Certain Fresh Cut Flowers From Ecuador: Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-331-602]

Certain Fresh Cut Flowers From Ecuador: Preliminary Results and

Partial Rescission of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review

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

SUMMARY: In response to a request from a domestic interested party, the

Department of Commerce is conducting an administrative review of the

antidumping duty order on certain fresh cut flowers from Ecuador for

the period March 1, 1997, through February 28, 1998.

We have preliminarily determined that sales have been made below

normal

[[Page 18879]]

value by various companies subject to this review. If these preliminary

results are adopted in the final results of this administrative review,

we will instruct the Customs Service to assess antidumping duties equal

to the difference between the export price or constructed export price

and the normal value. We invite interested parties to comment on these

preliminary results.

EFFECTIVE DATE: April 16, 1999.

FOR FURTHER INFORMATION CONTACT: Mark Ross or Edythe Artman, Office of

Antidumping/Countervailing Duty Enforcement, Import Administration,

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

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

(202) 482-4794 or (202) 482-3931, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

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's (the

Department's) regulations are to the regulations codified at 19 CFR

Part 351 (1998).

Background

On March 11, 1998, the Department published a notice of

``Opportunity to Request Administrative Review'' with respect to the

antidumping duty order on certain fresh cut flowers from Ecuador (63 FR

11868). The Floral Trade Council (FTC) requested a review on March 31,

1998. An association of U.S. flower producers, the FTC was the

petitioner in the original investigation of this proceeding. In

response to the FTC's request, the Department published a notice of

initiation of an administrative review on April 24, 1998, in accordance

with 19 CFR 351.213(b) (63 FR 20378). On November 24, 1998, we extended

the deadline for the preliminary results of the review until March 30,

1999 (see 63 FR 66528).

Scope of Review

Imports covered by this review are shipments of certain fresh cut

flowers from Ecuador. Specifically, the products are standard

carnations, standard chrysanthemums, and pompon chrysanthemums. These

products are currently classifiable under item numbers 0603.10.70.10,

0603.10.70.20, and 0603.10.70.30, respectively, of the Harmonized

Tariff Schedule of the United States (HTSUS). Although the HTSUS item

numbers are provided for convenience and for customs purposes, the

Department's written description of the scope of this proceeding

remains dispositive.

Period of Review

The period of review (POR) is from March 1, 1997, through February

28, 1998.

Partial Rescission of the Review

In light of past administrative practice and relevant provisions of

the law, we are rescinding some companies from the review which were

listed in the notice of initiation.

The respondent U.S. Floral Corporation submitted a letter stating

that it was an importer of Ecuadorian fresh cut flowers. It stated that

it had no ownership or affiliation with any farm or exporter in Ecuador

and did not exist as a corporate entity in Ecuador. The company also

stated that it had made no shipments of subject merchandise to the

United States during the POR.

A review of Customs Service documentation regarding shipments of

the subject merchandise during the POR confirms that U.S. Floral did

not have any shipments of the merchandise. See Memorandum from Laurie

Parkhill to Richard W. Moreland (May 26, 1998). Therefore, we have

rescinded our review of U.S. Floral in accordance with 19 CFR

351.213(d).

Flores Equinocciales (listed in the notice of initiation as

Florequisa) stated in a submission that it had received a de minimis

weighted-average margin in the original investigation. It stated that,

as a result, it had never been subject to suspension of liquidation and

did not consider itself a candidate for an administrative review. We

agree (see Letter from Laurie Parkhill to Flores Equinocciales (June 3,

1998)) and have rescinded the review of this company.

Noelia Flowers (listed in the notice of initiation as

Noeliaflowers) reported that it had shipped flowers to the United

States during the POR, but that all of the shipments had been supplied

by a single, unaffiliated farm which knew that the destination of the

merchandise was within the United States. It submitted a copy of a

receipt from a farm which shows that the farm knew of the ultimate

destination of the flowers. Because the supplier of the flowers that

Noelia Flowers shipped to the United States during the POR had

knowledge, at the time it sold the merchandise to Noelia Flowers, that

those sales were destined for export to the United States, the

Department considers the supplier to be the source of any dumping

activity, not Noelia Flowers. As such, the supplier established the

price of the subject merchandise we would use in our antidumping

analysis. Therefore, we have rescinded the review of Noelia Flowers.

This is consistent with our practice of rescinding a review of an

exporter where the producer had knowledge that the subject merchandise

would ultimately end up in the United States. See Antifriction Bearings

(Other Than Tapered Roller Bearings) and Parts Thereof from France,

Germany, Japan, Singapore, Sweden, Thailand, and the United Kingdom;

Preliminary Results of Antidumping Duty Administrative Reviews, Partial

Termination of Administrative Reviews, and Notice of Intent to Revoke

Order, 60 FR 62817, 62818 (December 7, 1995). Request for Revocation of

the Antidumping Duty Order.

On May 29, 1998, Florisol Cia. Ltda. (also listed as Florisol in

the notice of initiation) submitted a letter in which it requested

revocation of the antidumping duty order with respect to its sales.

Section 351.222(e) of the Department's regulations states that a

request for revocation of an order may be submitted ``[d]uring the

third and subsequent annual anniversary months of the publication of an

antidumping order.'' The anniversary month of the order under review is

March. Hence, the request for revocation was received two months

following the prescribed time frame for its submission. For this

reason, the Department found that the request was untimely and,

therefore, rejected the request. See Memorandum from the Ecuadorian

Flowers Team to Laurie Parkhill (March 3, 1999).

Selected Respondents

Section 777A(c)(2) of the Act provides the Department with the

authority to determine margins either by limiting its examination to a

statistically valid sample of exporters or by limiting its examination

to exporters which account for the largest volume of the subject

merchandise that can reasonably be examined. This subparagraph is

formulated as an exception to the general requirement of the Act that

we examine each company, for which a review is requested, individually

and calculate a company-specific margin.

Because over 40 companies were named in the initiation notice for

this review and because of the limited resources available to calculate

individual margins, we determined that it was necessary to restrict the

number of respondents selected for examination. This approach enabled

the Department

[[Page 18880]]

to analyze the responses of the selected companies thoroughly and

carefully to consider all issues raised in the proceeding within the

statutory deadlines. This approach is consistent with that taken in

reviews of the antidumping duty order on certain fresh cut flowers from

Colombia (see, e.g., Certain Fresh Cut Flowers from Colombia:

Preliminary Results and Partial Termination of Antidumping Duty

Administrative Review, 63 FR 5354 (February 2, 1998)).

Consistent with section 777A(c)(2)(B) of the Act, we limited our

examination to six respondents since the sales of these companies

accounted for over ninety percent of the sales to the United States by

companies for which the review was requested. See Memorandum from

Laurie Parkhill to Richard W. Moreland (June 15, 1998). The six

selected respondents for this review are Agritab Cia. Ltda. (Agritab),

Claveles de la Montana, S.A. (Montana), Flores del Quinche S.A.

(Floraquin), Floricultura Ecuaclavel S.A. (Ecuaclavel), Florisol Cia.

Ltda. (Florisol), and Flores Mitad del Mundo, S.A. (Floremit).

Non-Selected Respondents

On May 1, 1998, the Department issued a questionnaire to each of

the companies named in the initiation notice. Sixteen of the companies

completed and returned the questionnaire and 22 sent letters in which

they reported having no shipments of subject merchandise during the

POR.

Of the sixteen who returned the questionnaire, we selected six as

respondents, as discussed above, and we consider the remaining ten as

non-selected respondents. Consistent with our practice in recent

administrative reviews of the antidumping duty order on certain fresh

cut flowers from Colombia, we are assigning the non-selected,

cooperative respondents a weighted-average margin based on the

calculated margins of the selected respondents, excluding any zero or

de minimis margins and margins based entirely on facts available. See

Memorandum from Laurie Parkhill to the File (July 17, 1998), and

Certain Fresh Cut Flowers from Colombia: Final Results of Antidumping

Duty Administrative Review, 63 FR 31724 (June 10, 1998) (Colombian

Flowers Tenth Review).

For companies that reported having no shipments during the POR, we

reviewed the Customs Service entry documentation for the subject

merchandise from Ecuador during the POR, which confirmed that these

companies had no shipments of the merchandise. Consequently, these

respondents will either retain the company-specific rate most recently

assigned to them (as a result of a prior review or the original less-

than-fair-value investigation) or their entries will receive the ``all

others'' rate for future cash-deposit purposes.

The non-selected companies are listed as the ``Non-Selected

Respondents'' in the ``Preliminary Results of Review'' section below.

Facts Available

Two companies, Ecuaplanta and San Alfonso, did not respond to our

original questionnaire or to a follow-up letter that was issued to

them. Section 776(a)(2) of the Act provides that, if an interested

party (1) withholds information that has been requested by the

Department, (2) fails to provide such information in a timely manner or

in the form or manner requested, subject to subsections 782(c)(1) and

(e) of the Act, (3) significantly impedes a determination under the

antidumping statute, or (4) provides such information but the

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

Act, then the Department shall, subject to section 782(d) of the Act,

use facts otherwise available in reaching the applicable determination.

Because Ecuaplanta and San Alfonso did not respond to the questionnaire

or the follow-up letter, the provisions of sections 782(c)(1) and (e)

of the Act do not apply and we must use facts otherwise available to

determine their dumping margins.

Section 776(b) of the Act provides that, if the Department finds

that an interested party has failed to cooperate by not acting to the

best of its ability to comply with a request for information, the

Department may use an inference that is adverse to the interests of

that party in selecting from among the facts otherwise available. The

section provides that an adverse inference may include reliance on

information derived from (1) the petition, (2) the final determination

in the investigation segment of the proceeding, (3) a previous review

under section 751 of the Act or a determination under section 753 of

the Act, or (4) any other information placed on the record. In

addition, the Statement of Administrative Action accompanying the URAA,

H.R. Doc. 316, Vol. 1, 103d Cong. (1994) (SAA), establishes that the

Department may employ an adverse inference ``to ensure that the party

does not obtain a more favorable result by failing to cooperate than if

it had cooperated fully.'' SAA at 870. In employing adverse inferences,

the Department is instructed to consider ``the extent to which a party

may benefit from its own lack of cooperation.'' Id. Because Ecuaplanta

and San Alfonso did not cooperate by complying with our request for

information and in order to ensure that they do not benefit from their

lack of cooperation, we are employing an adverse inference in selecting

from the facts available.

The Department's practice when selecting an adverse rate from among

the possible sources of information has been to ensure that the margin

is sufficiently adverse ``as to effectuate the purpose of the facts

available rule to induce respondents to provide the Department with

complete and accurate information in a timely manner.'' See Static

Random Access Memory Semiconductors From Taiwan; Final Determination of

Sales at Less Than Fair Value, 63 FR 8909, 8932 (February 23, 1998).

The Department will also consider the extent to which a party may

benefit from its own lack of cooperation in selecting a rate. See

Roller Chain Other Than Bicycle, From Japan; Notice of Final Results

and Partial Recission of Antidumping Duty Administrative Review, 62 FR

69472, 69477 (November 10, 1997), and Certain Welded Carbon Steel Pipes

and Tubes from Thailand: Final Results of Antidumping Administrative

Review, 62 FR 53808, 53820-21 (October 16, 1997).

In order to ensure that the rate is sufficiently adverse so as to

induce Ecuaplanta's and San Alfonso's cooperation, we have assigned

these companies as adverse facts available a rate of 23.50 percent, the

highest margin determined in any segment of this proceeding. This rate

was calculated for Eden Flowers in the amended final determination. See

Amendment to Final Determination of Sales at Less Than Fair Value and

Antidumping Duty Order in Accordance with Decision Upon Remand: Certain

Fresh Cut Flowers from Ecuador, 54 FR 29595 (July 13, 1989). As such,

the margin constitutes ``secondary information'' under section 776(c)

of the Act.

Section 776(c) of the Act provides that the Department shall, to

the extent practicable, corroborate secondary information used for

facts available by reviewing independent sources reasonably at its

disposal. The SAA provides that to ``corroborate'' means simply that

the Department will satisfy itself that the secondary information to be

used has probative value. SAA at 870. As noted in Tapered Roller

Bearings and Parts Thereof, Finished and Unfinished, from Japan, and

Tapered Roller Bearings, Four Inches or

[[Page 18881]]

Less in Outside Diameter, and Components Thereof, from Japan;

Preliminary Results of Antidumping Duty Administrative Reviews and

Partial Termination of Administrative Reviews, 61 FR 57391, 57392

(November 6, 1996), to corroborate secondary information, the

Department will, to the extent practicable, examine the reliability and

relevance of the information used. However, unlike other types of

information, such as input costs or selling expenses, there are no

independent sources from which the Department can derive calculated

dumping margins; the only source for margins is administrative

determinations. Thus, in an administrative review, if the Department

chooses as total adverse facts available a calculated dumping margin

from a prior segment of the proceeding, it is not necessary to question

the reliability of the margin for that time period.

As to the relevance of the margin used for adverse facts available,

the Department stated in Tapered Roller Bearings that it will

``consider information reasonably at its disposal'' as to whether there

are circumstances that would render a margin irrelevant. Where

circumstances indicate that the selected margin is not appropriate as

adverse facts available, the Department will disregard the margin and

determine an appropriate margin.'' Id.; see also Fresh Cut Flowers from

Mexico; Preliminary Results of Antidumping Duty Administrative Review,

60 FR 49567 (September 26, 1995).

As stated above, the highest rate determined in any segment of this

proceeding is 23.50 percent for Eden Flowers. We have determined that

there is no evidence on the administrative record for the less-than-

fair-value investigation which indicates that the 23.50 percent rate is

irrelevant or inappropriate as total facts available for Ecuaplanta and

San Alfonso for this review.

The FTC's Status as a Domestic Interested Party

Five of the respondents requested that the Department require the

FTC to identify its members, citing 19 CFR 351.213(b)(1) as requiring

that an administrative review be requested by a domestic interested

party. They argued that section 771(9)(E) of the Act provides that a

trade association may constitute a domestic interested party if the

majority of its members are manufacturers, producers or wholesalers of

a domestic like product in the United States but that, because the FTC

had not identified its members in its request for a review or any

subsequent submissions to the Department, it was impossible to know if

the FTC met the definition of domestic interested party. In the event

that the FTC was not found to meet the definition of interested party,

the respondents argued that the Department should terminate the review.

Further submissions by the FTC clarified the position of the FTC in

the industry. We determined that a November 1998 affidavit by the

President of the FTC stating that the majority of the association's

members were growers or wholesalers of the subject merchandise was

sufficient evidence of the nature of the association's membership.

Therefore, we concluded that the FTC meets the definition of ``domestic

interested party'' within the meaning of section 771(9)(E) of the Act.

See Memorandum from Laurie Parkhill to Richard W. Moreland (January 27,

1999).

Request for Separate Rates

Since the original investigation the Department has calculated

company-specific weighted-average margins for all subject merchandise.

Because the International Trade Commission (ITC) found that each of the

three flower types subject to investigation was a separate like

product, five of the respondents requested that the Department

calculate a weighted-average rate for each flower type. Because the

order is subject to a ``sunset'' review in 1999, the respondents

contend that the ITC would most likely use the like-product analysis

that it had developed at the investigation stage.

The purpose of an administrative review is to determine the amount

of duties due on entries during the POR and to establish estimated

antidumping duties for future entries. We calculate, where possible,

customer-specific duty-assessment rates and it is our long-established

practice to calculate a weighted-average margin for the subject

merchandise to set the cash-deposit rate for future entries.

Respondents' argument addresses the conduct of the sunset review, not

the assessment of antidumping duties. Therefore, we find no basis upon

which to assign separate weighted-average margins for the three flower

types in this administrative review.

Duty Absorption

On March 31, 1998, the FTC requested that the Department determine

whether antidumping duties had been absorbed by the respondents during

the POR. Section 751(a)(4) of the Act provides for the Department, if

requested, to determine, during an administrative review initiated two

years or four years after publication of the order, whether antidumping

duties have been absorbed by a foreign producer or exporter subject to

the order if the subject merchandise is sold in the United States

through an importer who is affiliated with such foreign producer or

exporter. For transition orders as defined in section 751(c)(6)(C) of

the Act (i.e., orders in effect as of January 1, 1995), section

351.213(j)(2) of our regulations provides that we will make a duty-

absorption determination, if requested, for any administrative review

initiated in 1996 or 1998. This approach ensures that interested

parties will have the opportunity to request a duty-absorption

determination prior to the time of a sunset review of an antidumping

order under section 751(c) of the Act, even though the second and

fourth years following the issuance of that order have passed.

Since the order on certain fresh cut flowers from Ecuador has been

in effect since 1987, it is a transition order. Furthermore, we

received the request for a duty-absorption determination in connection

with a review that we initiated in 1998. Consequently, in accordance

with the policy described above, it is appropriate to examine duty

absorption in this review.

Section 751(a)(4) of the Act provides that duty absorption may

occur if the subject merchandise is sold in the United States through

an affiliated importer. Of the selected respondents, Agritab, Floremit,

and Ecuaclavel have affiliated importers. We have preliminarily

determined that the following percentage of their U.S. affiliates'

sales, by quantity, have dumping margins:

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

Percentage of

U.S.

affiliate's

Name of firm sales with

dumping

margins

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

Agritab................................................. 13.79

Floricultura Ecuaclavel S.A............................. 38.04

Flores Mitad del Mundo, S.A............................. 15.00

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

With respect to the above companies, we presume that the duties

will be absorbed for those sales that we found to have been dumped.

However, this presumption can be rebutted with evidence (e.g., an

agreement between the affiliated importer and the unaffiliated

purchaser) that the unaffiliated purchasers in the United States will

pay the full duty ultimately assessed on the subject merchandise. An

interested party who wishes to submit such evidence may do so no later

than 15 days after publication of these

[[Page 18882]]

preliminary results. In the absence of such evidence, we will find that

the antidumping duties have been absorbed by the above-listed firms on

the percentage of U.S. sales indicated.

Export Price and Constructed Export Price

As permitted by section 777A(d)(2) of the Act, we have

preliminarily determined that it is appropriate to average U.S. prices

on a monthly basis in order to use actual price information (often

available only on a monthly basis) and account for practices associated

with pricing perishable products. The Department has used this

averaging technique in the most recently completed review of this order

and other reviews of the order covering certain fresh cut flowers from

Colombia. Certain Fresh Cut Flowers from Ecuador; Final Results of

Antidumping Duty Administrative Review, 61 FR 37044 (July 16, 1996),

and Colombian Flowers Tenth Review.

For the price to the United States, we used export price (EP) or

constructed export price (CEP) as defined in sections 772(a) and 772(b)

of the Act, as appropriate. CEP was used for consignment sales through

unaffiliated U.S. consignees and sales (consignment or otherwise) made

through affiliated importers.

We calculated EP based on the packed price, consisting of invoice

price plus certain additional charges (e.g., box charges), to the first

unaffiliated purchaser in the United States. We made deductions, where

appropriate, for foreign inland freight and return credits.

For sales made on consignment, we calculated CEP based on the

packed price consisting of invoice price plus certain additional

charges by the consignee (e.g., box charges) to the unaffiliated

purchaser. For sales made through affiliated parties, we based CEP on

the packed price, consisting of invoice price plus certain additional

charges (e.g., box charges), to the first unaffiliated customer in the

United States. We made adjustments to these prices, where appropriate,

for discounts and rebates, foreign inland freight, international (air)

freight, freight charges incurred in the United States, brokerage and

handling, U.S. customs fees, direct selling expenses related to

commercial activity in the United States, return credits and royalties.

Finally, consistent with our approach in the previous review, we made

adjustments for either commissions paid to unaffiliated U.S. consignees

or for the U.S. selling expenses of affiliated consignees.

Pursuant to sections 772(d)(3) and 772(f) of the Act, we calculated

and reduced the price further by an amount for profit on sales made

through affiliated parties to arrive at CEP.

Normal Value

1. Basis for Calculating Normal Value

Section 773(a)(1)(B)(i) of the Act defines normal value (NV) as the

price at which the foreign like product is first sold for consumption

in the exporting country (home market). However, pursuant to section

773(a) of the Act, certain conditions must be satisfied in order for

the Department to consider sales in the home market as the basis for

calculating NV. One condition is that the home market must be viable.

Generally, the Department will consider the home market to be viable if

the aggregate quantity (or, if quantity is not appropriate, value) of

sales of the foreign like product sold by an exporter or producer in

that market is five percent or more of the aggregate quantity (or

value) of its sales of the subject merchandise to the United States.

Where the home market is not viable, NV may be calculated based on

sales to a viable third-country market or on constructed value (CV).

See sections 773(a)(1) and 773(a)(4) of the Act.

Agritab, Florisol, and Floraquin had sales in excess of five

percent of their aggregate quantity of sales of the subject merchandise

to the United States. Thus, we found the home market to be viable for

them.

Ecuaclavel had sales in the home market, but they constituted less

than five percent of its aggregate sales to the United States.

Therefore, its home market is not viable. Floremit had no home market

sales and Montana had only ``cull'' sales. We consider sales of culls,

or flowers of lesser grade than those produced for export to the United

States, to be sales of by-products of the flowers grown for export. See

Certain Fresh Cut Flowers from Colombia; Final Results and Partial

Rescission of Antidumping Duty Administrative Review, 62 FR 53287,

53298 (October 14, 1997). Hence, we examined the viability of third-

country-market sales for these three companies.

The test for viability of a third-country market is also whether

the sales in that market equal five percent or more of the aggregate

sales to the United States. See section 773(a)(1)(B)(ii)(II) of the

Act. In the case of Floremit, there were no third-country sales equal

to or greater than five percent of its U.S. aggregate sales, so we have

based NV for this company on CV.

Montana and Ecuaclavel had sales to a third-country, Russia, that

accounted for more than five percent of sales to the United States. We

have concluded, however, that conditions existed in Russia that

rendered a comparison between a NV based on sales in Russia and an EP

or CEP inappropriate. Specifically, the Department found that the

flower prices in the United States were more volatile than those in

Russia where there is a more constant demand for the product. There

were also different peak price periods, or holidays, in the two

countries; since the United States had three of these peak periods and

Russia had only one, these periods affected price volatility in the

United States to a greater extent than prices in Russia. Thus, we have

concluded that a particular market situation exists which prevents a

proper comparison between a NV based on the third-country-market sales

and the EP or CEP.

In such a circumstance, we may decline to calculate a NV based on

the sales of the third-country market. See 19 CFR 351.404(c)(2).

Rather, we may opt to calculate the NV based on CV, pursuant to section

773(a)(4) of the Act. Because we found the comparison of prices between

the third-country market and the U.S. market to be inappropriate, we

have used CV to establish NV for Montana and Ecuaclavel. For a more

detailed explanation of this determination and the other NV

determinations, see Memorandum from Laurie Parkhill to Susan Kuhbach

(August 12, 1998).

2. Arm's-Length Test

During the POR, Agritab reported home market sales to employees. We

tested Agritab's home market sales to employees to see if they were

made at arm's-length prices. To test whether these sales were made at

arm's-length prices, we compared, by flower type, the prices of sales

to employees and unaffiliated customers net of appropriate home market

price adjustments (for Agritab these adjustments consisted of credit

expenses and packing expenses incurred on home market sales). Since we

found that the prices to the employees were on average less than 99.5

percent of the price to unaffiliated parties, we determined that all

sales made to the employees were not at arm's length and disregarded

them in determining NV. See 19 CFR 351.403(c).

3. Sales Below the Cost of Production

On September 11, 1998, the FTC alleged that Agritab, Florisol, and

Floraquin made home market sales of

[[Page 18883]]

certain fresh cut flowers at prices below the cost of production (COP)

and requested that the Department initiate a below-cost investigation.

Upon review of the allegation with regard to Agritab, we determined

that there were reasonable grounds to believe or suspect that Agritab

made sales at prices below its COP, in accordance with section

773(b)(2)(A)(i) of the Act. Accordingly, we initiated a COP

investigation of this company pursuant to section 773(b)(1) of the Act.

With regard to Florisol and Floraquin, we determined that the FTC's

allegations of below-cost sales did not provide reasonable grounds to

believe or suspect that their home market sales were made at prices

below COP. Therefore, we did not initiate COP investigations of

Florisol and Floraquin. For a more detailed explanation of our analysis

of the allegations of below-cost sales, see Memorandum from Laurie

Parkhill to Richard W. Moreland (November 2, 1998).

In our COP analysis, we used the information that Agritab provided

in its questionnaire responses. In accordance with section 773(b)(3) of

the Act, we calculated the COP based on the sum of the costs of

materials and fabrication employed in producing the foreign like

product, plus general and administrative expenses and all costs and

expenses incidental to packing the merchandise. Section 773(b)(3) of

the Act provides for the inclusion of home market selling expenses in

COP. However, Agritab reported that it had no selling expenses on sales

of export-quality flowers in the home market. For Agritab's COP,

therefore, we used zero as the actual amount of selling expenses

incurred on home market sales.

After calculating the COP, in accordance with section 773(b)(1) of

the Act we tested whether Agritab's home market sales of certain fresh

cut flowers were made at prices below the COP. We compared the COP of

each flower type to the reported home market prices less any applicable

movement charges. As a result of our comparisons of prices to weighted-

average COPs for the POR, we determined that all of Agritab's home

market sales were below the COP and were not at prices which would

permit recovery of all costs within a reasonable period of time, as

defined by section 773(b)(2)(D) of the Act. Therefore, we disregarded

all of Agritab's home market sales.

4. Calculation of NV

For Florisol and Floraquin, we based NV on the reported home market

prices. We based home market prices for these two respondents on their

packed, ex-farm or delivered prices to unaffiliated purchasers. When

applicable, we made adjustments for differences in packing and for

movement expenses in accordance with section 773(a)(6)(A) and (B) of

the Act and for differences in circumstances of sale (COS) in

accordance with section 773(a)(6)(C)(iii) of the Act. For comparisons

to EP, we made COS adjustments by adding U.S. direct selling expenses

to NV.

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

on sales at the same level of trade as the EP or CEP. Since NV was

always calculated at the same level of trade, we did not make any

adjustments for differences in the level of trade. (See ``Level of

Trade'' section below.) For Agritab, Floremit, Montana, and Ecuaclavel,

in accordance with section 773(a)(4) of the Act, we used CV as the

basis for NV when there were no usable sales of the foreign like

product in the comparison market. We calculated CV in accordance with

section 773(e) of the Act.

For CV, we used the cost of materials, direct labor, and overhead

as reported by the respondents. Some respondents reported revenues from

the sale of non-export-quality flowers. As noted above, we consider

non-export-quality flowers, or culls, which are produced in conjunction

with export-quality flowers, to be by-products. Therefore, we adjusted

the cost of materials, direct labor, and overhead to reflect revenue

from sales of the culls.

Section 773(e) of the Act also provides for the inclusion of

selling, general, and administrative expenses in the calculation of CV.

We used the general and administrative expenses reported by each

respondent. With regard to selling expenses, all respondents reporting

sales of export-quality flowers in the home market reported that they

had no selling expenses. Therefore, we used zero as the actual amount

of selling expenses incurred by the exporters and producers examined in

this review.

With respect to profit, section 773(e)(2)(A) of the Act instructs

us to calculate the amount realized in connection with the production

and sale of the foreign like product in the ordinary course of trade

for consumption in the home market. However, for all the respondents

for which we based NV on CV, it was necessary to calculate profit for

CV using an alternative methodology because the calculation of profit

in accordance with section 773(e)(2)(A) of the Act was not attainable

from the information on the record. Specifically, for Agritab there

were no home market sales above COP. For Montana, Floremit, and

Ecuaclavel, the respondents do not have home market sales of the

foreign like product under consideration for NV on which to calculate

profit for CV. Therefore, we selected an alternative CV-profit

calculation methodology for these four firms pursuant to section

773(e)(2)(B)(iii) of the Act, which permits us to use ``any other

reasonable method'' to compute an amount for profit, provided that the

amount does ``not exceed the amount normally realized by exporters or

producers * * * in connection with the sale, for consumption in the

foreign country, of merchandise that is in the same general category of

products as the subject merchandise.'' In reviewing the record for

information on profits earned in Ecuador by producers of merchandise

that is in the same general category of products as flowers, we

determined that the best available sources of information are the 1997

financial statements that producers of certain fresh cut flowers from

Ecuador submitted in response to section A of our questionnaire. Where

there was a positive profit amount on the 1997 financial statements, we

used the data to calculate an average profit rate. In order to

calculate a positive amount for profit consistent with Silicomanganese

from Brazil: Final Results of Antidumping Administrative Review, 62 FR

37877 (July 15, 1997), we disregarded financial statements of producers

that incurred losses. Disregarding these financial statements enabled

us to derive an ``element of profit'' as contemplated by the SAA. See

SAA at 839. Furthermore, we disregarded financial statements that were

not contemporaneous with sales during the POR (e.g., 1996 financial

statements).

We included U.S. packing expenses in the calculation of CV. In

addition, for EP sales, we made COS adjustments for direct selling

expenses, where appropriate, in accordance with section

773(a)(6)(C)(iii) of the Act.

Consistent with the methodology we used in recent reviews of the

order on certain fresh cut flowers from Colombia, we first converted

each month's CV from Ecuadorian sucres to dollars using that month's

exchange rate. We then totaled the monthly cost, expressed in dollars

over the POR, and divided by the quantity of export-quality flowers

sold by the producer/exporter in order to arrive at the per-stem CV in

dollars. The CV was then converted to Ecuadorian sucres using the

period-end exchange rate; we deflated each monthly figure to ensure a

constant cost over the POR. We converted the sucre per-stem CV to

dollars based on the date

[[Page 18884]]

of the U.S. sale, in accordance with section 773A(a) of the Act.

Level of Trade

In accordance with section 773(a)(1)(B)(i) of the Act, to the

extent practicable, we determine NV based on sales in the comparison

market at the same level of trade (LOT) as the EP or CEP transaction.

The NV LOT is that of the starting-price sales in the comparison market

or, when NV is based on CV, that of the sales from which we derive SG&A

and profit.

For EP, the LOT is also the level of the starting-price sale, which

is usually from the exporter to the importer. For CEP, it is the level

of the constructed export sale from the exporter to the affiliated

importer.

To determine whether NV sales are at a different LOT than EP or CEP

sales, we examine stages in the marketing process and selling functions

along the chain of distribution between the producer and the

unaffiliated customer. If the comparison-market sales are at a

different LOT and the difference affects price comparability, as

manifested in a pattern of consistent price differences between the

sales on which NV is based and comparison-market sales at the LOT of

the export transaction, we make a LOT adjustment under section

773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is

more remote from the farm than the CEP level and there is no basis for

determining whether the differences in the levels between NV and CEP

sales affect price comparability, we adjust NV under section

773(A)(7)(B) of the Act (the CEP offset provision). See Final

Determination of Sales at Less Than Fair Value: Certain Cut-to-Length

Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).

In this review, no respondent requested a LOT adjustment or a CEP

offset. To determine whether a LOT adjustment was necessary, in

accordance with principles discussed above, we examined information

regarding the distribution systems in both the U.S. and Ecuadorian

markets, including the selling functions, classes of customer, and

selling expenses for each respondent. We determined that no LOT

adjustment or CEP offset was necessary for any of the respondents.

For a company-specific description of our LOT analysis for these

preliminary results, see the Level of Trade Memorandum from the

Ecuadorian Flowers Team to Laurie Parkhill (March 26, 1999).

Currency Conversion

We made currency conversions into U.S. dollars in accordance with

section 773A(a) of the Act. The Department's preferred source for daily

exchange rates is the Federal Reserve Bank.

Preliminary Results of Review

As a result of our comparison of EP and CEP with NV, we

preliminarily determine that there are margins in the amounts listed

below for the period March 1, 1997, through February 28, 1998. When a

different spelling of a respondent's name appears in parentheses beside

its listed name, it is because we used that alternative spelling of the

name in the initiation notice.

Selected Respondents

The following six respondents received individual rates, as

indicated below:

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

Weighted-

Respondent average margin

(percent)

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

Agritab Cia. Ltda....................................... 1.16

Claveles de la Montana, S.A............................. 6.18

Flores del Quinche S.A. (Flores del Qinche, S.A.)....... 0.00

Floricultura Ecuaclavel S.A. (Floricultural Ecuaclavel). 15.11

Florisol Cia. Ltda...................................... 0.00

Flores Mitad del Mundo, S.A............................. 0.27

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

Non-Selected Respondents

The following respondents, which reported shipments of subject

merchandise during the POR but were not selected for examination, will

receive a weighted-average rate of 6.43 percent:

Agricola Landwork Cia. Ltda.

Agroindustrial Espialmor Ltda.

Colors from the World (Colorsfromtheworld)

Flores del Ecuador Armizo Cia. Ltda. (Armizo)

Flores La Antonia

Guala Export/Import (Guala Import)

Illinizia Flowers

Miliflowers Cia.

Nerita Flowers

Plantaciones Malima

The following respondents reported no shipments or sales of the

subject merchandise during the POR. A previously-reviewed or -

investigated company will retain the company-specific rate most

recently assigned to it. A company not subject to the investigation or

a prior review will be assigned a cash deposit rate of 5.89 percent,

the adjusted ``all others'' rate from the LTFV investigation. This

determination applies to the following companies:

Americflowers

Arco Valeno

Biocare Limited

Comedinsa

Comercializadora Agricola Caribe

Comprinz S.A.

Ecoflowers/Ecopacifico Cia. Ltda. (Ecoflowers)

Ecuaflor

Ecuaplanet Trading

Empagri Cia. Ltda.

Flores Barragan Rodriguez Cia. Ltda.

Florimex Verwaltung GMBH

Guanguilqui-Agro-Industrial S.A. (Guaiisa Farms)

Incaflor

Maximafarms

Navado Naranjo Ecuador

Panorama Roses S.A.

Quito Inor Flowers

Trevis S.A.

Velvet Flores Cia. Ltda. (Velvet)

Entries from the following companies will receive an adverse facts-

available rate of 23.50 percent:

Ecuaplanta

San Alfonso

Interested parties may request a hearing not later than 30 days

after publication of this notice. Interested parties may also submit

written arguments in case briefs on these preliminary results within 30

days of the date of publication of this notice. Rebuttal briefs,

limited to issues raised in case briefs, may be filed no later than

five days after the time limit for filing case briefs. Parties who

submit arguments are requested to submit with each argument a statement

of the issue and a brief summary of the argument. All memoranda to

which we refer in this notice can be found in the public reading room,

located in the Central

[[Page 18885]]

Records Unit, room B-099 of the main Department of Commerce building.

Any hearing, if requested, will be held two days after the scheduled

date for submission of rebuttal briefs.

The Department will publish the final results of this

administrative review, including a discussion of its analysis of issues

raised in any case or rebuttal brief or at a hearing. The Department

will issue final results of this review within 120 days of publication

of these preliminary results.

Upon completion of the final results in this review, the Department

shall determine, and the Customs Service shall assess, antidumping

duties on all appropriate entries. We have calculated an importer/

customer-specific per-stem duty-assessment rate based on the ratio of

the total amount of antidumping duties calculated for the examined

sales to the quantity of subject merchandise shipped during the POR.

This rate will be assessed uniformly on all entries of that particular

importer/customer made during the POR. The Department will issue

appraisement instructions on each exporter directly to the Customs

Service.

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise entered, or withdrawn from

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

final results of this administrative review, as provided for by section

751(a)(1) of the Act: (1) The cash deposit rates for the reviewed

companies will be those rates established in the final results of this

review, except that no cash deposit will be required if the rate is de

minimis, i.e., less than 0.5 percent; (2) for previously reviewed or

investigated companies not listed above, the cash deposit rate will

continue to be the company-specific rate published for the most recent

period; (3) if the exporter is not a firm covered in this review, a

prior review, or the original less-than-fair-value investigation, but

the manufacturer is, the cash deposit rate will be the rate established

for the most recent period for the manufacturer of the merchandise; and

(4) for all other producers and/or exporters of this merchandise, the

cash deposit rate shall be 5.89 percent, the adjusted ``all others''

rate from the less-than-fair-value investigation. These deposit

requirements, when imposed, shall remain in effect until publication of

the final results of the next administrative review.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 351.401(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 administrative review and notice are in accordance with

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

Dated: March 30, 1999.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-9612 Filed 4-15-99; 8:45 am]

BILLING CODE 3510-DS-P