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

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## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** April 16, 1999
- **Citation:** 64 FR 18878

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A99-9612. Public record. Not legal advice.