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Preliminary Results of New Shipper Review: Certain Preserved Mushrooms From the People's Republic of China

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Start Preamble


Import Administration, International Trade Administration, Department of Commerce.


In response to a timely request from Green Fresh Foods (Zhangzhou) Co., Ltd., on October 2, 2000, the Department of Commerce published a notice of initiation of a new shipper review of the antidumping duty order on certain preserved mushrooms from the People's Republic of China with respect to the above-mentioned exporter. The period of review is February 1, 2000, through July 31, 2000. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 65 FR 58735 (October 2, 2000).

As a result of this review, the Department of Commerce has preliminarily determined that a dumping margin exists for exports of the subject merchandise for the covered period.

We invite interested parties to comment on these preliminary results. Parties who submit arguments in this proceeding are requested to submit with their arguments (1) a statement of the issues and (2) a brief summary of the arguments.


June 7, 2001.

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David J. Goldberger or Rebecca Trainor, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-4136 or (202) 482-4007, respectively.

End Further Info End Preamble Start Supplemental Information


The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Act), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act. In addition, unless otherwise indicated, all citations to the Department of Commerce's (the Department's) regulations are to 19 CFR part 351 (2000).


On February 19, 1999, the Department published in the Federal Register (64 FR 8308) an antidumping duty order on certain preserved mushrooms from the People's Republic of China (PRC). On August 31, 2000, the Department received a timely request from Green Fresh Foods (Zhangzhou) Co. (Green Fresh), in accordance with section 751(a)(2)(B) of the Act and 19 CFR 351.214(c), for a new shipper review of this antidumping duty order.

On September 22, 2000, the Department initiated a new shipper review of the antidumping duty order on certain preserved mushrooms from the PRC (see Certain Preserved Mushrooms from the People's Republic of China: Initiation of New Shipper Start Printed Page 30696Antidumping Duty Review, 65 FR 58735 (October 2, 2000)). On September 28, 2000, the Department issued the antidumping questionnaire to Green Fresh. We received responses to the antidumping questionnaire on October 19, 2000, and December 11, 2000.

On December 18, 2000, the Department provided the parties an opportunity to submit publicly available information for consideration in these preliminary results.

The Department issued a supplemental questionnaire to Green Fresh on January 9, 2001, and received a response on February 9, 2001.

We conducted verification of Green Fresh and its affiliated producer, Zhang Zhou Longhai Lubao Food Co., Ltd. (Lubao) on March 14 and 15, 2001. We issued a verification report on April 17, 2001.

Scope of the Order

The products covered by the order are certain preserved mushrooms whether imported whole, sliced, diced, or as stems and pieces. The preserved mushrooms covered under the order are the species Agaricus bisporus and Agaricus bitorquis. “Preserved mushrooms” refer to mushrooms that have been prepared or preserved by cleaning, blanching, and sometimes slicing or cutting. These mushrooms are then packed and heated in containers including but not limited to cans or glass jars in a suitable liquid medium, including but not limited to water, brine, butter, or butter sauce. Preserved mushrooms may be imported whole, sliced, diced, or as stems and pieces. Included within the scope of the order are “brined” mushrooms, which are presalted and packed in a heavy salt solution to provisionally preserve them for further processing.

Excluded from the scope of the order are the following: (1) All other species of mushroom, including straw mushrooms; (2) all fresh and chilled mushrooms, including “refrigerated” or “quick blanched mushrooms'; (3) dried mushrooms; (4) frozen mushrooms; and (5) “marinated,” “acidified,” or “pickled” mushrooms, which are prepared or preserved by means of vinegar or acetic acid, but may contain oil or other additives.[1]

The merchandise subject to the order is classifiable under subheadings 2003.10.0027, 2003.10.0031, 2003.10.0037, 2003.10.0043, 2003.10.0047, 2003.10.0053, and 0711.90.4000 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of the order is dispositive.

Separate Rates

In proceedings involving non-market economy (NME) countries, the Department begins with a rebuttable presumption that all companies within the country are subject to government control and thus should be assessed a single antidumping duty deposit rate. In this case, Green Fresh has requested a separate company-specific rate. Green Fresh is owned by a holding company, Zhangzhou Longhai Lubao Can Foods Co., Ltd. (Longhai), and a U.S. citizen. Longhai is owned by three individuals in the PRC.

The Department's separate rate test to determine whether a company engages in export activities independent of government control is not concerned, in general, with macroeconomic/border-type controls, e.g., export licenses, quotas, and minimum export prices, particularly if these controls are imposed to prevent dumping. The test focuses, rather, on government controls over export-related investment, pricing, and production decisions at the individual firm level. See e.g., Certain Cut-to-Length Carbon Steel Plate from Ukraine: Final Determination of Sales at Less than Fair Value, 62 FR 61754, 61757 (November 19, 1997); Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 62 FR 61276, 61279 (November 17, 1997); and Honey from the People's Republic of China: Preliminary Determination of Sales at Less than Fair Value, 60 FR 14725, 14726 (March 20, 1995).

To establish whether a firm is sufficiently independent from government control in its export activities to be entitled to a separate rate, the Department analyzes each exporting entity under a test arising out of the Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991) and amplified in the Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994) (Silicon Carbide). Under the separate rates criteria, the Department assigns separate rates in NME cases only if respondents can demonstrate the absence of both de jure and de facto governmental control over export activities.

1. Absence of De Jure Control

In prior PRC cases, the Department has analyzed laws provided by respondents to demonstrate absence of de jure control, such as the “Foreign Trade Law of the People's Republic of China” and the “Company Law of the People's Republic of China” (see Memo to the File dated May 23, 2001, placed on the record of this review), and found that such PRC laws establish an absence of de jure control. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Partial-Extension Steel Drawer Slides with Rollers from the People's Republic of China, 60 FR 54472 (October 24, 1995); see also Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol form the People's Republic of China, 60 FR 22544 (May 8, 1995) (Furfuryl Alcohol). We have no new information in this proceeding which would cause us to conclude that these laws do not apply to Green Fresh.

Accordingly, we preliminarily determine that, within the PRC preserved mushroom industry, the aforementioned laws of the PRC demonstrate an absence of de jure government control over export pricing and marketing decisions of Green Fresh.

2. Absence of De Facto Control

As stated in previous cases, there is some evidence that certain enactments of the PRC central government have not been implemented uniformly among different sectors and/or jurisdictions in the PRC. See Silicon Carbide, 59 FR at 22587 and Furfuryl Alcohol, 60 FR at 22545. Therefore, the Department has determined that an analysis of de facto control is critical in determining whether respondents are, in fact, subject to a degree of governmental control which would preclude the Department from assigning separate rates.

The Department typically considers four factors in evaluating whether each respondent is subject to de facto governmental control of its export functions: (1) whether the export prices are set by, or subject to, the approval of a governmental authority; (2) whether the respondent has authority to negotiate and sign contracts and other agreements; (3) whether the respondent has autonomy from the government in making decisions regarding the selection of its management; and (4) whether the respondent retains the proceeds of its export sales and makes independent decisions regarding disposition of profits or financing of Start Printed Page 30697losses. See Silicon Carbide, 59 FR at 22587 and Furfuryl Alcohol, 60 FR at 22545.

Green Fresh asserted the following: (1) It establishes its own export prices; (2) it negotiates contracts without guidance from any governmental entities or organizations; (3) it makes its own personnel decisions; and (4) it retains the proceeds of its export sales, uses profits according to its business needs, and has the authority to sell its assets and obtain loans. Furthermore, our analysis of Green Fresh's questionnaire responses reveals no information indicating government control. This information supports a preliminary finding that there is an absence of de facto governmental control of Green Fresh's export functions. Consequently, we preliminarily determine that Green Fresh has met the criteria for the application of a separate rate.

Fair Value Comparisons

To determine whether the sale of the subject merchandise by Green Fresh to the United States was made at less than normal value, we compared the export price to the normal value, as described in the “Export Price” and “Normal Value” sections of this notice, below.

Export Price

We used export price methodology in accordance with section 772(a) of the Act, because the subject merchandise was sold directly to unaffiliated customers in the United States prior to importation and constructed export price methodology was not otherwise indicated.

We calculated export price based on a packed, free on board Xiamen, PRC, price to the first unaffiliated purchaser in the United States. Where appropriate, we made a deduction from the starting price (gross unit price) for foreign inland freight and foreign brokerage and handling in the PRC, in accordance with section 772(c) of the Act. Because foreign inland freight and foreign brokerage and handling fees were provided by NME entities or paid for in a NME currency, we based those charges on surrogate rates from India (see “Surrogate Country” section below). To value foreign inland trucking charges and foreign brokerage and handling expenses and/or port loading charges, we used November 1999 Indian freight companies' and freight forwarders' price quotes, respectively, obtained by the Department in other antidumping duty proceedings.

Normal Value

A. Non-Market Economy Status

In every case conducted by the Department involving the PRC, the PRC has been treated as a NME country. Any determination that a foreign country is a NME country shall remain in effect until revoked by the Department (see section 771(18)(c) of the Act). None of the parties to this proceeding has contested such treatment. Accordingly, we calculated normal value in accordance with section 773(c) of the Act, which applies to NME countries.

B. Surrogate Country

Section 773(c)(4) of the Act requires the Department to value the NME producer's factors of production, to the extent possible, in one or more market economy countries that: (1) are at a level of economic development comparable to that of the NME, and (2) are significant producers of comparable merchandise. The Department has determined that India, Pakistan, Indonesia, Sri Lanka, and the Philippines are countries comparable to the PRC in terms of overall economic development and are significant producers of the subject merchandise (see Memorandum dated December 4, 2000). According to the available information on the record, we have determined that India meets the statutory requirements for an appropriate surrogate country for the PRC. Accordingly, we have calculated normal value using Indian values for the PRC producer's factors of production. We have obtained and relied upon publicly available information wherever possible.

C. Factors of Production

In accordance with section 773(c) of the Act, we calculated normal value based on factors of production reported by Lubao which produced preserved mushrooms for Green Fresh which in turn sold them to the United States during the POR. To calculate normal value, the reported unit factor quantities were multiplied by publicly available Indian values, except as noted below.

The selection of the surrogate values applied in this determination was based on the quality, specificity, and contemporaneity of the data. Wherever possible and appropriate, we used non-producer-specific prices in accordance with the preamble to the Department's regulations, Antidumping Duties; Countervailing Duties; Final Rule, at 62 FR 27296, 27366 (May 19, 1997). As appropriate, we adjusted input prices to reflect delivered values. Where the producer did not report the distance between the material supplier and the factory, as facts available, we used the distance to the nearest seaport because an import value was used as the surrogate value for the factor. For those values not contemporaneous with the POR and quoted in a foreign currency, we adjusted for inflation using wholesale price indices published in the International Monetary Fund's International Financial Statistics. A complete analysis of the surrogate values may be found in the Preliminary Determination Valuation Memorandum from the Team to the File (Preliminary Determination Valuation Memorandum), dated May 31, 2001.

We valued the major material inputs used in the production of the subject merchandise using the following sources. For fresh mushrooms, we used the simple average of the fresh mushrooms prices quoted in the Indian publication The Economic Times during the POR. We revised the average calculated by Green Fresh to include the daily high price. We valued cans and lids using the per-piece value derived from the notes to the Indian producer Agro Dutch Industries, Ltd.'s 1999-2000 financial statement. Because the surrogate value is for a complete can set (can and lid), we applied the value only to the can consumption factor to avoid double-counting.

For agricultural inputs, such as spawn, cow manure, and straw, we derived unit values from Agro Dutch's 1999-2000 financial statement and notes.

We valued salt and citric acid based on the 1998-1999 financial statement of the Indian producer Weikfield Agro Products Ltd. We valued labels and glue based on the weighted-average unit values derived from the Monthly Trade Statistics of Foreign Trade of India, Volume II—Imports. We did not value water separately because, consistent with our methodology in the 1998-2000 reviews, we believe that the costs for water are included as factory overhead in the Indian financial statements used to calculate factory overhead, selling, general and administrative (SG&A) expenses, and profit.

We valued gypsum based on the unit value derived from relevant data in Weikfield's and Saptarishi Agro's 1998-1999 financial statements. We based the surrogate values for calcareous (calcium carbonate or chalk) and carbamide (urea) on the average unit prices for the material quoted in the Indian publication Chemical Weekly from February through July 2000. Because the average domestic price includes Indian excise tax, we adjusted the average value by subtracting the 18% excise tax, based on the methodology applied to Start Printed Page 30698values from the same source in the 1999-2000 investigation of Synthetic Indigo from the PRC. We valued calcium phosphate using U.S. prices quoted in the U.S. publication Chemical Marketing Reporter for “Calcium Phosphate, dibasic, feed grade, 18.5% P. bulk” in October and December 1999.

We valued packing materials, including cardboard boxes, packing tape, and packing paper, using the weighted-average unit values derived from the Indian Import Statistics, August and December 1998.

We valued labor based on a regression-based wage rate in accordance with 19 CFR 351.408(c)(3).

To value electricity, we used the average rupees/kilowatt hour rate derived from the 1998-1999 financial statements of four Indian preserved-mushroom producers. We based the value of coal on the weighted average of rates obtained from two sources: (1) the rupees/metric ton rate of “Coal (for steam raising)” published in the 1998-1999 annual report for the Indian company Polychem, Ltd.; and (2) the 1998 weighted-average unit value for Indian imports of Bituminous coal, not agglomerated from the Commodity Trade Statistics published by the United Nations Statistics Division.

We based our calculation of factory overhead (including water), SG&A expenses, and profit using ratios derived from financial statements of three Indian producers of the subject merchandise whose production and sales activity is comprised mostly of preserved mushrooms and other food products and who were profitable during the POR.

To value truck freight rates, we used the average of November 1999 Indian freight companies' price quotes discussed in the “Export Price” section above.

The United States Court of Appeals for the Federal Circuit's (CAFC's) decision in Sigma Corp. v. United States, 117 F. 3d 1401 (CAFC 1997) requires that we revise our calculation of source-to-factory surrogate freight for those material inputs that are based on CIF import values in the surrogate country. Therefore, we have added to CIF surrogate values from India a surrogate freight cost using the shorter of the reported distances from (1) the closest PRC port to the factory or (2) the domestic supplier to the factory, on an import-specific basis.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that the weighted-average dumping margin for the January 31, 2000, through July 31, 2000, POR is as follows:

Manufacturer/Producer/ExporterMargin percent
Green Fresh Foods Zhangzhou Co., Ltd31.10

We will disclose the calculations used in our analysis to parties to this proceeding within five days of the publication date of this notice. See 19 CFR 351.224(b). Any interested party may request a hearing within 30 days of publication. See 19 CFR 351.310(c). If requested, a hearing will be held 44 days after the publication of this notice, or the first workday thereafter.

Issues raised in any hearing will be limited to those raised in the respective case briefs and rebuttal briefs. See 19 CFR 351.310(c). Case briefs from interested parties and rebuttal briefs, limited to the issues raised in the respective case briefs, may be submitted not later than 30 days and 37 days, respectively, from the date of publication of these preliminary results. See 19 CFR 351.309(c) and (d). Parties who submit case briefs or rebuttal briefs in this proceeding are requested to submit with each argument (1) a statement of the issue and (2) a brief summary of the argument. Parties are also encouraged to provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited.

The Department will issue the final results of this new shipper review, including the results of its analysis of issues raised in any written briefs or at the hearing, if held, not later than 90 days after the date on which the preliminary results are issued.

Interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Import Administration, Room B-099, within 30 days of the date of publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of issues to be discussed.

In accordance with 19 CFR 351.301(c)(3)(ii), interested parties may submit additional publicly available information to value the factors of production for the final results of this review until 20 days after publication of these results, unless a written request for an extension is received and granted.

Assessment Rates

Upon completion of this new shipper review, the Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. The Department will issue appropriate appraisement instructions directly to the Customs Service upon completion of this review. The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of this review and for future deposits of estimated duties. Pursuant to 19 CFR 351.106(c)(2), we will instruct the Customs Service to liquidate without regard to antidumping duties all entries for any importer for whom the assessment rate is de minimis (i.e., less than 0.50 percent). For assessment purposes, we intend to calculate an entry-specific ad valorem duty assessment rate for Green Fresh, whose sale and entry under review occurred in different PORs, based on the ratio of the total amount of the dumping margins calculated for the examined sales to the total entered value of those same sales.

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entry for 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.

Cash Deposit Requirements

The following cash 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 new shipper review, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate for the reviewed company will be that established in the final results of this review, except if the rate is less than 0.50 percent, and therefore, de minimis within the meaning of 19 CFR 351.106(c)(1), in which case the cash deposit rate will be zero; (2) for previously reviewed or investigated companies not listed above that have separate rates, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) the cash deposit rate for all other PRC manufacturers or exporters will continue to be 198.63 percent, the “PRC-Wide” rate made effective by the LTFV investigation; and (4) for all non-PRC exporters, the cash deposit rate will continue to be 198.63 percent, the “PRC-Wide” rate made effective by the Start Printed Page 30699LTFV investigation. These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

This new shipper review and notice are published in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.214.

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Dated: May 31, 2001.

Faryar Shirzad,

Assistant Secretary for Import Administration.

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1.  On June 19, 2000, the Department affirmed that “marinated,” “acidified,” or “pickled” mushrooms containing less than 0.5 percent acetic acid are within the scope of the antidumping duty order. See “Recommendation Memorandum-Final Ruling of Request by Tak Fat, et al. for Exclusion of Certain Marinated, Acidified Mushrooms from the Scope of the Antidumping Duty Order on Certain Preserved Mushrooms from the People's Republic of China.”

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[FR Doc. 01-14380 Filed 6-6-01; 8:45 am]