Certain Fresh Cut Flowers From Colombia: Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-301-602]

Certain Fresh Cut Flowers From Colombia: 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 February 2, 1998, the Department of Commerce published the

preliminary results of the administrative review of the antidumping

duty order on certain fresh cut flowers from Colombia. This review

covers a total of 424 producers and/or exporters of fresh cut flowers

to the United States during the period March 1, 1996 through February

28, 1997.

We gave interested parties an opportunity to comment on the

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

have made certain changes for the final results. The review indicates

the existence of dumping margins for certain firms during the review

period.

EFFECTIVE DATE: June 10, 1998.

FOR FURTHER INFORMATION CONTACT: Rosa Jeong, Hong-Anh Tran or Todd

Hansen, Office 1, Group 1, AD/CVD Enforcement, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone

(202) 482-1278, (202) 482-0176 or (202) 482-1276, respectively.

APPLICABLE STATUTE AND REGULATIONS: The Department of Commerce (the

Department) is conducting this administrative review in accordance with

section 751 of the Tariff Act of 1930, as amended (the Act). 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 Act by the Uruguay Round Agreements Act (URAA).

In addition, unless otherwise indicated, all citations to the

Department's regulations are to those codified at 19 CFR Part 353

(April 1997).

SUPPLEMENTARY INFORMATION:

Background

On February 2, 1998, we published a notice of Preliminary Results

and Partial Termination of Antidumping Duty Administrative Review

(Preliminary Results), wherein we invited interested parties to

comment. See 63 FR 5354. At the request of the interested parties, we

held a public hearing on April 14, 1998.

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 of the United States (HTSUS). The HTSUS item numbers

are provided for convenience and customs purposes. The written

description of the scope of this order remains dispositive.

Fair Value Comparisons

Export Price and Constructed Export Price

For the price to the United States, we used export price (EP) or

constructed export price (CEP) as defined in section 772(a) and 772(b)

of the Act. We calculated EP and CEP based on the same methodology used

in the Preliminary Results with the following exceptions: (1) we

recalculated Tuchany's credit expenses net of commission and

international freight expenses (see infra Comment 14); (2) we accounted

for the returns for Clavecol and Caicedo for the months reported rather

than allocating them over the period of review (POR) (see infra Comment

16).

Normal Value

As discussed in the Preliminary Results, we determined that home

market and third-country sales are not an appropriate basis for normal

value (NV) and, therefore, used constructed value (CV) as defined in

section 773(e) of the Act as the basis for determining NV. We used the

same methodology to calculate NV as that described in the Preliminary

Results.

Analysis of Comments Received

We received case and rebuttal briefs from the Floral Trade Council

(FTC), the domestic interested party, and the Asociacion Colombiana de

Exportadores de Flores (Asocolflores), an association of Colombian

flower producers representing many of the respondents in this case.

General Issues

Comment 1: Asocolflores argues that zero and de minimis margins

should be included in the calculation of the rate for non-selected

respondents since it is reasonable to assume that some of the non-

selected respondents would have received the same had they been

individually reviewed. Citing to Serampore Indus. Pvt. Ltd. v. United

States, 696 F. Supp. 665, 668-69 (CIT 1988), Asocolflores argues that

excluding zero and de minimis margins amounts to a presumption of

dumping on behalf of non-selected firms.

Asocolflores further argues that if the rates of selected companies

are not, in some way, ``representative,'' then there is no legal basis

for using such rates for non-selected respondents. Referring to

National Knitwear & Sportswear Association v. United States, 779 F.

Supp. 1364, 1372 (CIT 1991), Asocolflores elaborates that the benefits

of zero or de minimis margins made available to selected respondents

should be extended to non-selected respondents. Acknowledging that the

Act provides for the exclusion of zero and de minimis margins in

calculating the cash deposit rate for non-examined producers in an

investigation, Asocolflores differentiates this situation

[[Page 31725]]

from the final results of an administrative review which give rise to

actual duty payments. Asocolflores emphasizes that because of the

Department's decision to limit the number of respondents, all exporters

and importers do not have the ability to obtain their own assessment

rates as they normally would in an administrative review.

Asocolflores claims that the Department's decision to exclude zero

and de minimis margins is arbitrary and denies non-selected respondents

their substantive and procedural due process rights. Moreover,

Asocolflores asserts that because no adverse facts available (AFA)

rates were applied in this review, the Department's approach of

excluding zero and de minimis rates alone would in effect result in an

``unbalanced'' approach, defeating the rationale for a ``balanced''

approach (i.e., excluding both AFA and zero and de minimis margins),

taken by the Department in Certain Fresh Cut Flowers from Colombia:

Final Results and Partial Rescission of Antidumping Duty Administrative

Review, 62 FR 53287 (October 14, 1997) (Ninth Review Final Results).

In the event the Department continues to exclude zero, de minimis

and AFA margins, Asocolflores claims that Tuchany's rate should be

excluded because it is mostly derived from information based on facts

available (FA). By excluding Tuchany's rate, Asocolflores asserts that

a more ``balanced'' result will be maintained.

The FTC contends that there is no valid basis for excluding margins

based on AFA on the one hand while including de minimis margins on the

other. The FTC argues that Asocolflores' argument ignores the fact that

the Department's methodology, one of selecting only the largest

producers in this case, is not intended to be a statistically

representative sampling of the whole population. The FTC asserts that

over the past twelve years, all respondents have had many opportunities

to request partial revocation, by demonstrating that they were not

dumping. Those respondents who have succeeded in obtaining revocation,

the FTC states, are properly excluded from the universe from which a

sample would be drawn in future administrative reviews. Consequently,

the FTC asserts that the remaining universe is fairly presumed to

consist of those producers that continue to dump. Therefore, the FTC

argues that the Department's practice of excluding zero and de minimis

margins in calculating the rate for non-selected respondents is

appropriate. The FTC states that margins such as Tuchany's that are not

based entirely on AFA should be included in the non-selected respondent

rate.

Department's Position: Consistent with our practice in Ninth Review

Final Results, we are not including zero or de minimis rates or rates

based entirely on AFA in the calculation of the rate for non-selected

respondents. As stated in that segment of this proceeding, there is no

over-arching rule as to the inclusion or exclusion of zero and de

minimis rates in calculating the rate to be applied to non-selected

respondents. The approach we have adopted parallels the statutorily

mandated formula for calculating the all-others rate, i.e., the

weighted-average rate of uninvestigated companies not including AFA and

zero and de minimis rates. See section 735(c)(5) of the Act. This

approach is both reasonable and one that yields a balanced result.

We disagree with Asocolflores that due process is being denied to

non-selected respondents because we have not included zero and de

minimis margins. Asocolflores misread the relevant case law. The cases

cited by Asocolflores stand for the proposition that the parties'

procedural and substantice rights are limited to those set forth in the

antidumping statute and regulations. Arjay Associates, Inc. v. Bush,

891 F. 2d 894, 896 (Fed. Cir. 1989); Gulf States Tube Division of

Quanex Corp. v. United States, 981 F. Supp. 630, 652 (CIT 1997); see

also Kemira Fibres Oy v. United States, 858 F.Supp. 229, 235 (CIT

1994). In the instant case, our methodology of excluding zero and de

minimis margins in the calculation of rates applicable to non-

respondents in no way prevents non-selected respondents from obtaining

revocation of the antidumping duty order in this case. Rather, they

have the opportunity for revocation as set forth in Ninth Review Final

Results at 53290 (Comment 4). Specifically, companies that requested

reviews in prior reviews but were not selected for examination may

request revocation by certifying and demonstrating that they have not

sold subject merchandise at not less than normal value during the

current and two prior periods of review (POR).

We also disagree with Asocolflores that because there is no AFA-

based rate applicable in this review, zero and de minimis margins must

be included in the non-selected respondents' rate calculation in order

to maintain a ``balanced'' result. The fact that there is no AFA-based

rate in the present review does not affect the validity of our

methodology of excluding zero and de minimis rates and rates based on

AFA from the calculation of the non-selected respondent rate. For

instance, if there had been a rate based on AFA but no zero or de

minimis rate in the present review, we would have followed the same

approach by excluding the AFA rate from the calculation of the non-

selected respondent rate.

As we stated in the Ninth Review Final Results at 53290, we do not

find that the selected respondents, who represent the largest

producers/exporters of the subject merchandise, are necessarily

representative of the whole population. Therefore, we do not treat the

selected companies as a statistical sample and compute a margin that is

based on the results of all the selected companies.

Finally, we have included Tuchany's rate in the calculation of the

rate for non-selected respondents. Because its rate is not entirely

based on AFA, it would be included in calculating an all-others rate,

the same approach that we are adopting here.

Comment 2: The FTC argues that the Department's reasons for

rejecting third-country prices as the basis for determining NV in past

reviews are insufficient to support a finding that third-country prices

should not be used for any of the respondents in this review. The FTC

notes that the Department has rejected the use of prices from sales to

European markets in past reviews because of evidence indicating that

prices in European markets are more stable than those in the U.S.

market, and that the demand pattern in European markets differs

significantly from the U.S. market due to differences in the flower-

giving holidays. In the present review, however, the FTC claims that

the Department has no reason to reject non-European third-country

prices as the basis for determining NV. The FTC notes that Canada and

Japan have become increasingly important markets for Colombian flower

exporters, and that in this review the Department found that several

exporters had viable markets in Japan and/or Canada. The FTC claims

that there is no evidence on the record indicating that either the

Japanese or the Canadian market differs significantly from the U.S.

market. Moreover, the FTC argues that the Department has consistently

determined the proper basis for NV on a company-specific basis.

Therefore, the Department should use sales to Japan or Canada as the

basis for determining NV whenever these markets are found to be viable

for individual respondents.

Asocolflores argues that the non-European third-country markets are

not

[[Page 31726]]

representative markets for the majority of Colombian growers and that

sales to these markets should not be used as the basis of NV for any of

the responding companies. Asocolflores notes that all of the major

third-country markets for Colombian flower growers are European, and

that the Canadian and Japanese are not significant third-country

markets for the Colombian industry as a whole. Asocolflores argues that

the Department was correct not to use third-country prices to Japan or

Canada to calculate NV for certain respondents in the Preliminary

Results because reliance on such data would not produce representative

results for the non-selected respondents.

Department's Position: We disagree with the FTC. Because Japan and

Canada are not significant export markets for Colombia, we determined

that, under the facts of this case, prices to Canada or Japan are not

representative within the meaning of section 773(a)(1)(B)(ii)(I) of the

Act. As discussed in the Preliminary Results at 5355, we limited our

analysis to a subset of the Colombian companies exporting to the United

States and are basing the antidumping duty assessments for the non-

selected companies on the margins calculated for the selected

companies. Given this, it is important that our analysis be as

representative as possible of the companies that were not selected to

respond to our questionnaire.

It is clear that neither Japan nor Canada is an important export

market for Colombian flower growers. Evidence on the record indicates

that Canada represents less than three percent of flower exports from

Colombia and Japan represents less than one percent. Thus, to use sales

to Japan or Canada as the basis of our margin calculations for the few

exporters that have viable markets in Japan and Canada and then include

those results in calculating the rate used for assessing duties on the

non-selected respondents would be inappropriate for the vast majority

of growers. Consequently, in accordance with section 773(a)(4) of the

Act, we based NV on CV.

As an alternative method of ensuring that NV was representative, we

considered using third-country sales for those companies with viable

third-country markets, but excluding those companies from the

calculation of the assessment rate for non-selected exporters. However,

such a methodology would substantially reduce the percentage of exports

during the POR that would form the basis of the assessment calculation

for non-selected exporters. Therefore, we determine that the use of CV

is a more reasonable means of establishing a representative NV for

purposes of calculating the assessment rates for all exporters under

review.

Export Price or Constructed Export Price

Comment 3: The FTC claims that section 772(d)(1) of the Act

explicitly requires the Department to reduce CEP first by deducting

commissions and then by deducting any indirect selling expenses for

both affiliated and unaffiliated parties. The FTC contends that the Act

recognizes that a CEP reseller, whether or not affiliated, should be

treated as a separate entity. Consequently, because all CEP

transactions are made at the same level of trade (LOT), the FTC argues

that commissions should be treated the same whether the CEP sale is

made through an affiliated reseller or through an unaffiliated

reseller. The FTC further argues that, because of changes which

resulted from the URAA, no double-counting would result if the

Department deducts commissions paid by the exporter to an affiliated

importer and then deducts any additional indirect expenses.

Asocolflores counters that the FTC's commission argument has been

repeatedly rejected by the Department in earlier reviews of this same

case, as well as in Fresh Cut Roses from Ecuador: Final Determination

of Sales at Less Than Fair Value, 60 FR 7019, 7028 (Feb. 6, 1995)

(Roses from Ecuador), and in Fresh Cut Roses from Colombia: Final

Determination of Sales at Less Than Fair Value, 60 FR 6980, 6992 (Feb.

6, 1995) (Roses from Colombia). Asocolflores also points out that the

Department's rejection of the FTC's argument that related party

commissions should be deducted from U.S. price was recently affirmed by

the U.S. Court of International Trade (CIT). See Asociacion Colombiana

de Exportadores de Flores v. United States, Slip Op. 98-33 at 74-81

(March 25, 1998) (Asociacion Colombiana).

Department's Position: We disagree with the FTC. Consistent with

Asociacion Colombiana and the Department's practice in prior reviews of

this case, the Department will make adjustments for commissions paid to

unaffiliated U.S. consignees, while adjusting for actual U.S. selling

expenses of affiliated consignees of the exporter. See Ninth Review

Final Results at 53294; see also Asociacion Colombiana at 78-81.

Notwithstanding the fact that the decision in Asociacion Colombiana is

based on pre-URAA practice, the principle remains the same: to avoid

double-counting, we deduct commissions paid to unaffiliated resellers

in the United States, but for affiliated resellers, we deduct the

actual selling expenses of the affiliated importer and allocate profit.

Comment 4: Asocolflores contends that the Department should

calculate the CEP profit rate on a monthly rather than an annual basis.

Asocolflores points to the holiday-driven demand patterns for flowers

in the United States, noting that the price for flowers can vary by

more than 100 percent between peak and off-peak months. Asocolflores

states that this variability in demand for flowers results in highly

variable profit rates when comparing peak to off-peak months.

Asocolflores argues that calculating the CEP profit rate on a

monthly basis is necessary to avoid the distortion inherent in

deducting a constant profit percentage from monthly sales when actual

profit margins are demonstrably and radically different. Asocolflores

notes that nothing in the Act or the Department's regulations requires

the CEP profit deduction be calculated on an annual basis. Asocolflores

points to the preamble to the Department's 1997 regulations where the

Department states that paragraph (d) of section 351.402 affords the

Department the flexibility to calculate the CEP profit deduction on the

basis of something less than all sales of the subject merchandise and

the foreign like product throughout the period of investigation or

review. See Antidumping Duties; Countervailing Duties; Final Rule, 62

FR 27296, 27354 (May 19, 1997). Because both CEP and EP prices reflect

huge swings in monthly prices, a monthly calculation of the CEP profit

rate would, according to Asocolflores, be more consistent with the

contemplated purpose of the CEP profit adjustment as described in the

Statement of Administrative Action, H. Doc. 316, 103d Cong., 2nd

Session 870 (SAA) at page 153, i.e., calculating CEP price to be, as

closely as possible, a price corresponding to EP.

The FTC argues that an arm's length price to an unrelated importer

would incorporate some element of profit, whereas a methodology that

isolates holiday sales from other transactions, as proposed by

Asocolflores, may result in a zero profit rate for several months of

the POR because CEP profit is calculated based on the total profit for

both the grower and the reseller. The FTC contends that while importers

may realize different monthly profits based on seasonal price swings,

growers' profit expectations are annual. Use of an annual rate, the FTC

argues, ensures that some profit is assigned to all months, reflecting

the reasonable

[[Page 31727]]

expectations of arm's length importers. The FTC notes that the use of

an annual rate still results in a variation in the amount of CEP profit

when prices vary.

The FTC further cites to Antifriction Bearings (Other Than Tapered

Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan,

Singapore, and the United Kingdom; Final Results of Antidumping Duty

Administrative Reviews, 62 FR 2081, 2125 (January 15, 1997) (AFBs from

France, et al), where the Department indicated a preference for a

single rate for CEP profit. The FTC argues that Asocolflores' logic

that the use of monthly prices requires the use of monthly profit rates

leads to the conclusion that sale-by-sale comparisons require the use

of sale-by-sale CEP profit rates, a proposition that would undermine

the very purpose of the CEP profit deduction.

Department's Position: Consistent with our practice in Ninth Review

Final Results and the Preliminary Results, we have used an annual CEP

profit rate for purposes of these final results. As the FTC has noted,

the Department's practice has been to apply a single rate for CEP

profit. Although Asocolflores has argued that profit rates may vary due

to changes in demand conditions, this is true, to some extent, for many

products. Moreover, the CEP profit calculation is normally based on the

overall profit of home market and U.S. sales rather than on the profit

of a particular U.S. sale. Although a respondent may have few or no

home market sales, we nonetheless use an average profit rate for those

U.S. and home market sales that were made. We determine that the

circumstances surrounding this case do not compel a departure from our

usual practice of using a single rate for CEP profit.

Comment 5: Asocolflores argues that the Department erred in

calculating CEP profit, because the calculation of the ratio of total

profit to total selling expenses did not include imputed selling

expenses, while this ratio was applied to a U.S. selling expense figure

that included imputed selling expenses. According to Asocolflores, this

treatment is inconsistent and overstates profit on U.S. selling

activities. Asocolflores argues that the Department's past rationales

for this practice do not withstand analysis. Asocolflores contends that

the Department's statement that `` `actual' profit is calculated on the

basis of `actual' rather than imputed expenses'' in Certain Cold-Rolled

and Corrosion-Resistant Carbon Steel Flat Products From Korea: Final

Results of Antidumping Duty Administrative Reviews, 62 FR 18404, 18440

(April 15, 1997) is unfounded, because the Act makes no distinction

between ``actual'' and ``imputed'' expenses. According to Asocolflores,

imputed credit represents a real expense to the company because payment

today is worth more than payment in the future. Additionally,

Asocolflores notes that the Department ``imputes'' inflation in

calculating the growers' CV and includes this imputed inflation

adjustment when calculating ``actual'' profit and the CEP profit ratio.

Asocolflores also disagrees with the Department's explanation that,

``if [the Department] were to account for imputed expenses in the

denominator of the CEP allocation ratio, we would double-count the

interest expense incurred for credit and inventory carrying costs

because these expenses are already included in the denominator.'' Id.

Asocolflores notes that in calculating CEP, the Department makes an

adjustment for both imputed credit expense and indirect selling

expenses, which already include actual interest expense. Asocolflores

contends that to the extent the Department believes that imputed credit

expenses and interest expense overlap, the Department should be

consistent and eliminate all double-counting by either reducing U.S.

indirect selling expenses by the amount of imputed credit expense or

according the same treatment to both actual and imputed credit as

expenses for purposes of calculating and allocating CEP profit.

Department's Position: We disagree with Asocolflores. Consistent

with our practice in the Ninth Review Final Results and the Preliminary

Results, we excluded imputed selling expenses in deriving total actual

profit for these final results. As described in a recent policy

bulletin, we included these expenses in the pool of U.S. selling

expenses used to allocate a portion of total actual profit to each

sale. See Import Administration Policy Bulletin number 97/1, issued on

September 4, 1997, concerning the Calculation of Profit for Constructed

Export Price Transactions, at 3 and note 5; see also Notice of Final

Results of Antidumping Duty Administrative Review: Canned Pineapple

Fruit From Thailand, 63 FR 7392, 7395-96 (February 13, 1998).

Asocolflores' argument confuses actual interest expenses with

adjustments for imputed credit. While interest expense components

included in the calculation of indirect selling expenses and CV are

actual expenses, imputed credit is an opportunity cost, and not an

actual, recorded expense. Contrary to Asocolflores' claims, the

inflation adjustment to depreciation expense does not represent an

opportunity cost, but rather, reflects a restatement of the value of

fixed assets to account for the effects of inflation.

When allocating a portion of the actual profit to each CEP sale, we

include imputed credit as part of the total U.S. expenses allocation

factor, consistent with section 772(f)(2) of the Act which defines the

term ``total U.S. expenses'' as those described under sections

772(d)(1) and (2) of the Act. We note that credit expense is

specifically enumerated in section 772(d)(1)(B) of the Act.

Normal Value

Comment 6: While acknowledging that the Department's practice was

recently upheld in Asociacion Colombiana at 27-34, Asocolflores

maintains that the Department must allocate production costs equally to

national and export quality flowers when calculating CV. Asocolflores

relies on IPSCO, Inc. v. United States, 965 F.2d 1056 (Fed. Cir. 1992)

(IPSCO) in which, according to Asocolflores, the court held that lower

quality grades of the same primary product which are used for the same

purpose and produced by the same process may not be treated as a by-

product to which no production costs are allocated. Asocolflores also

notes that the court in Thai Pineapple Public Co. v. United States, 946

F. Supp. 11 (CIT 1996) (Thai Pineapple) had rejected the Department's

attempt to allocate production costs on the basis of relative sales

value. Asocolflores argues that the Department must follow its post-

IPSCO practice of allocating the same production costs to different

grades of product that are produced in the same manner, citing to such

cases as Polyethylene Terephthalate Film, Sheet, and Strip from the

Republic of Korea; Final Results of Antidumping Duty Administrative

Reviews and Notice of Revocation in Part, 61 FR 35177, 35182-83 (July

5, 1996); Porcelain-on-Steel Cookware from Mexico: Final Results of

Antidumping Duty Administrative Review, 62 FR 25908, 25911-912 (May 12,

1997); and Canned Pineapple Fruit From Thailand; Final Determination of

Sales at Less Than Fair Value, 60 FR 29553, 29561 (June 5, 1995). In

accordance with these precedents and the above-cited court decisions,

Asocolflores argues that the Department should allocate production

costs to all flowers sold regardless of grade.

Noting that Asocolflores' argument has been raised and rejected in

Roses from Colombia and that the Department's practice has been upheld

by the court in Asociacion Colombiana,

[[Page 31728]]

the FTC argues that the Department should continue to reject

Asocolflores' argument that production costs should be allocated to

national quality flowers or culls.

Department's Position: We disagree with Asocolflores. Our general

practice in cases involving agricultural goods has been to treat

``reject'' products as by-products and to offset the total cost of

production with revenues earned from the sale of any such ``reject''

products. This approach has been upheld by the CIT in Asociacion

Colombiana. Specifically, the CIT found that our approach ``represents

a permissible construction of the Act and a longstanding agency

practice.'' Asociacion Colombiana at 31. Furthermore, the CIT held that

Asocolflores' reliance on IPSCO and Thai Pineapple was misguided (Id.

at 29), noting that those two cases involved the accounting treatment

of co-products, not by-products. In light of the fact that our

treatment of national quality flowers as by-products for cost

allocation purposes has been upheld by the CIT, we see no reason to

depart from our methodology.

Comment 7: Asocolflores maintains that the Department's failure to

make an adjustment to financial expenses for ``net monetary

correction,'' while including an adjustment for the effects of

inflation in respondents' depreciation and amortization costs, leads to

significant distortions in the calculation of CV. Asocolflores argues

that in addition to requiring an inflation adjustment to asset values,

Colombian law and generally accepted accounting principles (GAAP) also

require the adjustment for ``monetary correction,'' which represents

the net gain or loss to the company caused by inflation on its net

exposed monetary assets and liabilities.

Asocolflores explains that under Colombian GAAP, financial costs,

along with depreciation and amortization expense, must be adjusted from

nominal pesos to current value pesos because the costs incurred by a

company in the current period but not payable until later periods, such

as accounts payable and peso loan balances, will be paid in the future

when the pesos will be cheaper in current value terms. According to

Asocolflores, the Department's methodology results in a distorted cost

calculation that mixes nominal pesos for some costs with inflation

adjusted, current value pesos for other costs. Asocolflores contends

that the Department must either disregard all inflation adjustments or

include the net monetary correction.

Asocolflores asserts that under section 773(f)(1)(A) of the Act,

the Department must calculate costs based on the records of the

exporter, unless such costs are distortive or do not reasonably reflect

costs. According to Asocolflores, the Department violates the Act by

disregarding the net monetary correction without making a finding that

the inclusion of the adjustment distorts costs or otherwise does not

reasonably reflect the cost associated with the production and sale of

the merchandise. Asocolflores also cites past cases involving inflation

accounting where the Department recognized that the monetary correction

must be included. See Gray Portland Cement and Clinker from Mexico;

Final Results of Antidumping Duty Administrative Review, 58 FR 25803

(April 28, 1993) (Cement from Mexico (1993)); Gray Portland Cement and

Clinker from Mexico; Final Results of Antidumping Duty Administrative

Review, 62 FR 17148 (April 9, 1997) (Cement from Mexico (1997));

Aimcor, Ala. Silicon, Inc. v. United States, slip op. No. 95-130, 1995

WL 431186 (CIT July 20, 1995). Asocolflores further argues that the

Department's rationale for excluding monetary correction in the Ninth

Review Final Results, that inflation effects to financial expenses are

``largely confined within the POR,'' is unreasonable because the

significance of inflation upon costs is based not only on the age of

the asset or loan but also on its amount.

The FTC asserts that the Department's rejection of the monetary

correction adjustment is supported by past cases such as Roses from

Colombia, where the Department specifically declined to include

inflation adjustments resulting from the annual revaluation of non-

monetary assets because the adjustment ``merely reflects an increase to

respondent's financial statement equity due to the restatement of non-

monetary assets to account for inflation.'' 60 FR at 6993. The FTC

distinguishes Cement from Mexico (1993) in that the Mexican inflation

adjustment was determined to pertain solely to monetary assets and

liabilities whereas the Colombian monetary correction is an adjustment

to non-monetary assets. The FTC also points out that the court in

Asociation Colombiana has upheld the Department's rejection of the

adjustment.

Department's Position: We disagree with Asocolflores. Consistent

with our practice in Ninth Review Final Results, we have continued to

adjust only fixed asset costs for the effects of inflation and have not

revised CV to include the monetary correction suggested by

Asocolflores. With the exception of cases involving countries with

``hyperinflationary'' economies, the Department typically ignores the

effects of inflation on costs incurred during the period of

investigation or review. However, as in this review, the Department has

recognized the effect that high levels of inflation may have on the

historical cost of certain production assets when compounded over

periods prior to the period of investigation or review. In these

instances, the Department adjusts the historical cost of these assets

such that they reflect the currency value during the period for which

costs are calculated.

In Asociacion Colombiana, the CIT upheld the Department's method of

accounting for the longer-term effects of significant inflation on

assets that were purchased or placed into service before the POR, but

that were not recognized as production costs until some time during the

POR. The CIT also rejected Asocolflores' argument that, where the

Department adjusts fixed asset costs for inflation, it must also

recognize the monetary correction for inflationary effects arising

within the POR. See Budd Co. v. United States, 773 F. Supp. 1549 (CIT

1991) (holding that full accounting for inflation is neither necessary

nor possible).

Comment 8: Asocolflores argues that the Department should adjust

the CV in the final results by either excluding an amount allocable to

the actual cost of financing trade accounts receivable or by reducing

the CV by an amount for imputed credit expense. Citing Amended Final

Results of Antidumping Duty Administrative Review: Silicon Metal from

Brazil, 62 FR 54087, 54091 (October 17, 1997) (Silicon Metal from

Brazil), Asocolflores states that the Department recently acknowledged

that an inaccurate result arises when comparing the CV inclusive of all

actual financing costs to a U.S. price exclusive of imputed credit

costs. Asocolflores charges that the Department's failure to make such

an adjustment in the instant case results in an unfair comparison of

U.S. price to CV.

Asocolflores contends that it was the Department's practice prior

to the Ninth Review Final Results to include in the CV interest expense

only the portion of respondents' borrowing costs associated with

production. Asocolflores states that the Department either should

reduce the CV interest expense by the ratio of accounts receivable to

total assets or it should make a circumstance-of-sale (COS) adjustment

to CV. Asocolflores argues that by including all actual financing

expenses in the CV, the Department included the cost of

[[Page 31729]]

financing sales to all markets. Because a majority of respondents'

sales are made to the United States, Asocolflores suggests that the

Department use the imputed credit expenses on U.S. sales as a COS

adjustment. Specifically, Asocolflores recommends that the Department

use the percentage of U.S. price attributable to credit expense on a

customer-specific basis as the adjustment to the CV.

The FTC asserts that the cases cited by Asocolflores show that it

is the Department's practice to use only home market imputed credit

expenses as a COS adjustment. In the instant case, however, the FTC

states that the Department should not make a COS adjustment to CV

because there are no home market credit costs associated with

Colombia's non-viable market. Additionally, the FTC argues that on CEP

sales, the U.S. importer incurs the U.S. credit expenses rather than

the producer. Because the reported CV interest expense does not include

these costs, the FTC argues, it would be inappropriate to deduct them

from CV.

Department's Position: Since the adoption of the URAA, we no longer

make a reduction to interest expense to account for the percentage of

total assets accounted for by accounts receivable because we no longer

include an amount for imputed credit in the CV. However, we agree with

the parties that it is our practice to make a COS adjustment for

differences in credit costs between the home and U.S. markets in the

calculation of CV. See, e.g., Silicon Metal from Brazil; Certain

Stainless Steel Bar from India: Final Results of Antidumping Duty

Administrative Review, 63 FR 13622, 13624 (Comment 5) (March 20, 1998).

Addressing this same issue in Ninth Review Final Results at Comment 24,

we explained that:

It is no longer appropriate to do as Asocolflores suggests and

reduce actual interest expense * * *. Any differences in credit

expense between the U.S. and foreign market are taken into account

as a circumstance of sale adjustment, but not as part of the actual

calculation of net interest expense incurred for the product.

The Department's practice is to reduce CV by home market imputed credit

expenses. See, e.g., Certain Stainless Steel Wire Rods from France:

Final Results of Antidumping Duty Administrative Review, 62 FR 7206,

7209 (February 18, 1997). However, respondents reported no home market

credit expenses. Thus, as in the Preliminary Results and in the Ninth

Review Final Results, we have reduced CV by home market credit expenses

of zero as a COS adjustment for these final results.

Comment 9: Asocolflores argues that the Department's use of the

profit rate of Compania Nacional de Chocolates S.A. (CNC), a Colombian

producer of chocolate and other processed agricultural products, as FA

in the calculation of CV is inconsistent with the Act. Asocolflores

contends that for those selected respondents whose home market sales of

export quality flowers were made below cost (i.e., zero profit), the

Department should use the profit rate of zero pursuant to section

773(e)(2)(B)(i) of the Act. With respect to the remaining respondents,

Asocolflores argues that the application of the ``profit cap''

described in section 773(e)(2)(B)(iii) of the Act is mandatory.

Therefore, Asocolflores claims that because none of the responding

companies had profits on sales of flowers in the home market, the

profit cap applicable to all selected respondents must be zero.

Asocolflores states that basic principles of statutory construction

preclude the Department from construing the Act as requiring profit to

be a positive amount. Asocolflores points out that the methodologies of

calculating profit set forth in sections 773(e)(2)(A) and

773(e)(2)(B)(ii) of the Act specifically include an ordinary course of

trade test, which by its terms excludes certain below cost sales and

ensures that the profit margins using these methodologies are above

zero. Asocolflores argues that by omitting the ordinary course of trade

test in sections 773(e)(2)(B)(i) and (iii) of the Act, while including

it in the methodologies under other sections as above, Congress must

have intended that the profit rate is not required to be above zero.

Asocolflores also contends that in other sections of the Act where the

Department is required to calculate an amount for profit, such as

sections 772(d) and (f), which relate to an adjustment to CEP for

profit allocable to certain expenses incurred in the United States, the

Department has not construed the Act as requiring a positive profit

figure.

Asocolflores argues the Department's reasoning, as explained in the

Ninth Review Final Results, that the profit figure used cannot be zero

and must be positive is flawed and contrary to the Act and the SAA.

Asocolflores states that by noting that for ``below-cost sales * * *

the profit is zero,'' the SAA (on page 169) makes clear that while

profit cannot be a negative number, it is zero when all sales are below

cost. Citing to the same page of the SAA, Asocolflores contends that

the statement that CV ``must include an amount * * * for profit'' in no

way precludes the ``amount'' from being zero. Asocolflores argues that

in Shop Towels from Bangladesh; Final Results of Antidumping Duty

Administrative Review, 61 FR 55957 (October 30, 1996) (Shop Towels from

Bangladesh), and Bicycles from the People's Republic of China; Notice

of Final Determination of Sales at Less Than Fair Value, 61 FR 19026

(April 30, 1996) (Bicycles from the PRC), the Department included zero

profit for the companies that had shown losses in deriving the average

of the profit rates to be used in calculating CV. Asocolflores also

cites to three initiations of antidumping duty investigations where the

Department used zero as the profit in the calculation of CV: Initiation

of Antidumping Duty Investigation: Clad Steel Plate from Japan, 60 FR

54666 (October 25, 1995); Initiation of Antidumping Duty Investigation:

Large Newspaper Printing Presses and Components Thereof, Whether

Assembled or Unassembled, from Germany and Japan, 60 FR 38546 (July 27,

1995); and Initiation of Antidumping Duty Investigation: Light-Walled

Rectangular Pipe and Tube from Mexico, 60 FR 20963 (April 28, 1995).

Asocolflores argues that the exception allowed in the SAA to the profit

cap applies only when, ``due to the absence of data,'' the Department

cannot calculate the profit cap. Here, Asocolflores contends, there is

no absence of data; the data merely indicate that the profit rate is

zero.

Asocolflores further argues that the use of CNC's profit rate is

inconsistent with the purpose of the Act and violates due process.

According to Asocolflores, the profit rate used is arbitrary,

unpredictable and random, thereby providing the Colombian producers of

flowers no basis on which to price their products to avoid dumping.

Asocolflores contends that although there is no evidence of any

similarity between the Colombian market for chocolate and the Colombian

market for fresh cut flowers, dumping is arbitrarily found by the

Department in any month in which the Colombian flower grower does not

earn a profit margin equal to the annual profit margin earned by CNC.

The FTC counters that the Department correctly interpreted the Act

and SAA in determining that the profit must be a positive amount. The

FTC argues that because respondents' home market sales consist of

culls, not export quality flowers, such sales are neither a ``foreign

like product'' nor ``in the ordinary course of trade'' as described in

the Act. As such, the FTC contends that such sales cannot be used as

the basis for profit pursuant to section 773(e)(2)(A) or

[[Page 31730]]

773(e)(2)(B) of the Act. The FTC further claims that the ``fair sales

price'' described at page 171 of the SAA cannot be at price levels

which lack profit thereby not providing any return on investment.

Where home market sales of the ``same general category of

products'' include sales of culls, the FTC argues there is insufficient

basis for calculating the profit cap. Because culls are treated as by-

products in the Department's calculations and are assigned a cost basis

of zero, the FTC argues that the profit rate on such sales would be

equal to the full revenue received. Although section 773(e)(2)(B)(iii)

of the Act does not impose the ``ordinary course'' constraint on sales

within the ``same general category,'' the FTC contends that Congress

could not have intended for cull sales to be rejected under 773(b) or

773(e)(2)(A) of the Act but then to be accepted under 773(e)(2)(B)(iii)

as the basis for calculating profits or the profit cap. Department's

Position: We disagree with Asocolflores. Although the URAA eliminated

the use of a minimum profit rate, the presumption of a profit element

in the calculation of CV was not eliminated. The SAA (at page 169)

states: ``Because CV serves as a proxy for a sales price, and because a

fair sales price would recover [selling, general and administrative

(SG&A)] expenses and would include an element of profit, CV must

include an amount for SG&A expenses and for profit.'' We find that ``a

fair sales price,'' as intended by the SAA, is a price that necessarily

includes a positive amount for profit, therefore providing a return on

investment.

Asocolflores' argument that the Department has used a zero profit

figure in the calculation of profit pursuant to other sections of the

Act such as 772(d) and (f) which refer to CEP profit is inapplicable.

This adjustment to CEP represents a portion of the company's total

actual profit allocable to economic activities incurred in the United

States, which may be zero.

We also disagree with Asocolflores' argument that a zero rate of

profit would be consistent with Shop Towels from Bangladesh and

Bicycles from the PRC. An average that includes some zeroes but still

yields a positive number, as was the case in Shop Towels from

Bangladesh and Bicycles from the PRC, is different from using a profit

rate of zero. We also find that Asocolflores' reliance on the three

initiations is misplaced. Given the general constraints in the

availability of data in the initiation stage of an investigation, the

Department's use of a zero profit figure was reasonable in that it was

the most conservative approach.

By providing three alternative methodologies for calculating CV

profit in section 773(e)(2)(B), the Act enables the Department to use

an overall positive profit rate whenever the calculation of CV profit

under section 773(e)(2)(A) is not appropriate. The inclusion of a

positive profit rate is consistent with the Department's past practice.

See, e.g., Silicomanganese from Brazil; Final Results of Antidumping

Duty Administrative Review, 62 FR 37869, 37877 (July 15, 1997) (``[I]f

a company has no home market profit or has incurred losses in the home

market, the Department is not instructed to ignore the profit element,

include a zero profit or even consider the inclusion of a loss; rather,

the Department is directed to find an alternative home market

profit.'').

Consistent with our practice in the Ninth Review Final Results, we

have continued to use CNC's profit rate since there is no information

on the record that would enable us to calculate a home market profit

rate on the same general category of merchandise as flowers or a profit

cap. As discussed above, a profit rate of zero is not appropriate for

use in calculating CV; therefore, we do not have appropriate

information to use as the basis for a profit cap. Accordingly, we have

applied the alternative of section 773(e)(2)(B)(iii) of the Act on the

basis of ``the facts available,'' as instructed by the SAA at 171.

Comment 11: The FTC maintains that the Department's use of CNC's

profit rate is inappropriate. The FTC asserts that because CNC's

products are primarily processed agricultural products, they do not

entail the same risks of perishability and, therefore, investors would

expect a different (lower) rate of return on equity. Instead, the FTC

urges the Department to base profit upon the projected return on equity

of Banco Ganadero, a Colombian bank that, in 1994, made approximately

23.06 percent of its loans to the agricultural sector. The FTC contends

that this bank, whose profitability is based on the experience of its

borrowers, is a better gauge of the return that would need to be earned

by producers in the Colombian agricultural sector than a chocolate

manufacturer.

In the alternative, the FTC argues that the Department should base

the profit rate on the third-country sales of Colombian flower growers.

While noting that the court in Asociacion Colombiana has affirmed the

Department's rejection of third-country sales as the basis for profit

in prior reviews, the FTC asserts that section 773(e)(2)(B)(iii) of the

Act, as amended by the URAA, explicitly provides the Department the

authority to use ``any reasonable method'' to calculate profit where

other alternative bases are not available. As such, the FTC draws a

distinction with the court decision, which arose under the pre-URAA

law. The FTC further argues that because profit is determined on an

annual basis, the Department's reasoning in rejecting third-country

sales as basis of determining NV, i.e., differences in price patterns

due to different demand, does not apply in the context of calculating

profit. The FTC asserts that third-country profits realized by

respondents are more closely related to the foreign like product or

general category of merchandise and better reflect the profit of the

specific respondents. According to the FTC, the use of third-country

profits is appropriate since dumping in the United States is made

possible by profits earned from higher prices charged in third-country

markets such as Europe.

Asocolflores disagrees with the suggestion of basing the profit

rate on the Colombian bank's rate of equity. According to Asocolflores,

a return on equity, which is equal to a company's total profits divided

by its total equity, is fundamentally different from a profit rate,

which is a rate applicable to the sale of goods. Asocolflores also

argues that there is no evidence that the profitability of Banco

Ganadero, whose product is a service rather than goods, is in any way

representative of the profitability of the agricultural sector in

Colombia.

With respect to the use of third-country profit, Asocolflores

asserts that the third-country profit margin presented by the FTC

should be rejected because the FTC's calculation ignores expenses such

as movement charges and selling expenses. Referring to section

351.405(b)(1) of the Department's final regulations as well as the

proposed regulations, Asocolflores contends that the Department, having

rejected third-country prices as the basis for NV, is not permitted to

use third-country profit as the basis for CV profit. Asocolflores

maintains that no respondents are using home market profits or third-

country profits to subsidize U.S. sales, which are profitable on their

own.

Department's Position: We disagree with the FTC. As stated by

Asocolflores, we find that the rate of return on equity of a financial

institution is not appropriate for this case. While we were unable to

locate a profit rate on home-market sales for a Colombian producer of

merchandise in the same general category of flowers, we determine that

using the profit rate of CNC, a

[[Page 31731]]

Colombian producer of processed agricultural goods, is more appropriate

than the rate of return on equity of a Colombian bank.

We also reject the FTC's suggestion that we base profit on third-

country sales. As we have found third-country sales to be an

inappropriate basis for calculating NV, it would likewise be

inappropriate to base CV profit on third-country sales. Accordingly,

consistent with our practice in Ninth Review Final Results, we have

used CNC's profit rate as FA in calculating CV profit.

Comment 12: The FTC argues that if the Department continues using

CNC data to calculate CV profit in the final results, the Department

should either adjust the calculation of CNC's profit rate by excluding

SG&A expenses or add CNC's SG&A expenses to CV. The FTC contends that

section 773(e)(2)(B)(iii) of the Act does not distinguish SG&A from

profit or contemplate that these values will come from different

sources. The FTC states that the reason respondents lack home market

selling expenses is the same reason that they lack profits: sales in

the home market are not in the ordinary course of trade. The FTC notes

that while respondents had neither profit nor selling expenses in the

home market, CNC has both profits and selling expenses. If profits are

determined using CNC's profit rate, according to the FTC, it follows

that selling expenses should be determined likewise in order to reflect

the selling expenses that would have been incurred if respondents had

home market sales in the ordinary course of trade.

The FTC further argues that to the extent selling expenses incurred

with respect to export sales are incurred in the home market and are

not deducted from CV, then the CEP sales will reflect selling

activities that are not reflected in CV. The FTC argues that some proxy

for selling expenses must be identified or there is an inconsistency

between the LOT for actual sales and CV.

Asocolflores argues that it would be inappropriate to recalculate

CNC's profitability by assuming it did not incur costs which, in fact,

it did incur. Asocolflores notes that profitability is dependent on

costs being incurred to generate revenues, and that the FTC is

incorrect in its assertion that if a company reduces expenditures the

result will be a higher level of profitability.

Asocolflores also contends that there is no legal basis for adding

hypothetical selling expenses to CV when respondents incurred no actual

selling expenses on their home market sales. Asocolflores asserts that,

contrary to the FTC's argument, there is no statutory preference for

using the same source of data for SG&A and profits.

Asocolflores asserts that the FTC's argument that growers incur no

selling expenses in the home market because home market sales are

outside the ordinary course of trade is not relevant because sections

773(e)(2)(B)(i) and (iii) of the Act contain no ordinary course of

trade test. Asocolflores contends that the Department is correct to use

the actual amount of selling expenses in the home market in calculating

CV.

Department's Position: We disagree with the FTC that we should

adjust CV profit or CV selling expenses to account for selling expenses

incurred by CNC. As noted by Asocolflores, there is no requirement or

preference that profit and SG&A expenses be drawn from the same source.

The Department has used different sources for selling expenses and for

profit in other cases where respondents had no profitable home market

sales. See, e.g., Shop Towels From Bangladesh, 61 FR at 55959.

Moreover, we are not persuaded by the FTC's argument that a potential

difference in LOT compels the inclusion of the selling expenses of CNC

or another proxy. Section 773(e)(2)(B) of the Act, which describes the

sources on which the Department may base selling expenses for

determining CV, does not require us to reject the use of the

respondent's actual selling expenses due to a potential difference in

LOT. See also Tapered Roller Bearings and Parts Thereof, Finished and

Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or

Less in Outside Diameter, and Components Thereof, From Japan; Final

Results of Antidumping Duty Administrative Reviews, 63 FR 2557, 2578

(January 15, 1998 ) (``We base home market LOTs on a respondent's

actual experience in selling in the home market. * * * [T]here is no

statutory basis for us to ``construct'' levels in the home market or

elsewhere.''). Accordingly, we based selling expenses on the actual

amounts incurred and realized by the respondents in selling in the home

market (i.e., zero) for purposes of calculating CV.

Comment 13: Asocolflores claims that the Department should compare

the annual average CV with annual average U.S. prices, in light of the

extreme seasonality of U.S. demand and prices. The FTC argues that the

Department has consistently rejected Asocolflores' position that annual

averages should be used when comparing CV with U.S. price. The FTC

further maintains that use of annual averages as the basis for CV and

U.S. price would eliminate the seasonality issue and allow the

Department to use viable third-country market prices as the basis of

determining NV.

Department's Position: In accordance with our past practice and as

affirmed by the CIT, we have continued to use monthly weighted averages

in calculating CV and U.S. price. See Floral Trade Council v. United

States, 775 F. Supp. 1492, 1499-1501 (CIT 1991). By relying on monthly

averages, we are able to use the exporters' actual price information,

which is often available only on a monthly basis. As in prior reviews,

we have not adopted Asocolflores' suggestion that we move to annual

averages. In our view, use of an annual average would allow respondents

to dump during periods of low demand, a result that is not consistent

with the Act.

Company Specific Comments

Comment 14: Asocolflores argues that because Tuchany's U.S. sales

were mainly made through unaffiliated U.S. importers, the Department

should deduct freight and commissions before computing Tuchany's

imputed credit expense on sales to unaffiliated customers. Asocolflores

explains that when an exporter sells through an unaffiliated

consignment importer, or, as with Tuchany, makes EP sales with a

commission payable, it finances a receivable equal to the sales value

less the commission and less any international freight. Asocolflores

argues that because the exporter does not finance the international

freight or commission, no credit expense should be imputed on these

amounts.

The FTC contends that because Asocolflores does not cite any

authority in support of its position, the Department should reject its

argument.

Department's Position: We agree with Asocolflores. For these final

results, we calculated credit expenses net of commission and

international freight. While Asocolflores has not cited to any

statutory authority in support of its credit calculation formula, we

find that it has nonetheless articulated reasonable grounds that are

consistent with the Department's practice of calculating imputed credit

on the basis of net accounts receivable.

Comment 15: The FTC contends that the Department should use AFA to

determine Tuchany's cost for the review period because Tuchany failed

to supply complete cost data. The FTC asserts that Tuchany is among the

top ten groups of exporters in this review and is well versed in

antidumping procedures. As such, the FTC argues that Tuchany should

have been aware of

[[Page 31732]]

its obligation to collect and maintain the necessary cost data.

Asocolflores claims that at the time the questionnaires were issued

in the current review, three of the Tuchany Group companies had already

gone out of business and had fired all employees. Asocolfores further

explains that because the cost data were kept individually by each of

the companies, the cost data for the defunct companies were no longer

available. Despite the best efforts of two remaining companies, Xue and

Tikiya, Asocolflores claims that they were unable to recover the cost

data for the defunct companies. Given the circumstances and the effort

made by Xue and Tikiya to obtain the cost data of the other three

companies, Asocolflores argues that the Tuchany Group as a whole should

not be penalized by the application of AFA.

Department's Position: We agree with Asocolflores. We believe that

it is inappropriate to draw adverse inferences from Xue's and Tikiya's

failure to provide cost data for the three defunct companies of the

Tuchany Group under these circumstances. The descriptions provided by

Tuchany with respect to the efforts to locate the missing information

and the difficulties that arose from the dissolution of the group

demonstrate these two companies have acted to the best of their ability

to respond to our request for cost information. Therefore, we believe

that it is appropriate to use the standard carnation CV data for the

two farms for which we have cost data to calculate a margin for

standard carnations and also apply this same margin to the sales of

other flower types.

Comment 16: Asocolflores claims that while it may be reasonable to

allocate returns for companies that do not match returns to the month

of the initial sale, the Department should not have disregarded the

monthly reported returns for Clavecol and the Caicedo groups because

both groups report their returns in the month that the flowers subject

to the claim were sold, not in the month the claim was made. Given

these circumstances, Asocolflores argues that the reported data

relating to returns more accurately reflect the relevant month for the

returns than the Department's methodology. Asocolflores further states

that the Department's reallocation introduces an unnecessary

distortion, since the monthly average price for flowers is highly

variable over the POR.

The FTC argues that there is no legal authority or agency precedent

to support a change in the Department's return methodology here.

According to the FTC, Caicedo's and Clavecol's U.S. prices and

adjustment for returns through numerous past reviews have been

calculated in the same manner as all other respondents. Moreover, the

FTC contends that the verification reports do not show that the

reporting methodology for returns is accurate or complete and some

returns may represent a credit to customers when the market is slow,

rather than by reason of the quality of the flowers.

Department's Position: We agree with Asocolflores and have made

appropriate changes to our calculation of these final results for

Caicedo and Clavecol. Since the Ninth Review Final Results, the

Department's practice has been to allocate returns over the POR because

most companies report returns in the month the claim was made, not in

the month the flowers were initially sold. However, because Caicedo and

Clavecol report their returns in the month the flowers were initially

sold, their reporting of returns is more accurate than an allocation.

Therefore, it is inappropriate to allocate their returns over the POR.

Although not specifically detailed in the verification report, the

accuracy of Caicedo's return methodology was fully verified in the

present review. In general, verification reports tend to place greater

emphasis on describing any inconsistencies found at verification,

rather than restating the information from the responses that are

verified to be accurate. Clavecol was not verified in the present

review, and because we have no reason to believe that its return

methodology is inaccurate, we have accepted Clavecol's return values as

reported.

Comment 17: Asocolflores asserts that the additional interest

expenses associated with the freeze of Floraterra's U.S. bank accounts

during the POR qualify as an excludable extraordinary expense that are

unrelated to the production or sale of flowers. According to

Asocolflores, the additional costs are ``unusual in nature'' and

``infrequent in occurrence,'' and, thereby meet the Department's

requirements of extraordinary expenses that are to be excluded from COP

or CV. Asocolflores refers to Roses from Ecuador, where the Department

excluded expenses incurred due to wind damage from the CV calculation.

Asocolflores further argues that the Department routinely excludes

costs associated with defending against U.S. Government investigations

unrelated to a company's normal business operations. See Certain

Corrosion-Resistant Carbon Steel Flat Products and Certain Cut to

Length Carbon Steel Plate from Canada: Final Results of Antidumping

Duty Administrative Reviews, 63 FR 12725, 12731 (March 16, 1998).

Because Floraterra's increased costs are analogous to the costs of

defending against an antidumping case, Asocolflores contends that such

costs must be deducted.

The FTC rebuts that although the seizure of assets may have been

unusual, it is not unusual in the industry to have unexpected needs for

additional funds. Furthermore, the FTC argues that Floraterra has not

shown that the allegedly extraordinary expenses were treated as such in

its financial statements or other accounting records. In light of the

fact that Floraterra did not separate such costs in its financial

statements, the FTC contends that there is no basis to construct a

calculation that would separate the financing costs Floraterra would

have incurred from those it claims to be extraordinary.

Department's Position: We disagree with Asocolflores's contention

that the amounts incurred as described above are extraordinary expenses

and, as a result, must be excluded from the company's reported costs.

As the FTC noted, Floraterra did not treat these expenses as

``extraordinary'' items in its own financial statements. Furthermore,

it is the Department's practice to include all interest expenses

incurred during the POR as part of operating capital. As such, the

additional interest expenses incurred by the company are properly

included as a part of the cost of the subject merchandise.

Final Results of Review

As a result of our review, we determine the following percentage

weighted-average margins to exist for the period March 1, 1996 through

February 28, 1997:

Selected Respondents

The following 10 groups of firms (composed of 86 companies) were

selected as respondents and received individual rates, as indicated

below.

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

Percent

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

Agrodex Group.............................................. 0.88

Agricola de las Mercedes S.A.

Agricola el Retiro Ltda.

Agrodex Ltda.

Degaflores Ltda.

Flores Camino Real Ltda.

Flores Cuatro Esquinas Ltda.

Flores de la Comuna Ltda.

Flores de Los Amigos Ltda.

Flores de los Arrayanes Ltda.

Flores de Mayo Ltda.

[[Page 31733]]

Flores del Gallinero Ltda.

Flores del Potrero Ltda.

Flores dos Hectareas Ltda.

Flores de Pueblo Viejo Ltda.

Flores el Trentino Ltda.

Flores la Conejera Ltda.

Flores Manare Ltda.

Florlinda Ltda.

Horticola el Triunfo Ltda.

Horticola Montecarlo Ltda.

Caicedo Group.............................................. 3.66

Agrobosque S.A.

Andalucia S.A.

Aranjuez S.A.

Consorcio Agroindustrial Colombiano S.A. (CAICO)

Exportaciones Bochica S.A.

Floral Ltda.

Flores del Cauca S.A.

Productos el Rosal S.A.

Productos el Zorro S.A.

Claveles Colombianos Group................................. 0.86

Claveles Colombianos Ltda.

Elegant Flowers Ltda.

Fantasia Flowers Ltda.

Splendid Flowers Ltda.

Sun Flowers Ltda.

Cultivos Miramonte Group................................... 0.61

C.I. Colombiana de Bouquets S.A.

Cultivos Miramonte S.A.

Flores Mocari S.A.

Floraterra Group........................................... 6.10

Floraterra S.A.

Flores Casablanca S.A.

Flores Novaterra Ltda.

Flores San Mateo S.A.

Siete Flores S.A.

Florex Group............................................... 1.17

Agricola Guacari S.A.

Agricola el Castillo

Flores San Joaquin

Flores Altamira S.A.

Flores de Exportacion S.A.

Flores Primavera S.A.

Guacatay Group............................................. 2.49

Agricola Cunday S.A.

Agricola Guacatay S.A.

Agricola Ventura

Jardines Bacata Ltda.

Multiflora Comercializadora Internacional S.A.

Queens Flowers Group....................................... 0.11

Agroindustrial del Rio Frio

Cultivos General Ltda.

Flora Nova

Flora Atlas Ltda.

Flores Calima S.A.

Flores Canelon Ltda.

Flores de Bojaca

Flores del Cacique

Flores del Hato

Flores el Aljibe Ltda.

Flores el Cipres

Flores El Pino Ltda.

Flores el Tandil

Flores la Mana

Flores las Acacias Ltda.

Flores la Valvanera Ltda.

Flores Jayvana

Flores Ubate Ltda.

Jardines de Chia Ltda.

Jardines Fredonia Ltda.

M.G. Consultores Ltda.

Mountain Roses

Queens Flowers de Colombia Ltda.

Quality Flowers S.A.

Florval S.A. (Floval)

Jardines del Rosal

Tinzuque Group............................................. 1.23

Tinzuque Ltda.

Catu S.A.

Tuchany Group.............................................. 9.06

Tuchany S.A.

Flores Sibate

Flores Tikaya

Flores Munya

Flores Xue S.A.

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

Non-Selected Respondents

The following 338 companies were not selected as respondents and

will receive a rate of 2.52 percent:

Abaco Tulipanex de Colombia

Achalay

Aga Group

Agricola la Celestina

Agricola la Maria

Agricola Benilda Ltda.

Agrex de Oriente

Agricola Acevedo Ltda.

Agricola Altiplano

Agricola Arenales Ltda.

Agricola Bonanza Ltda.

Agricola Circasia Ltda.

Agricola de Occident

Agricola del Monte

Agricola el Cactus S.A.

Agricola el Redil

Agricola Guali S.A.

Agricola la Corsaria Ltda.

Agricola la Siberia

Agricola Las Cuadras Group

Agricola las Cuadras Ltda.

Flores de Hacaritama

Agricola Megaflor Ltda.

Agricola Yuldama

Agrocaribu Ltda.

Agro de Narino

Agroindustrial Don Eusebio Ltda. Group

Agroindustrial Don Eusebio Ltda.

Celia Flowers

Passion Flowers

Primo Flowers

Temptation Flowers

Agroindustrial Madonna S.A.

Agroindustrias de Narino Ltda.

Agromonte Ltda.

Agropecuria Cuernavaca Ltda.

Agropecuaria la Marcela

Agropecuaria Mauricio

Agrorosas

Agrotabio Kent

Aguacarga

Alcala

Alstroflores Ltda.

Amoret

Ancas Ltda.

Andalucia

Andes Group

Cultivos Buenavista Ltda.

Flores de los Andes Ltda.

Flores Horizonte Ltda.

Inversiones Penas Blancas Ltda.

A.Q.

Arboles Azules Ltda.

Aspen Gardens Ltda.

Astro Ltda.

Becerra Castellanos y Cia.

Bojaca Group

Agricola Bojaca

Universal Flowers

Flores y Plantas Tropicales

Flores del Neusa Nove Ltda.

Tropiflora

Cantarrana Group

Cantarrana Ltda.

Agricola los Venados Ltda.

Carcol Ltda.

Cienfuegos Group

Cienfuegos Ltda.

Flores la Conchita

Cigarral Group

Flores Cigarral

Flores Tayrona

Classic

Claveles de los Alpes Ltda.

Clavelez

Coexflor

Colibri Flowers Ltda.

Color Explosion

Combiflor

Consorcio Agroindustrial

Cota

Crest D'or

Crop S.A.

Cultiflores Ltda.

Cultivos Guameru

Cultivos Medellin Ltda.

Cultivos Tahami Ltda.

Cypress Valley

Daflor Ltda.

Degaflor

De La Pava Guevara E. Hijos Ltda.

Del Monte

Del Tropico Ltda.

Dianticola Colombiana Ltda.

Disagro

Diveragricola

Dynasty Roses Ltda.

El Antelio S.A.

Elite Flowers (The Elite Flower/Rosen Tantau)

El Milaro

El Tambo

El Timbul Ltda.

Envy Farms Group

Envy Farms

Flores Marandua Ltda.

Euroflora

Exoticas

Exotic Flowers

Exotico

Expoflora Ltda.

Exportadora

Falcon Farms de Colombia S.A. (formerly Flores de Cajibio Ltda.)

Farm Fresh Flowers Group

Agricola de la Fontana

Flores de Hunza

Flores Tibati

Inversiones Cubivan

Ferson Trading

Flamingo Flowers

Flor Colombiana S.A.

Flora Bellisima

Flora Intercontinental

Floralex Ltda.

[[Page 31734]]

Floralex Ltda.

Flores el Puente Ltda.

Agricola Los Gaques Ltda.

Florandia Herrera Camacho & Cia.

Floreales Group

Floreales Ltda.

Kimbaya

Florenal (Flores el Arenal) Ltda.

Flores Abaco S.A.

Flores Acuarela S.A.

Flores Agromonte

Flores Aguila

Flores Colon Ltda.

Flores de la Sabana S.A.

Flores de Serrezuela S.A.

Flores de Suesca S.A.

Flores del Rio Group

Agricola Cardenal S.A.

Flores del Rio S.A.

Indigo S.A.

Flores El Molino S.A.

Flores El Zorro Ltda.

Flores la Cabanuela

Flores la Fragrancia

Flores la Gioconda

Flores la Lucerna

Flores la Macarena

Flores la Pampa

Flores la Union/Gomez Arango & Cia. Group

Santana

Flores las Caicas

Flores las Mesitas

Flores los Sauces

Flores Monserrate Ltda.

Flores Montecarlo

Flores Monteverde

Flores Palimana

Flores Ramo Ltda.

Flores S.A.

Flores Sagaro

Flores Saint Valentine

Flores Sairam Ltda.

Flores San Andres

Flores San Carlos

Flores San Juan S.A.

Flores Santa Fe Ltda.

Flores Santana

Flores Sausalito

Flores Selectas

Flores Silvestres

Flores Sindamanoi

Flores Suasuque

Flores Tenerife Ltda.

Flores Tiba S.A.

Flores Tocarinda

Flores Tomine Ltda.

Flores Tropicales (Happy Candy) Group

Flores Tropicales Ltda.

Happy Candy Ltda.

Mercedes Ltda.

Rosas Colombianos Ltda.

Flores Urimaco

Flores Violette

Florexpo

Floricola

Floricola la Gaitana S.A.

Florimex Colombia Ltda.

Florisol

Florpacifico

Flor y Color

Flowers of the World/Rosa

Four Seasons

Fracolsa

Fresh Flowers

F. Salazar

Funza Group

Flores Alborada

Flores de Funza S.A.

Flores del Bosque Ltda.

Garden and Flowers Ltda.

German Ocampo

Granja

Green Flowers

Grupo el Jardin

Agricola el Jardin Ltda.

La Marotte S.A.

Orquideas Acatayma Ltda.

Gypso Flowers

Hacienda la Embarrada

Hacienda Matute

Hana/Hisa Group

Flores Hana Ichi de Colombia Ltda.

Flores Tokai Hisa

Hernando Monroy

Horticultra Montecarlo

Horticultura de la Sasan

Horticultura El Molino

Hosa Group

Horticultura de la Sabana S.A.

HOSA Ltda.

Innovacion Andina S.A.

Minispray S.A.

Prohosa Ltda.

Illusion Flowers

Industria Santa Clara

Industrial Agricola

Industrial Terwengel Ltda.

Ingro Ltda.

Inverpalmas

Inversiones Almer Ltda.

Inversiones Bucarelia

Inversiones Cota

Inversiones el Bambu Ltda.

Inversiones Flores del Alto

Inversiones Maya, Ltda.

Inversiones Morcote

Inversiones Morrosquillo

Inversiones Playa

Inversiones & Producciones Tecnica

Inversiones Santa Rita Ltda.

Inversiones Silma

Inversiones Sima

Inversiones Supala S.A.

Inversiones Valley Flowers Ltda.

Iturrama S.A.

Jardin de Carolina

Jardines Choconta

Jardines Darpu

Jardines Natalia Ltda.

Jardines Tocarema

Jardines de America

Jardines de Timana

J.M. Torres

Karla Flowers

Kingdom S.A.

La Colina

La Embairada

La Flores Ltda.

La Floresta

La Plazoleta Ltda.

Las Amalias Group

Las Amalias S.A.

Pompones Ltda.

La Fleurette de Colombia Ltda.

Ramiflora Ltda.

Las Flores

Laura Flowers

L.H.

Linda Colombiana Ltda.

Loma Linda

Loreana Flowers

Los Geranios Ltda.

Luisa Flowers

Luisiana Farms

M. Alejandra

Manjui Ltda.

Mauricio Uribe

Maxima Farms Group

Agricola los Arboles S.A.

Colombian D.C. Flowers

Polo Flowers

Rainbow Flowers

Maxima Farms Inc.

Merastec

Monteverde Ltda.

Morcoto

Nasino

Natuflora Ltda./San Martin Bloque B

Olga Rincon

Oro Verde Group

Inversiones Miraflores S.A.

Inversiones Oro Verde S.A.

Otono (Agroindustrial Otono)

Papagayo Group

Agricola Papagayo Ltda.

Inversiones Calypso S.A.

Petalos de Colombia Ltda.

Pinar Guameru

Piracania

Pisochago Ltda.

Plantaciones Delta Ltda.

Plantas S.A.

Prismaflor

Propagar Plantas S.A.

Reme Salamanca

Rosa Bella

Rosaflor

Rosales de Colombia Ltda.

Rosales de Suba Ltda.

Rosas Sabanilla Group

Flores la Colmena Ltda.

Rosas Sabanilla Ltda.

Inversiones la Serena

Agricola la Capilla

Rosas y Jardines

Rose

Rosex Ltda.

Roselandia

San Ernesto

San Valentine

Sansa Flowers

Santa Rosa Group

Flores Santa Rosa Ltda.

Floricola La Ramada Ltda.

Santana Flowers Group

Santana Flowers Ltda.

Hacienda Curibital Ltda.

Inversiones Istra Ltda.

Sarena

Select Pro

Senda Brava Ltda.

Shasta Flowers y Compania Ltda.

Shila

Siempreviva

Soagro Group

Agricola el Mortino Ltda.

Flores Aguaclara Ltda.

Flores del Monte Ltda.

Flores la Estancia

Jaramillo y Daza

Solor Flores Ltda.

Starlight

Superflora Ltda.

Susca

Sweet Farms

Flores Santa Rosa Ltda.

Floricola la Ramada Ltda.

Tag Ltda.

[[Page 31735]]

The Beall Company

The Rose

Tomino

Toto Flowers Group

Flores de Suesca S.A.

Toto Flowers

Tropical Garden

Uniflor Ltda.

Velez de Monchaux Group

Velez De Monchaux e Hijos y Cia S. en C.

Agroteusa

Victoria Flowers

Villa Cultivos Ltda.

Villa Diana

Vuelven Ltda.

Zipa Flowers

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. We have

calculated an importer-specific per-stem duty assessment rate based on

the ratio of the total amount of AD duties calculated for the examined

sales made during the POR to the total quantity of subject merchandise

entered during the POR. This rate will be assessed uniformly on all

entries of that particular importer made during the POR. 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, on or after the publication date of these final results of review:

(1) The cash deposit rate for the individually examined companies will

be the most recent rates as listed above, except that for firms whose

weighted-average margins are less than 0.5 percent and therefore de

minimis, the Department shall require a zero deposit of estimated

antidumping duties; (2) the cash deposit rate for non-selected

companies will be the weighted-average of the cash deposit rates for

the individually examined companies; (3) 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; (4) if the exporter is not a firm covered in this review, a

prior review, or the original LTFV investigation, but the producer is,

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

period for the producer of the merchandise; and (5) the cash deposit

rate for all other producers or exporters will be the ``all other''

rate of 3.10 percent. This is the rate established during the Less-

Than-Fair-Value (LTFV) investigation, as amended in litigation.

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 351.402 (f)(2) to file a certificate

regarding the reimbursement of AD 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 AD duties occurred and the subsequent assessment of

doubled AD 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 is issued and published in accordance

with section 751(a)(1) of the Act.

Dated: June 2, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-15349 Filed 6-9-98; 8:45 am]

BILLING CODE 3510-DS-P