Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Preserved Mushrooms From Indonesia

DEPARTMENT OF COMMERCE

International Trade Administration

[A-560-802]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Certain Preserved

Mushrooms From Indonesia

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: August 5, 1998.

FOR FURTHER INFORMATION CONTACT: Mary Jenkins or David J. Goldberger,

Import Administration, International Trade Administration, U.S.

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

Washington, D.C. 20230; telephone: (202) 482-1756 or (202) 482-4136,

respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (``the Act''), 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 the regulations at 19 CFR Part 351, published at 62

FR 27296 (May 19, 1997).

Preliminary Determination

We preliminarily determine that certain preserved mushrooms

(``mushrooms'') from Indonesia are being, or are likely to be, sold in

the United States at less than fair value (``LTFV''), as provided in

section 733(b) of the Act. The estimated margins of sales at LTFV are

shown in the ``Suspension of Liquidation'' section of this notice.

Case History

Since the initiation of this investigation (Notice of Initiation of

Antidumping Investigations: Certain Preserved Mushrooms From Chile,

India, Indonesia, and the People's Republic of China (63 FR 5360,

February 2, 1998)), the following events have occurred:

During January through February of 1998, the Department of Commerce

(``the Department'') requested information from the U.S. Embassy in

Indonesia to identify producers/exporters of the subject merchandise.

During the month of February 1998, the Department also requested and

received comments from the petitioners and potential respondents

regarding model matching criteria.

On February 27, 1998, the United States International Trade

Commission (``ITC'') notified the Department of its affirmative

preliminary injury determination in this case.

Also on February 27, 1998, the Department issued an antidumping

duty questionnaire to the following producers: PT Dieng Djaya

(``Dieng''), PT Indo Evergreen Agro Business Company, PT Surya Jaya

Abadi Perkasa (``Surya''), PT Tuwuh Agung and PT Zeta Agro Corporation

(``Zeta'').

On March 30, 1998, the Department issued a notice setting aside a

period for interested parties to raise issues regarding product

coverage. Certain Preserved Mushrooms from Chile, India, Indonesia, and

the People's Republic of China: Comments Regarding Product Coverage (63

FR 16971 (April 7, 1998)). No parties to this investigation filed

comments regarding product coverage.

In April 1998, the Department received responses to Section A of

the questionnaire from Dieng, PT Indo Evergreen Agro Business Company,

Surya, PT Tuwuh Agung and Zeta. Dieng and Surya informed the Department

that they were affiliated companies as defined by the Department's

regulations; therefore, the two companies submitted a combined

response, in accordance with 19 CFR 351.401(f). Dieng/Surya also

informed the Department that PT Tuwuh Agung, a related company, was not

a manufacturer or exporter of subject merchandise. Dieng/Surya and Zeta

reported that their home market and third country markets were not

viable during the period of investigation (``POI'') and, therefore,

each of the companies would submit constructed value (``CV'') of the

subject merchandise.

On April 14, 1998, pursuant to section 777A(c) of the Act, the

Department determined that, due to the large number of exporters/

producers of the subject merchandise, it would limit the number of

mandatory respondents in this investigation. See ``Respondent

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Selection'' section below. The Department determined that it would

analyze the responses of the two largest exporters/producers of the

subject merchandise in this investigation. Based on Section A

questionnaire responses, the Department selected the two largest

companies in Indonesia, Dieng/Surya and Zeta, to be mandatory

respondents (see Memorandum to Louis Apple, dated April 14, 1998).

We received responses to Sections C and D of the questionnaire from

Dieng/Surya and Zeta in April 1998. We issued a supplemental

questionnaire for Sections A, C, and D to Dieng/Surya and Zeta in April

1998, and received responses to these questionnaires in June 1998.

On May 1, 1998, pursuant to section 733(c)(1)(A) of the Act, the

petitioners made a timely request to postpone the preliminary

determination for forty days. We granted this request and, on May 8,

1998, we postponed the preliminary determination until no later than

July 27, 1998. See 63 FR 27264 (May 18, 1998). Petitioners and

respondents provided additional comments on the responses during July

1998.

Postponement of Final Determination and Extension of Provisional

Measures

Pursuant to section 735(a)(2) of the Act, on July 14, 1998, Dieng/

Surya and Zeta requested that, in the event of an affirmative

preliminary determination in this investigation, the Department

postpone its final determination until not later than 135 days after

the date of the publication of an affirmative preliminary determination

in the Federal Register. On July 23, 1998, Dieng/Surya and Zeta amended

their request to include a request to extend the provisional measures

by not more than six months. In accordance with 19 CFR 351.210(b),

because our preliminary determination is affirmative, (2) Dieng/Surya

and Zeta account for a significant proportion of exports of the subject

merchandise, and (3) no compelling reasons for denial exist, we are

granting the respondents' request and are postponing the final

determination until no later than 135 days after the publication of

this notice in the Federal Register. In addition, we are extending the

provisional measures by not more than six months. Suspension of

liquidation will be extended accordingly.

Scope of Investigation

For purposes of this investigation, the products covered are

certain preserved mushrooms whether imported whole, sliced, diced, or

as stems and pieces. The preserved mushrooms covered under these

investigations are the species Agaricus bisporus and Agaricus

bitorquis. ``Preserved mushrooms'' refer to mushrooms that have been

prepared or preserved by cleaning, blanching, and sometimes slicing or

cutting. These mushrooms are then packed and heated in containers

including but not limited to cans or glass jars in a suitable liquid

medium, including but not limited to water, brine, butter or butter

sauce. Preserved mushrooms may be imported whole, sliced, diced, or as

stems and pieces. Included within the scope of the investigation are

``brined'' mushrooms, which are presalted and packed in a heavy salt

solution to provisionally preserve them for further processing.

Excluded from the scope of this investigation are the following:

(1) all other species of mushroom including straw mushrooms; (2) all

fresh and chilled mushrooms, including ``refrigerated'' or ``quick

blanched mushrooms'; (3) dried mushrooms; (4) frozen mushrooms; and (5)

``marinated,'' ``acidified'' or ``pickled'' mushrooms, which are

prepared or preserved by means of vinegar or acetic acid, but may

contain oil or other additives.

The merchandise subject to this investigation is classifiable under

subheadings 2003.10.27, 2003.10.31, 2003.10.37, 2003.10.43, 2003.10.47,

2003.10.53, and 0711.90.4000 of the Harmonized Tariff Schedule of the

United States (``HTS''). Although the HTS subheadings are provided for

convenience and Customs purposes, the written description of the

merchandise under investigation is dispositive.

Period of Investigation

The POI is January 1, 1997, through December 31, 1997.

Fair Value Comparisons

To determine whether sales of mushrooms from Indonesia to the

United States were made at less than fair value, we compared export

price (``EP'') to the Normal Value (``NV''), as described in the

``Export Price'' and ``Normal Value'' sections of this notice, below.

In accordance with section 777A(d)(1)(A)(i) of the Act, we calculated

weighted-average EPs for comparison to weighted-average NVs.

In this proceeding, none of the respondents had a viable home

market or third country market. Therefore, as the basis for NV, we used

CV when making comparisons, in accordance with section 773(a)(4) of the

Act.

Export Price

For both Dieng/Surya and Zeta we used EP methodology, in accordance

with section 772(a) of the Act, because the merchandise was sold

directly to the first unaffiliated purchaser in the United States prior

to importation and CEP methodology was not otherwise indicated. For all

respondents, we calculated EP based on packed prices charged to the

first unaffiliated customer in the United States.

Dieng/Surya

We based EP on the packed FOB seaport prices to unaffiliated

purchasers in the United States. We made deductions, where appropriate,

for foreign inland freight, foreign inland insurance, and brokerage and

handling, in accordance with 772(c)(2)(A) of the Act. In addition, we

made an adjustment to U.S. price for a refund in the form of a tax

credit made to Dieng/Surya by the Indonesian government for excise tax

paid on imported glass jars and tops that were eventually used for

exported merchandise, in accordance with 772(c)(2)(B) of the Act.

Zeta

We based EP on the packed FOB prices to unaffiliated purchasers in

the United States. We made deductions, where appropriate, for foreign

inland freight, foreign inland insurance, and brokerage and handling,

in accordance with section 772(c)(2)(A) of the Act.

Normal Value

After testing (1) home market viability, we calculated NV as noted

in the ``Price-to-CV Comparisons'' section of this notice.

Home Market or Third Country Viability

In order to determine whether there is a sufficient volume of sales

in the home market or third country to serve as a viable basis for

calculating NV (i.e., the aggregate volume of home market or third

country sales of the foreign like product are equal to or greater than

five percent of the aggregate volume of U.S. sales), we compared the

respondents' volume of home market and third country sales,

respectively, of the foreign like product to the volume of U.S. sales

of the subject merchandise, in accordance with sections 773(a)(1)(B)

and (C) of the Act. Because each respondent reported that the aggregate

volume of home market and/or third country sales of the foreign like

product was less than five percent of its aggregate volume of U.S.

sales of the subject merchandise, we determined for each respondent

that the home and third country markets were not viable. Therefore, we

used CV as a basis for calculating NV for both respondents, in

[[Page 41785]]

accordance with section 773(a)(4) of the Act.

Calculation of CV

We calculated CV for each respondent in accordance with section

773(e)(1) of the Act, which indicates that CV shall be based on the sum

of each respondent's cost of materials and fabrication for the foreign

like product, plus amounts for selling, general, and administrative

expenses (SG&A), profit, and U.S. packing costs.

We made the following adjustments for Zeta: Zeta allocated fresh

mushroom costs between fresh and canned products based on the relative

sale values of all mushroom products. This methodology is appropriate

only in certain situations involving the allocation of joint-product

costs (i.e., where a single production process yields simultaneously

two or more products). In this case, the identical mushrooms are inputs

into fresh and canned mushrooms products. Therefore, we recalculated

the allocation of mushroom growing costs (i.e., material, direct labor,

variable overhead, and fixed overhead incurred at the farm) between

fresh mushrooms and canned mushrooms based on the respective quantity

of fresh mushrooms used for each product.

In its April 20, 1998, submission, Zeta claimed a startup

adjustment under section 773(f)(1)(C)(ii) of the Act. In order to make

a startup adjustment, the statute requires that (I) a producer is using

new production facilities or producing a new product that requires

substantial additional investment, and (II) production levels are

limited by technical factors associated with the initial phase of

production. Preliminarily, we determine that Zeta's canning factory is

a new production facility. However, Zeta failed to identify suitable

technical factors; therefore, we did not accept Zeta's startup

adjustment. The technical factor identified by Zeta related to the lack

of raw material supply because mushrooms were not grown until the

cannery was built, which, in turn, resulted in a shortage of mushrooms

at the beginning of the cannery's operation. We do not consider

shortage of raw materials to be a technical factor associated with the

canning facility.

Because there are no viable comparison markets for Dieng/Surya and

Zeta and, hence, no actual company-specific profit and SG&A data

available for the respondents, we calculated profit and selling

expenses in accordance with section 773(e)(2)(B)(iii) of the Act and

the Statement of Administrative Action accompanying the URAA, H.R. Doc.

No. 316, 103d Cong, 2d Sess (1994), (SAA) at 841.

Specifically, the SAA provides that where, due to the absence of

data, the Department cannot determine amounts for profit under

alternatives (i) or (ii) of section 773(e)(2)(B) of the Act or a

``profit cap'' under alternative (iii) of section 773(e)(2)(B) of the

Act, the Department may apply alternative (iii) on the basis of the

facts available. In this case, we are unable to determine an amount for

profit under alternatives (i) or (ii), or a ``profit cap'' under

alternative (iii) because none of the respondents has viable home

markets. See 19 CFR 351.405(b)(2) of the Department's regulations

(clarifying that under section 773(e)(2)(B) of the Act, ``foreign

country'' means the country in which the merchandise is produced), (62

FR 27296, 27412-13 (May 19, 1997)). The statute directs us to use an

amount which reflects profit in connection with sales for consumption

in the foreign country of the same general category of products as the

subject merchandise See section 773(e)(2) of the Act. Because none of

the respondents had a viable home market, the profit and selling

expenses shown on their financial statements do not reflect profit and

selling expenses realized in the home market. Therefore, we did not

rely on the profit or selling expense data in the respondents'

financial statements in calculating CV.

Instead, we applied alternative (iii) and determined profit and

selling expense on the basis of the facts available consistent with the

SAA (See Shop Towels from Bangladesh; Final Results of Antidumping Duty

Administrative Review, 61 FR 55957, October 30, 1996). As facts

available, we calculated Zeta's and Dieng/Surya's profit and selling

expenses for CV based on the weighted-average selling expenses and

profit contained in PT Indofood Sukses Makmur's 1996 financial

statements. PT Indofood Sukses Makmur is a large Indonesian processor

of food products. For G&A expenses, we used the actual expenses

contained in the respondents' financial statements.

Price-to-CV Comparisons

For price-to-CV comparisons, we made adjustments to CV pursuant to

section 773(a)(8) of the Act. Dieng/Surya did not provide costs to be

used as CV for comparison for one product. As facts available, we have

applied the costs from a comparable product.

In their July 6, l998, submission, the petitioners argue that the

Department should use two averaging periods in its margin calculations

to account for the effect of the devaluation of the Indonesian rupiah.

The petitioners contend that CV differs significantly and dramatically

over the course of the POI when exchange rates are taken into account.

To support their argument, petitioners cite Final Determination of

Sales at Less Than Fair Value: Polyvinyl Alcohol from Taiwan, 61 FR

14106, March 29, 1996, (``PVA from Taiwan''), where the Department

established two averaging periods because of a ``distinct dividing

line'' between price trends in the home market. Accordingly, the

petitioners contend that the Department should calculate the weighted-

average EP for two averaging periods--January through June 1997 and

July through December 1997--in order to avoid distorting dumping

margins.

We have examined the prices and selling practices of the two

respondents in this investigation and find that the respondents'

selling practices have been constant. We find no evidence that there

has been a significant change in the respondents' pricing or marketing

during the POI. This situation contrasts with PVA from Taiwan, where

the respondent changed the way it conducted business with its principal

home market customers, including its price structure, while at the same

time, U.S. prices and input cost trends moved in tandem. Thus, contrary

to the petitioners' assertions, this case is not analogous to PVA from

Taiwan. Therefore, we find no basis to depart from our practice of

calculating the weighted-average EPs for the entire POI.

Currency Conversion

We made currency conversions into U.S. dollars based on the

exchange rates in effect on the dates of the U.S. sales as certified by

the Federal Reserve Bank, in accordance with section 773A of the Act.

Verification

As provided in section 782(i) of the Act, we will verify all

information relied upon for use in making our final determination.

Suspension of Liquidation

In accordance with section 733(d) of the Act, we are directing the

Customs Service to suspend liquidation of all imports of subject

merchandise that are entered, or withdrawn from warehouse, for

consumption on or after the date of publication of this notice in the

Federal Register. We will instruct the Customs Service to require a

cash deposit or the posting of a bond equal to the weighted-average

amount by which the NV exceeds the export price, as indicated in the

chart below. These suspension-of-

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liquidation instructions will remain in effect until further notice.

The weighted-average dumping margins are as follows:

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

Weighted-

average

Exporter/manufacturer margin

percentage

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

PT Dieng Djaya/PT Surya Jaya Abadi Perkasa.................. 11.24

PT Zeta Agro Corporation.................................... 29.58

All Others.................................................. 15.35

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

ITC Notification

In accordance with section 733(f) of the Act, we have notified the

ITC of our determination. If our final determination is affirmative,

the ITC will determine before the later of 120 days after the date of

this preliminary determination or 45 days after our final determination

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry.

Public Comment

Case briefs or other written comments in at least ten copies must

be submitted to the Assistant Secretary for Import Administration no

later than October 16, 1998, and rebuttal briefs no later than October

23, 1998. A list of authorities used and an executive summary of issues

should accompany any briefs submitted to the Department. Such summary

should be limited to five pages total, including footnotes. In

accordance with section 774 of the Act, we will hold a public hearing,

if requested, to afford interested parties an opportunity to comment on

arguments raised in case or rebuttal briefs. Tentatively, the hearing

will be held on October 27, 1998, time and room to be determined, at

the U.S. Department of Commerce, 14th Street and Constitution Avenue,

N.W., Washington, D.C. 20230. Parties should confirm by telephone the

time, date, and place of the hearing 48 hours before the scheduled

time.

Interested parties who wish to request a hearing, or to participate

if one is requested, must submit a written request to the Assistant

Secretary for Import Administration, U.S. Department of Commerce, Room

1870, within 30 days of the publication of this notice. Requests should

contain: (1) the party's name, address, and telephone number; (2) the

number of participants; and (3) a list of the issues to be discussed.

Oral presentations will be limited to issues raised in the briefs. If

this investigation proceeds normally, we will make our final

determination by no later than 135 days after the publication of this

notice in the Federal Register.

This determination is issued and published in accordance with

sections 773(d) and 777(i)(1) of the Act.

Dated: July 27, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-20909 Filed 8-4-98; 8:45 am]

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