction two months later. Based on this argument, petitioner

maintains that the respondent entered into a binding agreement on April

28, 1995, and that this constitutes the correct date of sale.

Respondent contends that the reported sale date of June 23, 1995,

(i.e. date of shipment) is correct. Respondent argues that it is the

Department's established practice to rely on date of shipment as the

date of sale when the quantity of the sale is not fixed until date of

shipment. See Cold-Rolled Steel Flat Products from Korea, (60 FR 65284)

December 19, 1995.

Respondent points to the Department's termination of the first new-

shipper review of Nordic where the petitioner successfully argued that

April 28, 1995, was not the date of sale for the same transaction

reported in this review because the price and quantity differed

materially between April 28, 1995, and the date of shipment. See Fresh

and Chilled Atlantic Salmon from Norway: Termination In-Part of New

Shipper Antidumping Duty Review, 60 FR 53162, (October 12, 1995).

Department's Position

We agree with respondent. The Department terminated Nordic's first

new shipper review, at the request of the petitioner, because the

Department determined that Nordic made the U.S. sale to the first

unrelated customer based on the invoice date of June 30, 1995, which

was outside the POR of November 1, 1994, through April 30,

[[Page 1431]]

1995. In making this determination, we concluded that April 28, 1995,

was not the correct date of sale because Nordic's April 28, 1995,

letter did not identify the unrelated customer in the U.S. We also

concluded that there were differences in the price and quantity

specified in Nordic's April 28, 1995, letter and the June 30, 1995,

invoice date. Accordingly, the Department determined the June 30, 1995,

date of invoice to be the correct date of sale. See Memorandum from

Joseph Spetrini to Susan Esserman, September 20, 1995.

Comment 2

Petitioner argues that Nordic's sole U.S. sale cannot be the basis

for Nordic's dumping margin because it is not a bona fide sale.

Petitioner states that in such situations, the U.S. Court of

International Trade (CIT) has recognized that the Department has the

authority to disregard U.S. sales that are not the result of a bona

fide transaction to ``prevent fraud upon its proceedings.'' See Chang

Tieh Industry Company, Ltd. v. United States, 840 F. Supp. 141-46 (CIT

1993). In addition, petitioner points to Sulfanilic Acid from Hungary,

(58 FR 8257) to demonstrate that the Department has a history of

disregarding U.S. sales where it is established that such sales are not

bona fide transactions.

Petitioner argues that there is abundant evidence to demonstrate

that Nordic's single sale under review is not a bona fide transaction

but rather is a transaction that was contrived for the purpose of

escaping dumping liability. As support for this allegation, petitioner

offers several arguments. Petitioner asserts that Nordic did not follow

its own sales procedure in making this sale. According to petitioner,

it is highly unusual for the U.S. customer to have traveled to Norway

to arrange this transaction. In addition, there is no evidence of a

written order confirmation produced by the U.S. customer that is

typically the first document produced in the sales process.

Petitioner contends that Nordic should not qualify as a new entrant

into the fresh Atlantic salmon market based on making only one U.S.

sale of the subject merchandise during the period November 1994 through

October 1995. During this period, petitioner claims that there were no

other sales of the subject merchandise to other markets. Rather,

petitioner charges that respondent will enter the U.S. market after

obtaining a zero dumping margin for its contrived sale.

Petitioner contends that Nordic's U.S. customer, a smoker, paid an

above market price for the sale under review. In support of this

allegation, petitioner submitted an affidavit from a large U.S. salmon

smoker that states that smokers can use frozen salmon at a price far

less than the price incurred to Nordic for fresh salmon. The U.S.

smoker also states that his company has not had an order for the

covered merchandise because it is too expensive as a result of the

antidumping duties and high movement charges. Petitioner points to U.S.

import statistics which show that Nordic's U.S. smoker could have

purchased frozen salmon at a price far below the price commanded by the

fresh salmon it purchased from Nordic.

Petitioner insists that the sale in question was not based on

commercial considerations, but rather, Nordic's illegitimate purpose of

achieving a zero rate. Petitioner supports this by pointing to the fact

that less that one-half of one percent of Nordic's total sales to the

U.S. customer were fresh salmon; the rest were frozen salmon.

Petitioner further points out that Nordic has never sold fresh salmon

to any another U.S. smoker. Petitioner argues that there is nothing on

record to support why the U.S. customer would purchase such a small

amount of fresh salmon.

Petitioner provides documentation to demonstrate that Nordic's U.S.

customer could have purchased fresh salmon from alternative sources

such as Canada, Maine and Chile at significantly lower prices.

Petitioner insists that not only was the sale in question priced higher

than other comparable U.S. sales, but it was also priced higher than

other world sales of fresh Norwegian salmon. Petitioner provides

documentation to support his assertion that the European price is

higher than the price paid in the sale under review.

Petitioner insists that in order for the Department to accept the

bona fide nature of this sale, the Department must investigate Nordic's

U.S. customer. Petitioner points to PQ Corporation v. United States,

652 F. Supp. 724 (CIT 1987) (PQ Corporation), to demonstrate that when

there is a question pertaining to the bona fide nature of U.S. sales,

the Department vigorously investigates to determine whether the U.S.

sales are indeed bona fide sales. Thus, petitioner advocates a thorough

investigation of the U.S. customer.

Respondent contends that there is nothing on record to support the

argument that the sale in question is not a bona fide transaction. The

respondent points to Chang Tieh Industry Co., Ltd. v. United States,

840 F. Supp. 141, 145 (CIT 1993) to show that the CIT has noted that

antidumping laws do not contain provisions to disregard U.S. sales in

the same manner that the statute directs the Department to disregard

home market sales intended to establish a fictitious market. Therefore,

respondent states arguendo, even had this one U.S. sale been considered

outside the ordinary course of trade, the Department is not required by

statute to disregard that sale. However, respondent concedes that the

Department has the discretion, citing to Ipsco, Inc. v. United States,

714 F. Supp. 1211 (CIT 1989), to disregard U.S. sales that are

considered to be atypical and not representative of a respondent's U.S.

sales. Because there was only one sale, this standard cannot be relied

on as the one sale is entirely representative of all U.S. sales.

Respondent refutes the applicability of Sulfanilic Acid from Hungary,

58 FR 8256 February 12, 1993, where U.S. sales were disregarded because

of fabricated verification documents. Similarly, respondent refutes the

applicability of Manganese Metal From the People's Republic of China,

60 FR 56045 November 6, 1995 (Manganese). Unlike this review, in the

Manganese investigation, the Department disregarded sales based on the

suspicious timing of the petition filing relative to the sales being

made and the ``significantly higher prices reported for this fungible

commodity.''

Respondent argues the fact that there was one sale cannot form the

basis for a determination that the sale is not a bona fide transaction.

In PQ Corporation, the CIT found it proper for the Department to review

the respondent's one sale to the United States with the intention of

eliminating a dumping margin. Respondent points to the Memorandum from

Holly Kuga to the File of July 26, 1995, stating that ``a new shipper

review for salmon based on one sale would be consistent with prior

practice.''

Respondent further substantiates the bona fide nature of the

transaction under review, contending that the record evidence

demonstrates that its U.S. sale was made in the ordinary course of

trade. Respondent argues that it followed customary sales procedures

for this sale. Part of the customary procedure is for the President of

Nordic Group, Inc. (the U.S. subsidiary) to travel back to Norway,

often with U.S. customers as a means to educate the U.S. customer. See

Sales Verification report.

Respondent argues that petitioner is wrong in its claim that Nordic

is not a new entrant to the U.S. fresh Atlantic salmon market because

Nordic has made only one sale during the POR. Respondent states that by

definition, to qualify for a new shipper review, Nordic did not sell

any salmon prior to the

[[Page 1432]]

POR. Since Nordic is currently assessed an ``all-others'' rate of 23.80

percent, U.S. customers are difficult to attract. Thus Nordic's one

sale is justifiable and does not disqualify Nordic as a new shipper in

the U.S. market.

Respondent argues that Nordic's price for fresh Norwegian salmon is

within the price range charged by others for fresh Norwegian salmon

sold to the United States. Nordic claims that it was aware of the

antidumping duty order and did its best to negotiate a price that would

not violate U.S. antidumping laws. Respondent argues that in alleging

Nordic's U.S. customer paid an above market price for the sale under

review, the petitioner incorrectly compared the price of frozen salmon

from other countries to that of fresh salmon from Norway. Frozen salmon

is outside the scope of the order. The International Trade Commission

found that fresh salmon is more expensive than frozen and that

Norwegian Atlantic salmon is also considered by purchasers to be a

higher priced product and is typically more expensive than U.S.

produced salmon. Thus, the price of Norwegian Atlantic salmon cannot be

compared to world market prices. Respondent dismisses the U.S. smoker's

claim that the U.S. smoker cannot profitably purchase premium Norwegian

Atlantic salmon because he either sells ``low end'' salmon or he runs

an inefficient, high cost operation.

Respondent states that to the extent price is relevant to determine

the bona fide nature of the U.S. transaction, the comparison should be

limited to the prices of subject merchandise sold in the United States

in June 1995. According to the June 1995 Report IM 145, Department of

Commerce, Bureau of the Census, Foreign Trade Division, Trade Data

Services, Washington, D.C. (IM 145 Report), the price of Nordic's sale

is consistent with other contemporaneous sales of fresh Norwegian

salmon sold in the United States.

Respondent argues that PQ Corporation does not compel the

Department to investigate the U.S. customer to verify the bona fide

nature of a transaction simply because a petitioner thinks the U.S.

price is too high. Rather the result of PQ Corporation is that an

administrative review could be based on one sale even though the

importation was made for the purpose of adjusting the antidumping cash

deposit rate.

Department's Position

We disagree with petitioner. While there is no specific statutory

or regulatory provision for the exclusion of U.S. sales as ``outside

the ordinary course of trade,'' the Department's authority to prevent

fraud upon its proceedings has been recognized. See Chang Tieh, 840 F.

Supp. at 146. The Department may disregard a U.S. sale if it is

determined that the sale is not the result of a bona fide arm's length

transaction. PQ Corp., 652 F. Supp. at 729. We are very mindful of this

issue, especially in the context of new shipper reviews, and take

appropriate steps to investigate credible allegations. Based on our

review of this here, we conclude that there is no evidence on the

record to indicate that the single U.S. sale under review was not a

bona fide transaction or that the transaction was in any way

fraudulent. Further, insofar as there was no written order confirmation

for the transaction under review, we relied on Nordic's June 30, 1995,

invoice to determine the date of sale. See Department's position on

Comment 1.

At the outset, we note that the fact that there is only one U.S.

sales transaction does not suggest that the transaction is not bona

fide. As reflected in the Department's practice, the dumping analysis

may be based upon a single sale even where the sale is designed for the

express purpose of reducing the cash deposit rate. See P.Q. Corp., 652

F. Supp. at 729. This may be even more true in the context of a new

shipper review, where new entrants into the market are likely to assess

(based on the Department's antidumping analysis) whether they can sell

on a sustained basis. In this case, the Department advised that such a

review could be based on one sale provided that the transaction be

completed and all relevant data available prior to verification. See

July 26, 1995 Memorandum from Holly Kuga to File. Moreover, the fact

that the quantity involved in this transaction represents a small

fraction of Nordic's total sales is not a determining factor in our

analysis of the bona fide nature of the sale of subject merchandise.

Thus, the fact that Nordic engaged in only one transaction cannot

detract from the bona fide nature of the transaction.

We also disagree with petitioner's assertion that Nordic employed

an unusual sales procedure with respect to this transaction. At

verification, we confirmed that the President of Nordic Inc. (the U.S.

subsidiary) often traveled to Norway with U.S. customers. See Nordic

Sales Verification Report at 3. Nordic officials indicated that they

were expanding their relationship with the U.S. customer which had

previously focused on frozen salmon. Id. There is no evidence on the

record to contradict this statement. Moreover, we are not persuaded by

the statement submitted by a U.S. salmon smoking operation that it

would not use fresh salmon as an input. As Nordic explained in its

October 7, 1996, supplemental questionnaire response, the U.S. customer

could be expected to keep both fresh and frozen salmon on hand in order

to serve a range of customers.

With regard to petitioner's comments on the price of the sale,

according to the IM 145 Report, the price Nordic charged was within the

range of prices of other sales of the subject merchandise from Norway

during the relevant June 1995 time period. Petitioner incorrectly

compared prices of the subject merchandise to that of non-subject

merchandise (frozen salmon) or salmon from other countries. Given

evidence that Norwegian salmon is typically a higher priced product due

to it being considered a premium product, we determine that the use of

fresh salmon prices from other producing countries is an inaccurate

basis for comparison.

Finally, we disagree with petitioner's suggestion that the

Department has not sufficiently investigated this transaction. Based on

the Department's review of Nordic's initial and supplemental

questionnaire responses, its on-site verification of Nordic's records,

and other information of record, we conclude that there is no evidence

on record to indicate that the single U.S. sale under review was not a

bona fide transaction or that the transaction was in anyway fraudulent.

Comment 3

Petitioner contends that the Department's constructed value

methodology is improper given the facts of this review. In past reviews

of this proceeding, petitioner contended that the third-country export

prices used as foreign market value were made at prices below the cost

of production. Thus, petitioner argued for use of the salmon farmers'

actual cost of production as opposed to the acquisition prices paid by

the exporters to the farmers. In this review, however, there are no

home market or third country sales. Therefore, the petitioner argues

that these different circumstances require foreign market value to be

based on constructed value using the price Nordic actually paid for the

merchandise. Petitioner argues that by using the actual price paid, the

Department would fulfill the original concern of petitioner.

Respondent contends that the Department correctly determined

constructed value on the basis of cost of cultivation. Respondent

argues that

[[Page 1433]]

petitioner's argument is essentially a middleman dumping argument and

should be rejected. The Department is not free to choose the higher of

fish farmer cost or exporter acquisition price. The Department's policy

for using the fish farmers' cost of production rather than the

exporter's acquisition price was established in the Memorandum from

David Mueller, dated December 18, 1990, and has been used as the basis

for determining cost of production in all salmon reviews.

Department's Position

We agree with respondent. We consider the live salmon produced by

the fish farmers and sold to the exporters to be the same merchandise

covered by the antidumping duty order, but at an earlier stage of

production. Accordingly, we consider the live salmon produced by the

fish farmers to be the identical merchandise and not an input of the

subject merchandise. As we found in all prior administrative reviews of

this proceeding, the responding exporter is not transforming the

merchandise. To determine the cost of producing salmon, the Department

properly reviewed respondent's costs as well as the fish farm cost of

cultivation.

Insofar as the Department used the same methodology described in

the preliminary results, the final results remain unchanged from the

preliminary results. As a result of our comparison of constructed

export price (CEP) and normal value (NV), we determine that the

following weighted-average dumping margin exists:

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

Manufacturer/exporter Period Margin

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Nordic Group A/L.................. 5/1/95-10/31/95............ 0.00

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The results of this review shall be the basis for the assessment of

antidumping duties on entries of merchandise covered by the

determination and for future deposits of estimated duties. The posting

of a bond or security in lieu of a cash deposit, pursuant to section

751(a)(2)(B)(iii) of the Act and section 353.22(h)(4) of the

Department's regulations, will no longer be permitted for this firm.

The Department will issue appraisement instructions directly to the

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 these

final results of this administrative review, as provided by section

751(a)(2)(C) of the Act: (1) The cash deposit rate for the reviewed

company will be zero percent; (2) for exporters not covered in this

review, but covered in previous reviews or the original less-than-fair-

value (LTFV) investigation, 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, previous reviews, or

the original 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; and (4) the cash deposit rate

for all other manufacturers or exporters will continue to be 23.80

percent. This rate is the ``All Others'' rate from 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 a reminder to parties subject to

administrative protective orders (APOs) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d)(1). Timely written notification

of the 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 new shipper administrative review and notice are in accordance

with section 751(a)(2)(B) of the Act (19 U.S.C. 1675(a)(2)(B)) and 19

CFR 353.22(h).

Dated: December 30, 1996.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 97-634 Filed 1-9-97; 8:45 am]

BILLING CODE 3510-DS-P