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

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URL: https://www.frixlaw.com/law-library/documents/fr%3A98-2478

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** February 2, 1998
- **Citation:** 63 FR 5360

## Text

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

[[Page 5362]]

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

[[Page 5363]]

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]
BILLING CODE 3510-DS-M

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-2478. Public record. Not legal advice.