Initiation of Antidumping Investigations: Certain Preserved Mushrooms From Chile, India, Indonesia, and the People's Republic of China

DEPARTMENT OF COMMERCE

International Trade Administration

[A-337-804, A-533-813, A-560-802, and A-570-851]

Initiation of Antidumping Investigations: Certain Preserved

Mushrooms From Chile, India, Indonesia, and the People's Republic of

China

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: February 2, 1998.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger, Office 5, AD/CVD

Enforcement Group II, Import Administration-Room B099, International

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

Constitution Avenue, N.W.,

[[Page 5361]]

Washington, DC 20230; telephone: (202) 482-4136.

SUPPLEMENTARY INFORMATION:

Initiation of Investigations

The Applicable State and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (``the Act'') by

the Uruguay Round Agreements Act (``URAA''). In addition, unless

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

to the current regulations, as amended by the regulations published in

the Federal Register on May 19, 1997 (62 FR 27296).

The Petition

On January 6, 1998, the Department of Commerce (``the Department'')

received a petition filed in proper form by the Coalition for Fair

Preserved Mushroom Trade which is comprised of the following companies:

L.K. Bowman, Inc., Modern Mushroom Farms, Inc., Monterey Mushrooms,

Inc., Mount Laurel Canning Corp., Mushroom Canning Company, Sunny Dell

Foods, Inc., and United Canning Corp. (``the petitioners''). The

Department received supplemental information to the petitions on

January 15 and 20, 1998.

In accordance with section 732(b) of the Act, petitioners allege

that imports of certain preserved mushrooms (``mushrooms'') from Chile,

India, Indonesia, and the People's Republic of China (``PRC'') are

being, or are likely to be, sold in the United States at less than fair

value within the meaning of section 731 of the Act, and that such

imports are materially injuring an industry in the United States.

The Department finds that petitioners filed the petition on behalf

of the domestic industry because they are interested parties as defined

in section 771(9)(C) and (D) of the Act and they have demonstrated

sufficient industry support (see discussion below).

Scope of Investigations

For purposes of these investigations, 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.

The merchandise subject to these investigations 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.

Excluded from the scope of this petition 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.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Act requires that a petition be filed on

behalf of the domestic industry. Section 732(c)(4)(A) of the Act

provides that a petition meets this requirement if the domestic

producers or workers who support the petition account for: (1) at least

25 percent of the total production of the domestic like product; and

(2) more than 50 percent of the production of the domestic like product

produced by that portion of the industry expressing support for, or

opposition to, the petition.

Section 771(4)(A) of the Act defines the ``industry'' as the

producers of a domestic like product. Thus, to determine whether the

petition has the requisite industry support, the statute directs the

Department to look to producers and workers who account for production

of the domestic like product. The International Trade Commission

(``ITC''), which is responsible for determining whether the domestic

industry has been injured, must also determine what constitutes a

domestic like product in order to define the industry. While both the

Department and the ITC must apply the same statutory provision

regarding the domestic like product (section 771(10) of the Act), they

do so for different purposes and pursuant to separate and distinct

authority. In addition, the Department's determination is subject to

limitations of time and information. Although this may result in

different definitions of the domestic like product, such differences do

not render the decision of either agency contrary to the law.\1\

Section 771(10) of the Act defines domestic like product as ``a product

which is like, or in the absence of like, most similar in

characteristics and uses with, the article subject to an investigation

under this title.'' Thus, the reference point from which the domestic

like product analysis begins is ``the article subject to an

investigation,'' i.e., the class or kind of merchandise to be

investigated, which normally will be the scope as defined in the

petition.

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\1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp.

639, 642-44 (CIT 1988); High Information Content Flat Panel Displays

and Display Glass Therefor from Japan; Final Determination;

Rescission of Investigation and Partial Dismissal of Petition, 56 FR

32376, 32380-81 (July 16, 1991).

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The domestic like product referred to in the petition is the single

domestic like product defined in the ``Scope of Investigation''

section, above. The Department has no basis on the record to find the

petition's definition of the domestic like product to be inaccurate.

The Department has, therefore, adopted the domestic like product

definition set forth in the petition. In this case, the petitioners

established industry support above the statutory requirement, as

detailed in a memorandum to the file dated January 23, 1998.

Accordingly, the Department determines that the petition is filed on

behalf of the domestic industry within the meaning of section 732(b)(1)

of the Act.

The Department received the following comments regarding industry

support. With respect to the petition on imports of mushrooms from

Chile, Nature's Farm Products (Chile) S.A. (``NFP Chile''), a foreign

exporter of the subject merchandise, filed a submission on January 22,

1998, which argued that the petitioners do not constitute a U.S.

industry. NFP Chile stated that the petitioners are not producers

because ``[f]ew of them even grow mushrooms which are the underlying

product that is the subject of the investigation.'' According to NFP

Chile, petitioners represent canners or packagers that cannot be

considered an industry. Instead, NFP Chile requests that the Department

poll members of the American Mushroom Institute to assess industry

support.

We disagree with NFP Chile that petitioners, that is, domestic

producers

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of preserved mushrooms, do not constitute an industry. As defined in

the scope of the petition, ``preserved mushrooms'' refer to mushrooms

that have been prepared or preserved by cleaning, blanching, and

sometimes slicing or cutting, which are then packed and heated in

various containers in a suitable liquid. Petition at 12. Therefore, the

proper focus of our industry support analysis lies with the producers

of preserved mushrooms, not the growers of mushrooms. We note that in

an earlier antidumping investigation, Canned Mushrooms form the

People's Republic of China, the petition was filed by a canner of

mushrooms, the Four ``H'' Company. 48 Fed. Reg. 45,445, (10/5/83). In

that investigation, the ITC concluded that the domestic industry was

comprised of ``the U.S. facilities engaged in canning mushrooms.''

Canned Mushrooms from the People's Republic of China, Inv. No. 731-TA-

115 (Prelim.), USITC Pub. 1324 at 3-4 (1982). As described in our

industry support memorandum, the Department confirmed with the ITC the

known universe of producers of preserved mushrooms. There is no basis

for polling an industry group (growers) which does not produce the

merchandise identified in the petition.

With respect to the petition on imports of preserved mushrooms from

India, on January 22, 1998, we received an expression of opposition

from Giorgio Foods Inc. (``Giorgio''), which is both a domestic

producer of the subject merchandise, as well as an importer of subject

merchandise from India. Because Giorgio is an importer of the subject

merchandise from India the Department has the authority to disregard

Giorgio's position, in accordance with section 732(c)(B)(ii) of the

Act. However, our analysis shows that the supporters of the petition

account for over 50 percent of production of the domestic producers who

have expressed an opinion even if Giorgio's position is not disregard.

See Memorandum to The File dated January 23, 1998, on Industry Support.

Export Price and Normal Value

The following are descriptions of the allegations of sales at less

than fair value upon which our decisions to initiate these

investigations are based. Should the need arise to use any of this

information in our preliminary or final determinations for purposes of

facts available under section 776 of the Act, we may re-examine the

information and revise the margin calculations, if appropriate.

Chile

The petitioners identified NFP Chile as the sole exporter and

producer of mushrooms from Chile. The petitioners based export price

(``EP'') on U.S. sales prices obtained by one of the petitioning

companies for the first sales to unaffiliated purchases, specifically,

sales made by Nature's Farm-USA to a customer in 1997. The petitioners

calculated a net U.S. price by subtracting import charges based upon

the official U.S. import statistics and import duties based on the 1997

import duty rate.

Pursuant to sections 773(a)(4) and 773(e) of the Act, the

petitioners based normal value (``NV'') for sales in Chile on

constructed value (``CV''). The petitioners claimed that there are

insufficient sales of the foreign like product in the home market to

form an adequate basis for comparison with EPs to the United States.

Pursuant to section 773(e) of the Act, CV consists of the cost of

materials, fabrication, other processing (i.e., cost of manufacturing

(``COM'')), selling, general, and administrative expenses (``SG&A''),

and packing. To calculate COM and SG&A, the petitioners relied on

market research and NFP Chile's corporate financial statements. The

petitioners also based packing information on market research.

Consistent with section 773(e)(2) of the Act, the petitioners also

added to CV an amount for profit. Because the petitioners claim that

NFP Chile has failed to realize a profit since 1990, the petitioners

relied upon the 1996 profit margin for Iansafrut S.A., a leading

Chilean fruit and vegetable producer, as a reasonable surrogate to

estimate a profit margin for NFP Chile's sales.

The estimated dumping margin in the petition, based on a comparison

between NFP Chile's U.S. price and the CV, is 83.30 percent.

India

The petitioners identified the following as exporters and producers

of mushrooms from India: Agro Dutch Foods, Ltd. (``Agro Dutch'');

Alpine Biotech Ltd. (``Alpine''); Mandeep Mushrooms Ltd. (``Mandeep'');

Pond's India Ltd. (``Pond's''); Saptarishi Agro Industries Ltd.

(``Saptarishi''); Transchem Ltd. (``Transchem''); Premier Mushroom

Farms (``Premier''); and Flex Foods Ltd. (``Flex Foods''). For export

price (``EP''), the petitioners used price quotes, as obtained from

their market research, and average unit prices derived from U.S.

Customs IM 146 statistical import data.

The petitioners adjusted these prices by subtracting amounts for

foreign inland freight and estimated international movement expenses,

U.S. merchandise processing fee, and U.S. harbor maintenance fee, as

appropriate. The movement expenses were based on information obtained

from the petitioners' market research and the difference between the

CIF import value and the Customs Import value reported in the official

1997 U.S. import statistics for January through September 1997.

With respect to NV, the petitioners provided calculations using

both home market prices and CV. In addition, the petitioners provided

information demonstrating reasonable grounds to believe or suspect that

sales of mushrooms in the home market were made at prices below the

cost of production (``COP''), within the meaning of section 773(b) of

the Act, and requested that the Department conduct a country-wide sales

below cost investigation. Therefore, pursuant to sections 773(a)(4) and

773(e) of the Act, the petitioners also based NV for sales in India on

CV.

As noted above, CV consists of COM, SG&A, and profit. The

petitioners calculated the direct portion of COM and packing based on

Indian costs obtained through their market research. To calculate the

indirect portion of COM, SG&A and CV profit, the petitioners relied on

financial statements of Indian producers of the subject merchandise, as

included in the petition.

Based on comparisons of EP to NV, the petitioners estimate margins

of 31.76 to 274.05 percent.

Indonesia

The petitioners identified five exporters and producers of

mushrooms: Dieng Djaya, PT (``Dieng Djaya''); Indo Evergreen Agro

Business Co., PT (``Indo Evergreen''); Surya Jaya Abadi Perkasa, PT

(``Surya Jaya''); Tuwuh Agung, PT (``Tuwuh Agung''); and Zeta Agro

Corporation (``Zeta''). The petitioners based EPs on U.S. price quotes

obtained from their market research, and average unit prices derived

from U.S. Customs IM 146 statistical import data. Where appropriate,

the petitioners subtracted foreign inland freight from the EP. As the

petitioners could not obtain freight expense data from Indonesia, they

applied a freight expense based on Indian data.

The petitioners based NV on home market prices quotes, as obtained

by their market research, and CV.

As noted above, CV consists of COM, SG&A, packing and profit. The

petitioners based their calculations for COM, SG&A and packing on

Indonesian costs obtained through their market

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research. Profit, net interest, and depreciation are based on public

information from a major Indonesian food processing company. The

petitioners made no adjustments to the home market price quote.

Comparison of NV and net EPs for sales of mushrooms from Indonesia

results in estimated dumping margins that range from 35.40 percent to

42.30 percent.

People's Republic to China

The petitioners identified 36 potential PRC exporters and producers

of mushrooms. The petitioners based EP on average Customs import values

and U.S. prices quotes obtained from industry contacts. From these

starting prices, the petitioners deducted international freight and

insurance fees, based on the difference between the CIF import value

and the Customs import value. The petitioners then subtracted U.S.

entry fees, U.S. merchandise processing fees and U.S. harbor

maintenance fees.

Because the PRC is considered a nonmarket economy (NME) country

under section 771(18) of the Act, the petitioners based NV on the

factors of production valued in a surrogate country, in accordance with

section 773(c)(3) of the Act. For the factors of production, the

petitioners used Indian consumption data for materials, labor, and

energy, based on data in the market research report for the companion

Indian petition and included in the public version of that petition.

Materials were valued based on Indian prices obtained from the

petitioner's market research. Labor was valued using the regression-

based wage rate for the PRC provided by the Department, in accordance

with 19 CFR 351.408(c)(3). Electricity was valued using the rate

published in the annual report of an Indian producer of the subject

merchandise. For factory overhead, SG&A and profit, the petitioners

applied rates derived from the public annual reports of several Indian

preserved mushroom producers. Packing factors were based on the Indian

market research report, and packing materials valued based on the

Indian market research. Packing labor was valued in the same manner as

direct labor.

Based on comparisons of EP to NV, the petitioners estimate dumping

margins from 85.38 percent to 198.63 percent.

Initiation of Cost Investigation

Pursuant to section 773(b) of the Act, the petitioners alleged that

sales in the home market of India were made at prices below the COP

and, accordingly, requested that the Department conduct a country-wide

sales below COP investigation in India. The Statement of Administrative

Action (``SAA''), submitted to the Congress in connection with the

interpretation and application of the Uruguay Round Agreements, states

that an allegation of sales below COP need not be specific to

individual exporters or producers. SAA, H.R. Doc. No. 316, 103d Cong.,

2d Sess., at 833 (1994). The SAA, at 833, states that ``Commerce will

consider allegations of below-cost sales in the aggregate for a foreign

country, just as Commerce currently considers allegations of sales at

less than fair value on a country-wide basis for purposes of initiating

an antidumping investigation.''

Further, the SAA provides that ``new section 773(b)(2)(A) retains

the current requirement that Commerce have `reasonable grounds to

believe or suspect' that below cost sales have occurred before

initiating such an investigation. `Reasonable grounds' exist when an

interested party provides specific factual information on costs and

prices, observed or constructed, indicating that sales in the foreign

market in question are at below-cost prices.'' Id. Based upon the

comparison of the adjusted prices from the petition of the foreign like

product in India to the COP calculated in the petition, we find

``reasonable grounds to believe or suspect'' that sales of these

foreign like products were made below their respective COP within the

meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the

Department is initiating the requested country-wide cost investigation

for India.

Fair Value Comparisons

Based on the data provided by the petitioners, there is reason to

believe that imports of mushrooms from Chile, India, Indonesia, and the

PRC are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

The petition alleges that the U.S. industry producing the domestic

like product is being materially injured, and is threatened with

material injury, by reason of the individual and cumulated imports of

the subject merchandise sold at less than NV. The allegations of injury

and causation are supported by relevant evidence including business

proprietary data from the petitioning firms, U.S. Customs import data

and a pricing report from an industry trade journal. The Department

assessed the allegations and supporting evidence regarding material

injury and causation and determined that these allegations are

sufficiently supported by accurate and adequate evidence and meet the

statutory requirements for initiation.

Initiation of Antidumping Investigations

We have examined the petition on mushrooms and have found that it

meets the requirements of section 732 of the Act. Therefore, we are

initiating antidumping duty investigations to determine whether imports

of mushrooms from Chile, India, Indonesia, and the PRC are being, or

are likely to be, sold in the United States at less than fair value.

Unless extended, we will make our preliminary determinations for the

antidumping duty investigations by June 15, 1998.

Distribution of Copies of the Petitions

In accordance with section 732(b)(3)(A) of the Act, a copy of the

public version of each petition has been provided to the

representatives of the governments of Chile, India, Indonesia, and the

PRC. We will attempt to provide a copy of the public version of each

petition to each exporter named in the petition (as appropriate).

International Trade Commission Notification

We have notified the ITC of our initiations, as required by section

732(d) of the Act.

Preliminary Determinations by the ITC

The ITC will determine by February 20, 1998, whether there is a

reasonable indication that imports of mushrooms from Chile, India,

Indonesia, and the PRC are causing material injury, or threatening to

cause material injury, to a U.S. industry. Negative ITC determinations

will result in the particular investigations being terminated;

otherwise, the investigations will proceed according to statutory and

regulatory time limits.

Dated: January 26, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-2478 Filed1-30-98; 8:45 am]

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