Certain Pasta from Italy: Preliminary Results of New Shipper Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-818]

Certain Pasta from Italy: Preliminary Results of New Shipper

Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of new shipper antidumping duty

administrative review.

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EFFECTIVE DATE: October 6, 1998.

SUMMARY: In response to a request by CO.R.EX. S.r.l, the Department of

Commerce is conducting a new shipper administrative review of the

antidumping duty order on certain pasta from Italy. The review covers

sales during the period July 1, 1997 through December 31, 1997. We

preliminarily determine that CO.R.EX. S.r.l. did not sell subject

merchandise at less than normal value during the period of review.

Interested parties are invited to comment on these preliminary

results. Parties who do so are requested to submit, along with each

argument, (1) a statement of the issue, and (2) a brief summary of the

argument.

FOR FURTHER INFORMATION CONTACT: Constance Handley or John Brinkmann,

AD/CVD Enforcement, Group I, Office 2, Import Administration,

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

Street and Constitution Avenue, N.W., Washington, DC 20230; telephone:

(202) 482-0631, or 482-5288, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

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

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

Uruguay Round Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to the Department of Commerce's regulations

are to the regulations provided in 19 CFR Part 351, as published in the

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

Case History

The Department of Commerce (the Department) published the

antidumping duty order on certain pasta from Italy on July 24, 1996 (61

FR 38547). On January 16, 1998, CO.R.EX. S.r.l. (Corex) requested a new

shipper review pursuant to section 751(a)(2)(B) of the Act and 19 CFR

351.214.

On March 4, 1998, the Department published a notice of initiation

of the new shipper review of Corex (63 FR 10590). On July 16, 1998, the

Department published a notice postponing the preliminary results of

this review until September 30, 1998 (63 FR 38371).

[[Page 53642]]

Scope of the Review

Imports covered by this review are shipments of certain non-egg dry

pasta in packages of five pounds (or 2.27 kilograms) or less, whether

or not enriched or fortified or containing milk or other optional

ingredients such as chopped vegetables, vegetable purees, milk, gluten,

diastases, vitamins, coloring and flavorings, and up to two percent egg

white. The pasta covered by this scope is typically sold in the retail

market, in fiberboard or cardboard cartons or polyethylene or

polypropylene bags, of varying dimensions.

Excluded from the scope of this review are refrigerated, frozen, or

canned pastas, as well as all forms of egg pasta, with the exception of

non-egg dry pasta containing up to two percent egg white. Also excluded

are imports of organic pasta from Italy that are accompanied by the

appropriate certificate issued by the Instituto Mediterraneo Di

Certificazione, by Bioagricoop Scrl, or by QC&I International Services.

The merchandise subject to review is currently classifiable under

item 1902.19.20 of the Harmonized Tariff Schedule of the United States

(HTSUS). Although the HTSUS subheading is provided for convenience and

customs purposes, our written description of the scope is dispositive.

Period of Review

The review covers one Italian producer/exporter, Corex, and the

period July 1, 1997 through December 31, 1997.

Scope Rulings

On August 25, 1997, the Department issued a scope ruling that

multicolored pasta, imported in kitchen display bottles of decorative

glass that are sealed with cork or paraffin and bound with raffia, is

excluded from the scope of this proceeding. In addition, the Department

issued a scope ruling on July 30, 1998, that multipacks consisting of

six one-pound packages of pasta that are shrink wrapped into a single

package are within the scope of the antidumping duty and countervailing

duty orders. (See July 30, 1998 letter from Susan H. Kuhbach, Acting

Deputy Assistant Secretary for Import Administration to Barbara P.

Sidari, Vice President, Joseph A. Sidari Company, Inc.)

Treatment of Sales of Tolled Merchandise

Pursuant to section 351.401(h) of its regulations, the Department

will not consider a toller or subcontractor to be a manufacturer or

producer when the toller or subcontractor does not acquire ownership of

the finished products and does not control the relevant sales of the

subject merchandise and the foreign like product. In determining

whether a company that uses a subcontractor in a tolling arrangement is

a producer pursuant to 19 CFR 351.401(h), we examine all relevant facts

surrounding a tolling agreement.

Corex claims that under the tolling arrangement with its

unaffiliated subcontractor, Corex is the producer of the pasta at

issue. In support of this claim, Corex reports that it: (1) purchases

all of the inputs, (2) pays the subcontractor a processing fee, and (3)

maintains ownership at all times of the inputs as well as the final

product. Corex also notes that it conducts independent product testing

and marketing research. Further, Corex claims that it is solely

responsible for the marketing and sales of the product and any freight

arrangements and that there is no contact between the subcontractor and

Corex's customers. Based on this evidence, we preliminarily determine

that Corex is the producer of the tolled merchandise, and hence the

appropriate respondent.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all

products produced by the respondent, covered by the description in the

Scope of the Review section and sold in the comparison market during

the period of review (POR), to be foreign like products for the purpose

of determining appropriate product comparisons to U.S. sales. Where

there were no sales of identical merchandise in the comparison market

to compare to U.S. sales, we compared U.S. sales to the most similar

foreign like product on the basis of the characteristics listed in the

Department's antidumping questionnaire. In making the product

comparisons, we matched foreign like products based on the physical

characteristics reported by the respondent.

Comparisons to Normal Value

To determine whether sales of subject merchandise by the respondent

to the United States were made at less than normal value, we compared

export price (EP) to normal value (NV), as described in the ``Export

Price'' and ``Normal Value'' sections of this notice. In accordance

with section 777A(d)(2) of the Act, we calculated monthly weighted-

average prices for NV and compared these to individual U.S.

transactions.

Export Price

We calculated the price of United States sales based on EP, in

accordance with section 772(a) of the Act, because the subject

merchandise was sold to unaffiliated purchasers in the United States

prior to the date of importation and the constructed export price

methodology was not indicated by the facts of record.

We calculated EP based on packed prices to unaffiliated customers

in the United States. Where appropriate, we made deductions from the

starting price for movement expenses, which included export customs

duties and container loading fee.

Normal Value

Corex reported no home market sales during the POR. Therefore, in

accordance with section 773(a)(1)(B)(ii) of the Act, we have based NV

on the price at which the foreign like product was first sold for

consumption in the respondent's largest third-country market,

Australia, which had an aggregate sales quantity greater than 5 percent

of the aggregate quantity sold in the United States.

We made adjustments to NV for differences in packing in accordance

with sections 773(a)(6)(A) and (B)(i) of the Act, and we deducted

movement expenses consistent with section 773(a)(6)(B)(ii) of the Act.

In addition, where applicable, we made adjustments for differences in

cost attributable to differences in physical characteristics of the

merchandise pursuant to section 773(a)(6)(C)(ii) of the Act, as well as

for differences in circumstances of sale (COS) in accordance with

section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410.

As set forth in section 773(a)(1)(B)(i) of the Act and in the

Statement of Administrative Action (SAA) accompanying the Uruguay Round

Agreements Act, H.R. Doc. 316, Vol. 1, 103d Cong., at 829-831 (1994),

to the extent practicable, the Department will calculate NV based on

sales at the same level of trade (LOT) as the U.S. sales. We examined

information on the selling activities associated with each channel of

trade in each of Corex's markets. Corex's Australian sales were all FOB

Naples and its U.S. sales were ex-factory. Given that the only

differences in selling activities between the two markets was the

provision of freight services to the port for Australian sales, we

determined that there was a single LOT in each market and that these

LOTs were comparable.

[[Page 53643]]

Currency Conversion

For purposes of the preliminary results, we made currency

conversions based on the official exchange rates in effect on the dates

of the U.S. sales as certified by the Federal Reserve Bank of New York.

Section 773A(a) of the Act directs the Department to use a daily

exchange rate in order to convert foreign currencies into U.S. dollars,

unless the daily rate involves a ``fluctuation.'' In accordance with

the Department's practice, we have determined that a fluctuation exists

when the daily exchange rate differs from a benchmark by 2.25 percent.

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

Results of Antidumping Duty Administrative Review (61 FR 8915, 8918,

March 6, 1996). The benchmark is defined as the rolling average of

rates for the past 40 business days. When we determined a fluctuation

existed, we substituted the benchmark for the daily rate.

Use of a Combination Rate

19 CFR 351.107 states that in the case of subject merchandise that

is exported to the United States by a company that is not the producer

of the merchandise, the Department ``may establish a combination cash

deposit rate for each combination of exporter and its supplying

producer(s).'' Although Corex, not its toller, is considered to be the

producer within the meaning of 19 CFR 351.401(h), Corex's primary

business is not that of a producer of the subject merchandise but

rather it is a trading company, which buys and resells many types of

food products. In the future, Corex may buy and resell pasta to the

United States that is sourced from other manufacturers. In these cases,

Corex would not be considered the producer of the subject merchandise

and the rate assigned to Corex as a producer of tolled merchandise

should not apply. As stated in the preamble to 19 CFR 351.107,

``Establishing a deposit rate for an exporter and, without regard to

the identity of the supplier, applying that rate to all future exports

by that exporter could lead to the application of that rate even if

other suppliers sold to the exporter with knowledge of exportation to

the United States. This would enable a producer with a relatively high

deposit rate to avoid the application of its own rate by selling to the

United States through an exporter with a low rate.'' See 62 FR 27303.

Therefore, in view of Corex's primary business as a reseller, the rate

determined in this review will be applicable only to subject

merchandise produced and exported by Corex. Because it would be

difficult for the Customs Service to distinguish between merchandise

produced by Corex, and that which is simply being resold by Corex as a

trading company, the strong possibility for circumvention exists in

this situation. Accordingly, any entries of merchandise exported and

produced by Corex must identify Corex as the producer in order that the

deposit rate established in this review will apply. If Corex is not the

producer, the deposit rate will be the rate for the identified

producer. Otherwise, the ``all others'' rate will apply.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that the

weighted-average dumping margin for Corex is 0.00 percent.

Parties to this proceeding may request disclosure within five days

of publication of this notice and any interested party may request a

hearing within 30 days of publication. Any hearing, if requested, will

be held 44 days after the date of publication, or the first working day

thereafter. Interested parties may submit case briefs and/or written

comments no later than 30 days after the date of publication. Rebuttal

briefs and rebuttals to written comments, limited to issues raised in

such briefs or comments, may be filed no later than 37 days after the

date of publication of this notice. The Department will publish a

notice of the final results of the administrative review, including its

analysis of issues raised in any written comments or at a hearing, not

later than 90 days after the date of publication of this notice.

Cash Deposit

The following cash deposit requirements will be effective upon

publication of the final results of this administrative review for all

shipments of the subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the publication date, as

provided for by section 751(a)(1) of the Act. The cash deposit rate for

Corex will be the rate established in the final results of this

administrative review (except that no deposit will be required for

firms with zero or de minimis margins, i.e., margins lower than 0.5

percent).

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 351.402(f)(2) to file a certificate

regarding the reimbursement of antidumping duties prior to liquidation

of the relevant entries during this review period. Failure to comply

with this requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This determination is issued and published in accordance with

sections 751(a)(1) and 777(i)(1) of the Act.

Dated: September 30, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-26779 Filed 10-5-98; 8:45 am]

BILLING CODE 3510-DS-P