Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Non-Frozen Apple Juice Concentrate From the People's Republic of China

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-855]

Notice of Preliminary Determination of Sales at Less Than Fair

Value: Certain Non-Frozen Apple Juice Concentrate From the People's

Republic of China

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 23, 1999.

FOR FURTHER INFORMATION CONTACT: Sally Hastings, Craig Matney, Annika

O'Hara or Vincent Kane, Import Administration, International Trade

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

Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)

482-3454, (202) 482-1778, (202) 482-3798, or (202) 482-2815,

respectively.

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 of Commerce

(``Department'') regulations are to the regulations at 19 CFR part 351

(April 1, 1998).

Preliminary Determination

We preliminarily determine that certain non-frozen apple juice

concentrate (``NFAJC'') from the People's Republic of China (``PRC'')

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

fair value

[[Page 65676]]

(``LTFV''), as provided in section 733 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 on July 6, 1999 (64 FR

36330), the following events have occurred:

On July 22, 1999, the United States International Trade Commission

(``ITC'') notified the Department of its affirmative preliminary injury

determination in this case.

On June 11, and July 14, 1999, we received entries of appearance by

counsel on behalf of 12 producers/exporters of the subject merchandise:

Yantai North Andre Juice Co., Ltd. (North Andre); Shaanxi Haisheng

Fresh Fruit Juice Co., Ltd. (Haisheng); Sanmenxia Lakeside Fruit Juice

Co., Ltd. (Lakeside); Shandong Zhonglu Juice Group Co., Ltd. (Zhonglu);

Yantai Oriental Juice Co., Ltd. (Oriental); Qingdao Nannan Foods Co.,

Ltd. (Nannan); Xianyang Fuan Juice Co., Ltd. (Fuan); Xian Asia Qin

Fruit Co., Ltd. (Asia Fruit); Shaanxi Machinery & Equipment Import &

Export Corporation (SAAME); Shaanxi Foreign Economic & Trade

Development Corporation (SFETDC); Changsha Industrial Products &

Minerals Import & Export Corporation (Changsha); and Shandong

Foodstuffs Imports & Export Corporation (Shandong Foodstuffs).

In response to a request from the Department, on July 22, 1999, the

12 producers/exporters listed above provided company-specific volumes

of exports of the subject merchandise to the United States for the

period October 1, 1998 through March 31, 1999. On July 27 and 29, 1999,

the Department sent letters to the Chinese Chamber of Commerce for the

Import and Export of Foodstsuffs, Native produce and Animal By-Products

(``China Chamber''), with copies to the Ministry of Foreign Trade and

Economic Cooperation (``MOFTEC'') and the Embassy of the PRC in

Washington, DC, requesting: (1) the total quantity of NFAJC exported to

the United States by the PRC during the POI; (2) the names of all

companies (other than the 12 already identified) that exported NFAJC to

the United States during the POI and the quantity that each exported;

and (3) for those exporters which are not also the producers, the names

of the producers that supply them. On August 11, 1999, the China

Chamber provided total PRC NFAJC exports to the United States for the

October 1998 through March 1999 period and the requested company-

specific export and contact information for 18 additional exporters.

Given the large number of exporters involved, we determined it

necessary to limit the number of respondents in this investigation to

the five largest producers/exporters based on their volumes of exports

to the United States (see August 17, 1998, Decision Memorandum to the

Acting Deputy Assistant Secretary, Import Administration). We selected

the following five companies as mandatory respondents: North Andre;

Haisheng; Oriental; Nannan; and SAAME. On August 17, 1999, the

Department issued the full antidumping questionnaire to these five

producers/exporters. On August 18, 1999, we issued a questionnaire

concerning quantity and value of sales of NFAJC, and company structure,

ownership, and affiliations (``separate rates questionnaire'') to the

remaining identified producers/exporters through their counsel or

through the China Chamber (with copies to MOFTEC and the Embassy of the

PRC), and requested that they assist in distributing it to all

exporters who might request separate rates (see PRC-Wide Rate section

below). On August 18, 1999, Lakeside and Zhonglu requested that they be

allowed to participate as voluntary respondents in this investigation.

On September 9, 1999, we accepted Lakeside and Zhonglu as voluntary

respondents because both companies were suppliers of a mandatory

respondent and were, therefore, already required to participate in this

investigation. Counsel withdrew its appearance on behalf of SFETDC on

August 23, 1999.

On September 15, 1999, the Department invited interested parties to

comment on surrogate country selection and to provide publicly

available information for valuing the factors of production. We

received responses from both the petitioners and the respondents on

September 27, 1999. Respondents and petitioners filed rebuttal comments

on surrogate values on October 4 and 6, 1999, respectively.

On September 21 and October 5, 1999, the Department received

sections A, C, and D questionnaire responses from the five mandatory

and the two voluntary respondents: North Andre; Haisheng; Oriental;

Nannan; SAAME; Lakeside; and Zhonglu. Fuan, Asia Fruit, Changsha, and

Shandong Foodstuffs provided responses to the separate rates

questionnaire on September 21, 1999. We issued supplemental

questionnaires to respondents in October and received supplemental

responses in October and November 1999. Between October 14 and 20,

1999, we received comments on the responses from the petitioners.

Critical Circumstances

On September 7, 1999, pursuant to the allegation of critical

circumstances contained in the petition, the Department requested

information regarding shipments of NFAJC from the seven respondents

participating in this investigation. Each respondent provided the

requested information on October 5, 1999. On November 3, 1999, the

Department issued its preliminary determination that critical

circumstances exist with respect to SAAME, Lakeside, Haisheng, North

Andre, Nannan, and for all other exporters covered by this

investigation. We found that critical circumstances do not exist with

respect to Oriental and Zhonglu. For a complete discussion of our

analysis, see Memorandum to Deputy Assistant Secretary Richard W.

Moreland, dated November 3, 1999, on file in Room B-099 of the

Department's headquarters and the Preliminary Determination of Critical

Circumstances: Certain Non-Frozen Apple Juice Concentrate from the

People's Republic of China, 64 FR 61835 (November 15, 1999).

Scope of Investigation

For purposes of this investigation, the product covered by the

scope is all non-frozen concentrated apple juice with a Brix scale of

40 or greater, whether or not containing added sugar or other

sweetening matter, and whether or not fortified with vitamins or

minerals. Excluded from the scope of this investigation are: frozen

concentrated apple juice; non-frozen concentrated apple juice that has

been fermented; and non-frozen concentrated apple juice to which

spirits have been added.

The petitioners originally excluded from the scope of this

investigation NFAJC fortified with vitamins or minerals. However, on

September 24, 1999, the petitioners requested that the Department

expand the scope to include NFAJC fortified with vitamins or minerals.

The petitioners made this request based on their concern that

circumvention might occur if NFAJC with vitamins and minerals were

excluded from the scope of the investigation. To substantiate this

claim, they provided an affidavit attesting to the fact that a buyer/

seller of Chinese NFAJC had been told that Chinese exporters were

considering the possibility of fortifying NFAJC with vitamins or

minerals as one way to avoid the payment of antidumping duties.

[[Page 65677]]

On September 28, 1999, the respondents objected to the inclusion of

NFAJC with vitamins and minerals stating that the ITC's preliminary

determination was made with respect to NFAJC that did not include added

vitamins and minerals. The respondents also cited to the antidumping

and countervailing duty investigations of pasta from Turkey and Italy

(``Pasta''), where the Department chose to retain the original scope

rather than expand it at the request of the petitioners to include

pasta in packages of more than five pounds. (See, Memorandum to Susan

G. Esserman, Assistant Secretary for Import Administration from Barbara

Stafford, Deputy Assistant Secretary for Investigations, dated October

10, 1995, entitled ``Antidumping and Countervailing Duty Investigations

of Pasta from Italy and Turkey--Scope Issue'')

In this case, we have preliminarily determined to include NFAJC

with vitamins and minerals for the following reasons. First, the

petitioners have provided evidence that circumvention may occur unless

the scope is expanded. Second, the ITC will have the opportunity to

examine this issue in its final determination (if necessary). Finally,

the courts have given the Department discretion in defining the scope.

``* * * the Department may fashion the scope of an order so as to

prevent circumvention by parties in the future ``employing inventive

import strategies.''' (NTN Bearing Corp. of America v. United States,

747 F. Supp. 726, 731 (CIT 1990). Although we have preliminarily

included NFAJC with vitamins and minerals in the scope of this

investigation, we will continue to investigate this matter for our

final determination.

The merchandise subject to this investigation is classified in the

Harmonized Tariff Schedule of the United States (``HTSUS'') at

subheading 2009.70.20. Although the HTSUS subheading is provided for

convenience and customs purposes, the written description of the

merchandise under investigation is dispositive.

Period of Investigation

The period of this investigation (``POI'') corresponds to the

exporters' two most recent fiscal quarters prior to the filing of the

petition, i.e., October 1, 1998 through March 31, 1999.

Nonmarket Economy Country and Market Oriented Industry Status

The Department has treated the PRC as a nonmarket economy (``NME'')

country in all past antidumping investigations (see, e.g., Final

Determination of Sales at Less Than Fair Value: Certain Preserved

Mushrooms from the People's Republic of China, 63 FR 72255 (December

31, 1998) (``Mushrooms'')). A designation as an NME remains in effect

until it is revoked by the Department (see section 771(18)(C) of the

Act).

The respondents in this investigation have not requested a

revocation of the PRC's NME status. We have, therefore, preliminarily

determined to continue to treat the PRC as an NME.

Separate Rates

All of the respondents have provided the requested company-specific

separate rates information and have stated that for each company, there

is no element of government ownership or control.

The Department's separate rate test is not concerned, in general,

with macroeconomic/border-type controls, e.g., export licenses, quotas,

and minimum export prices, particularly if these controls are imposed

to prevent dumping. The test focuses, rather, on controls over the

investment, pricing, and output decision-making process at the

individual firm level. See Certain Cut-to-Length Carbon Steel Plate

from Ukraine: Final Determination of Sales at Less than Fair Value, 62

FR 61754, 61757 (November 19, 1997); Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished, from the People's Republic of China:

Final Results of Antidumping Duty Administrative Review, 62 FR 61276,

61279 (November 17, 1997); and Honey from the People's Republic of

China: Preliminary Determination of Sales at Less than Fair Value, 60

FR 14725, 14726 (March 20, 1995) (``Honey'').

To establish whether a firm is sufficiently independent from

government control to be entitled to a separate rate, the Department

analyzes each exporting entity under a test arising out of the Final

Determination of Sales at Less Than Fair Value: Sparklers from the

People's Republic of China, 56 FR 20588 (May 6, 1991), as modified by

Final Determination of Sales at Less Than Fair Value: Silicon Carbide

from the People's Republic of China (59 FR 22585, May 2, 1994). Under

the separate rates criteria, the Department assigns separate rates in

NME cases only if the respondents can demonstrate the absence of both

de jure and de facto governmental control over export activities.

1. Absence of De Jure Control

The respondents have placed on the record a number of documents to

demonstrate absence of de jure government control, including the

``Foreign Trade Law of the People's Republic of China'' (``Foreign

Trade Law''), the ``Law of the People's Republic of China on Industrial

Enterprises Owned by the Whole People'' (``Industrial Enterprises

Law''), the ``Law of the People's Republic of China on Chinese-Foreign

Cooperative Joint Ventures' (``Joint Ventures Law''), and the

``Administrative Regulations of the People's Republic of China

Governing the Registration of Legal Corporations.''

In prior cases, the Department has analyzed the Foreign Trade Law

and found that it establishes an absence of de jure control. (See,

e.g., Final Determination of Sales at Less Than Fair Value: Certain

Partial-Extension Steel Drawer Slides with Rollers from the People's

Republic of China, 60 FR 54472 (October 24, 1995); see also Mushrooms.)

We have no new information in this proceeding which would cause us to

reconsider this determination. For the purposes of this investigation

and in prior cases, the Department has also analyzed the Industrial

Enterprises Law and found that this law establishes mechanisms for

private control of companies which indicate an absence of de jure

control. See Pure Magnesium from the People's Republic off China: Final

Results of New Shipper Review, 63 FR 3085, 3086 (January 21, 1998).

According to the respondents, NFAJC exports are not affected by

quota allocations or export license requirements. The producers/

exporters claim to have the autonomy to set the price at whatever level

they wish through independent price negotiations with their foreign

customers without government interference.

Accordingly, we preliminarily determine that there is an absence of

de jure government control over export pricing and marketing decisions

of the respondents.

2. Absence of De Facto Control

As stated in previous cases, there is some evidence that certain

enactments of the PRC central government have not been implemented

uniformly among different sectors and/or jurisdictions in the PRC. (See

Mushrooms.) Therefore, the Department has determined that an analysis

of de facto control is critical in determining whether respondents are,

in fact, subject to a degree of governmental control which would

preclude the Department from assigning separate rates.

The Department typically considers four factors in evaluating

whether each respondent is subject to de facto governmental control of

its export

[[Page 65678]]

functions: (1) Whether the export prices are set by, or subject to the

approval of, a governmental authority; (2) whether the respondent has

authority to negotiate and sign contracts and other agreements; (3)

whether the respondent has autonomy from the government in making

decisions regarding the selection of its management; and (4) whether

the respondent retains the proceeds of its export sales and makes

independent decisions regarding disposition of profits or financing of

losses (see Mushrooms).

Each of the 11 respondents in this investigation has asserted the

following: (1) It establishes its own export prices; (2) it negotiates

contracts without guidance from any governmental entities or

organizations; (3) it makes its own personnel decisions; and (4) it

retains the proceeds from export sales and uses profits according to

its business needs without any restrictions. Additionally, these 11

respondents have stated that they do not coordinate or consult with

other exporters regarding their pricing. This information supports a

preliminary finding that there is an absence of de facto governmental

control of the export functions of these companies. Consequently, we

preliminarily determine that all responding exporters have met the

criteria for the application of separate rates.

Antidumping Deposit Rate for Those Producers/Exporters That Responded

Only to the Separate Rates Questionnaire

For those PRC producers/exporters that responded to our separate

rates questionnaire but did not respond to the full antidumping

questionnaire (because they were not selected to respond or because

they did not submit a voluntary response), we have calculated a

weighted-average margin based on the rates calculated for those

producers/exporters that were selected to respond, except that we did

not include the rate for North Andre which was zero. (See, e.g., Notice

of Final Determination of Sales at Less Than Fair Value: Bicycles from

the People's Republic of China, 61 FR 19026 (April 30, 1996)

(``Bicycles from the PRC'')).

PRC-Wide Rate

Information on the record of this investigation indicates that

there are numerous producers/exporters of the subject merchandise in

the PRC. As noted in the case history section above, all exporters were

given the opportunity to respond to the separate rates questionnaire.

Based upon our knowledge of PRC exporters and the fact that U.S. import

statistics show that responding companies did not account for all

imports into the United States from the PRC, we have preliminarily

determined that PRC exporters of NFAJC failed to respond to our

questionnaire.

Section 776(a)(2) of the Act provides that ``if an interested party

or any other person--(A) withholds information that has been requested

by the administering authority or the Commission under this title, (B)

fails to provide such information by the deadlines for submission of

the information or in the form and manner requested, subject to

subsections (c)(1) and (e) of section 782, (C) significantly impedes a

proceeding under this title, or (D) provides such information but the

information cannot be verified as provided in section 782(i), the

administering authority and the Commission shall, subject to section

782(d), use the facts otherwise available in reaching the applicable

determination under this title.''

Section 776(b) of the Act further provides that adverse inferences

may be used when a party has failed to cooperate by not acting to the

best of its ability to comply with a request for information. The

producers/exporters that decided not to respond to the separate rates

questionnaire failed to act to the best of their ability in this

investigation. Absent a response, we must presume government control of

these companies (see, e.g., Bicycles from the PRC). Moreover, the

Department has determined that, in selecting from among the facts

otherwise available, an adverse inference is warranted.

In accordance with our standard practice, as adverse facts

available, we are assigning to those companies that did not respond to

the Department's separate rates questionnaire the higher of: (1) The

highest margin stated in the notice of initiation; or (2) the highest

margin calculated for any respondent in this investigation (see, e.g.,

Notice of Final Determination of Sales at Less Than Fair Value:

Stainless Steel Wire Rod from Japan, 63 FR 40434 (July 29, 1998)). In

this case, the adverse facts available margin is 54.55 percent, which

is the highest margin calculated for a respondent in this investigation

(Lakeside).

Section 776(c) of the Act provides that where the Department

selects from among the facts otherwise available and relies on

``secondary information,'' such as the petition, the Department shall,

to the extent practicable, corroborate that information from

independent sources reasonably at the Department's disposal. The

Statement of Administrative Action accompanying the URAA, H.R. Doc. No.

103-316 (1994) (SAA), states that ``corroborate'' means to determine

that the information used has probative value. See SAA at 870.

To corroborate secondary information, the Department will, to the

extent practicable, examine the reliability and relevance of the

information to be used. In an investigation, if the Department chooses

as facts available a calculated dumping margin of another respondent,

it is not necessary to question the reliability of that calculated

margin. With respect to relevance, however, the Department will

consider information reasonably at its disposal as to whether there are

circumstances that would render a margin not relevant. Where

circumstances indicate that the selected margin may not be appropriate,

the Department will attempt to find a more appropriate basis for facts

available (see, e.g., Fresh Cut Flowers from Mexico; Final Results of

Antidumping Duty Administrative Review, 61 FR 6812, 6814 (February 22,

1996) (where the Department disregarded the highest margin as adverse

best information available because the margin was based on another

company's uncharacteristic business expense resulting in an unusually

high margin)). In this investigation, there is no indication that the

highest calculated margin is unreliable or irrelevant and, hence,

inappropriate to use as adverse facts available. Thus, the Department

has preliminarily determined the PRC-wide rate to be 54.55 percent.

Fair Value Comparisons

To determine whether sales of the subject merchandise by North

Andre, Haisheng, Lakeside, Zhonglu, Oriental, Nannan and SAAME for

export to or within the United States were made at LTFV, we compared

the EP or the CEP, as appropriate, to the NV, as described in the

``Export Price,'' ``Constructed Export Price'' and ``Normal Value''

sections of this notice, below. In accordance with section

777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-average EPs

and CEPs to the NVs.

Export Price

For North Andre, Haisheng, Lakeside, Zhonglu, Nannan and SAAME, we

used EP methodology in accordance with section 772(a) of the Act

because the subject merchandise was sold directly to unaffiliated

customers in the United States prior to importation and CEP methodology

was not otherwise appropriate. We calculated EP based on packed CIF,

C&F, FOB or delivered prices to the first unaffiliated purchaser in the

United States. Where appropriate,

[[Page 65679]]

we made deductions from the starting price (gross unit price) for

billing adjustments, inland freight from the plant/warehouse to the

port of export, marine insurance, ocean freight, U.S. duty, U.S.

brokerage and handling, and U.S. inland freight. Because certain

domestic inland freight expenses, ocean freight and marine insurance

were paid in RMB, we based these charges on surrogate rates from India.

(See ``Normal Value'' section for further discussion.)

Constructed Export Price

For certain sales by Haisheng and all sales by Oriental, we used

CEP methodology in accordance with sections 772(b), (c) and (d) of the

Act, because sales to the first unaffiliated purchaser in the United

States took place after importation. For these companies, we calculated

CEP based on ex-dock, ex-warehouse, CIF or delivered prices to

unaffiliated purchasers in the United States. Where appropriate, we

made deductions for billing adjustments, inland freight in the PRC,

ocean freight, marine insurance, U.S. duty, U.S. inland freight, and

U.S. warehousing. Also, where appropriate, we deducted direct and

indirect selling expenses related to commercial activity in the United

States. Pursuant to section 772(d)(3) of the Act, where applicable, we

made an adjustment for CEP profit. We did not adjust for CEP profit for

Oriental because Oriental's U.S. sales were consignment sales made

through unaffiliated consignment agents. For these sales, we deducted

the commission paid to the consignee.

Normal Value

Surrogate Country

Section 773(c)(4) of the Act requires the Department to value the

NME producer's factors of production, to the extent possible, in one or

more market economy countries that: (1) Are at a level of economic

development comparable to that of the NME, and (2) are significant

producers of comparable merchandise. Regarding the first criterion, the

Department has determined that India, Pakistan, Sri Lanka, Egypt,

Indonesia, and the Philippines are countries comparable to the PRC in

terms of overall economic development (see memorandum from Jeff May,

Director, Office of Policy, to Susan Kuhbach, Senior Director, AD/CVD

Enforcement, Office 1, September 15, 1999) (``Surrogate Memorandum'')).

Regarding the second criterion (related to significant production

of comparable merchandise), the petitioners have alleged that India is

a significant producer of apples, at least among the countries at a

comparable level of economic development to the PRC. Moreover, the

petitioners claim, since there is little use for low quality apples

except to make NFAJC, most countries that produce apples also produce

NFAJC.

The respondents have argued that none of the countries found by the

Department to be economically comparable to the PRC is a significant

producer of NFAJC. Therefore, instead of relying on one of those

countries, the respondents urge the Department to use Turkey, a country

which they claim is a major producer of NFAJC, as the surrogate. Of the

countries that are significant producers of NFAJC, according to the

respondents, Turkey is closest to the PRC in terms of economic

development. In addition to the fact that Turkey is a significant

producer of comparable merchandise, the respondents also argue that the

Department has publicly available information on many key factor values

in Turkey. This is in contrast to India, where much of the factor value

data submitted by the petitioners is proprietary.

Regarding the petitioners' argument that India should be used as

the surrogate country, the respondents disagree, claiming that the

major input into NFAJC (juice apples) is subsidized. The respondents

point to the Department's Surrogate Memorandum which, in naming the

economically comparable countries that could be used as surrogates,

states ``we know of no direct subsidies on the production or sale of

any input used in the production of the subject merchandise * * *'' To

the contrary, the respondents claim, India subsidizes its apple

producers through a price support scheme known as the Market

Intervention Scheme (``MIS''). Thus, even if India's level of apple

production led the Department to view India as a significant producer

of comparable merchandise, India should not be used because the key

input into NFAJC in India is subsidized.

For purposes of the preliminary determination, we have used India

as our surrogate. First, we note that India is economically comparable

to the PRC, while Turkey is not. Second, we have been able to develop

publicly available factor values in India without relying on

proprietary information submitted by the petitioners.

The surrogate country memorandum language to which the respondents

cite concerns the Department's reluctance to use factor prices that may

not, in some sense, reflect ``fair market value.'' The meaning of

``fair market value'' in this context is necessarily broad, and

certainly not limited to the price prevailing in a perfectly

competitive, distortion-free market, since markets the world over,

particularly agricultural markets, are distorted by any number of

government measures and policies such as taxes, tariffs and price/

income support schemes. The concept of ``fair market value'' in this

context is not so broad, however, that it covers all government market

interventions, and the Department therefore ``draws a line'' with

government subsidies that tend to enable producers to lower their price

to the point where they (the prices) may not reflect fair market value.

In such cases, the Department considers alternative factor price data.

There is, however, no need to do so in this case for two reasons: (1)

The MIS is a price support scheme, similar to those employed in many

agricultural product markets around the world; and (2) as such, the MIS

does not raise the fair market value concerns discussed above.

Although we have used India as the surrogate for this preliminary

determination, we are considering this matter further for the final

determination. First, we note the respondents' claim that juice apples

are not internationally traded inputs. According to the respondents,

the freight costs of transporting juice apples would be greater than

the value of the apples themselves. Such a situation may lead the

Department to place greater emphasis on the significant producer

criterion that on the economically comparable criterion in making its

surrogate selection. (See, Preamble to Sec. 351.408 of the Department's

Proposed Rule, 61 FR 7308, 7344, February 27, 1996) Second, although

the respondents have claimed that Turkey should be considered a

significant producer of NFAJC, the information they have submitted in

support of this claim is limited. The petitioners' information

regarding production of NFAJC is also lacking. We acknowledge that the

Department, itself, has had difficulty in developing this information.

However, better information on NFAJC production would be useful. Third,

key factor values from India are lacking in several respects. As

discussed further below, we have used a juice apple price taken from

the annual report of a single apple juice producer. However, we prefer

to use input prices that reflect the actions of many buyers and

sellers. (See, Preamble to Sec. 351.408 of the Department's

Regulations, 62 FR 27296, 27366) Finally, we have relied on broadly

aggregated data for factory overhead, SG&A, and profit. We would

prefer, instead, to use data from producers of

[[Page 65680]]

identical or comparable merchandise in the surrogate country. (See,

Sec. 351.408(c)(4)) While the petitioners have placed information on

the record regarding an Indian producer of apple juice, that

information is proprietary and, hence, its use would be contrary to our

policy of relying on publicly available data, where possible. (See,

Sec. 351.408(c)(1)).

We invite parties to address these issues for the final

determination.

2. Factors of Production

In accordance with section 773(c) of the Act, we calculated NV

based on factors of production reported by the companies in the PRC

which either produced and exported NFAJC to the United States or

produced NFAJC for exporters that exported NFAJC to the United States

during the POI. To calculate NV, the reported unit factor quantities

were multiplied by publicly available Indian values, except as noted

below.

In selecting the surrogate values, we considered the quality,

specificity, and contemporaneity of the data. For those values not

contemporaneous with the POI and quoted in a foreign currency, we

adjusted for inflation using wholesale price indices published in the

International Monetary Fund's International Financial Statistics.

As appropriate, we adjusted input prices to make them delivered

prices. Where a producer did not report the distance between the

material supplier and the factory, we used, as facts available, either

the distance to the nearest seaport (if an import value was used as the

surrogate value for the factor) or the farthest distance reported for a

supplier. Where distances were reported and the surrogate value was

based on Indian import statistics, we added to the surrogate value a

surrogate freight cost using the shorter of the reported distances from

either the closest PRC port to the PRC factory, or from the domestic

supplier to the factory. This adjustment is in accordance with the

CAFC's decision in Sigma Corp. v. United States, 117 F. 3d 1401

(Fed.Cir. 1997).

For a detailed analysis of surrogate values, see the ``Factors of

Production'' Memorandum from the Team to the file (FOP memo) dated

November 8, 1999.

Juice Apples: We valued apples using the price paid by Himachal

Pradesh Horticultural Produce Marketing and Processing Corporation, as

reported in the introduction to that company's 1998-99 financial

statement. Because that value is contemporaneous with the POI, no

adjustment was necessary.

Processing Agents: We valued all of the processing agents, except

for one (PVPP), using Indian import statistics for the period April

1997 through March 1998. PVPP was not reported in the Indian import

statistics. For that processing agent, we used an October 1999 price

quote from a U.S. chemical company.

Labor: We valued labor using the method described in 19 CFR

351.408(c)(3).

Electricity and Coal: To value electricity, we used the 1995

electricity rates reported in the publication Energy Prices and Taxes,

4th quarter 1998. We based the value of coal on Indian import

statistics.

Factory Overhead, SG&A, and Profit: We derived ratios for factory

overhead, SGA, and profit, using 1992-93 data from the ``Expenditures

and Appropriations'' category of the accounts of ``Processing and

Manufacture--Foodstuffs, Textiles, Tobacco, Leather and Products

Thereof'' from the Reserve Bank of India Bulletin, January 1997.

Packing Materials: We calculated values for plastic bags, plastic

liners , and labels using Indian import statistics from the period

April 1997-March 1998. We converted values from a per kilogram to a per

piece basis where necessary. For steel drums, we could not find a

reliable Indian value. Therefore, we used a 1994 Indonesian price.

Inland Freight Rates: To value truck freight rates, we used a 1994

rate from The Times of India inflated to be contemporaneous with the

POI. With regard to rail freight, we based our calculation on

information from the Indian Railway Conference Association. We

calculated an average per kilometer per metric ton rate.

International Freight: We used a 1996 price quote from a U.S.

shipping company. Where the PRC producer/exporter used a market economy

shipper and paid for the shipping in a market economy currency, we

calculated an average price for shipping paid by that producer/

exporter.

Marine Insurance: We used a June 1998 prices quote from a U.S.

insurance provider.

By-products: Certain respondents reported by-products resulting

from production of the subject merchandise. For those respondents that

reported their production of apple essence/aroma, we have offset the

cost of materials with a by-product credit. The value for apple

essence/aroma was calculated as a simple average of the various prices

reported at the July 1999 ITC hearing and November 1999 price quotes

provided to the Department by two U.S. brokers of food products.

Certain respondents claimed proprietary treatment for other by-

products. Since we lacked surrogate values for these other by-products,

we have not adjusted for them in this preliminary determination.

Verification

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

information relied upon in making our final determination.

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, we are directing

the Customs Service to suspend liquidation of all imports of subject

merchandise from the PRC entered, or withdrawn from warehouse, for

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

Federal Register, except for imports from North Andre whose antidumping

margin is zero. In addition, for all exporters except Oriental and

Zhonglu, we are directing Customs to suspend liquidation of any

unliquidated entries of subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the date, which is 90 days prior

to the date on which this notice is published 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 EP or CEP, as appropriate, as indicated in the chart below.

These suspension of liquidation instructions will remain in effect

until further notice.

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

Weighted-

Exporter/manufacturer average margin Critical

percentage circumstances

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

Yantai North Andre Juice Co., Ltd 0.00 Yes.

Shaanxi Haisheng Fresh Fruit 18.58 Yes.

Juice Co., Ltd.

Sanmenxia Lakeside Fruit Juice 54.55 Yes.

Co., Ltd.

[[Page 65681]]

Shandong Zhonglu Co., Ltd........ 9.85 No.

Yantai Oriental Juice Co., Ltd... 14.97 No.

Qingdao Nannan Foods Co., Ltd.... 44.24 Yes.

Shaanxi Machinery & Equipment 35.29 Yes.

Import & Export Corp.

Xian Asia Qin Fruit Co., Ltd..... 28.71 Yes.

Xian Yang Fuan Juice Co., Ltd.... 28.71 Yes.

Changsa Industrial Products & 28.71 Yes.

Minerals Import and Export Co.,

Ltd.

Shandong Foodstuffs Import and 28.71 Yes.

Export Corporation.

PRC-wide rate.................... 54.55 Yes.

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

The PRC-wide rate applies to all entries of the subject merchandise

except for entries from exporters/factories that are identified

individually above.

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 six copies must be

submitted to the Assistant Secretary for Import Administration no later

than January 6, 2000, and rebuttal briefs no later than January 11,

2000. 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 January 13, 2000, at the U.S. Department of Commerce,

14th Street and Constitution Avenue, NW, Washington, DC 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 not later than 75 days after the date of the preliminary

determination.

This determination is issued and published in accordance with

sections 733(d) and 777(i)(1) of the Act.

Dated: November 15, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-30551 Filed 11-22-99; 8:45 am]

BILLING CODE 3510-DS-P