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Notice

Certain Pasta from Turkey: Notice of Preliminary Results of Antidumping Duty Administrative Review and Notice of Intent Not To Revoke Order in Part

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Information about this document as published in the Federal Register.

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Results of Antidumping Duty Administrative Review and Notice of Intent Not To Revoke Order in Part.

SUMMARY:

In response to a request by one producer/exporter of the subject merchandise, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain pasta (pasta) from Turkey for the period July 1, 2000 through June 30, 2001.

We preliminarily determine that during the period of review (POR), Filiz Gida Sanayi ve Ticaret A.S. (Filiz) sold subject merchandise at less than normal value (NV). If these preliminary results are adopted in the final results of this administrative review, we will instruct the U.S. Customs Service to assess antidumping duties based on the difference between the export price (EP) and NV. In addition, we are not revoking the antidumping order with respect to Filiz, because it has not had zero or de minimis dumping margins for three consecutive reviews and has not had three years of sales in commercial quantities at not less than NV. See Intent Not To Revoke section of this notice.

Interested parties are invited to comment on these preliminary results. Parties who submit comments in this proceeding should also submit with Start Printed Page 51195them: (1) A statement of the issues; (2) a brief summary of their comments; and (3) a table of authorities. Further, we would appreciate it if parties submitting written comments would provide the Department with an additional copy of the public version of any such comments on diskette.

EFFECTIVE DATE:

August 7, 2002.

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FOR FURTHER INFORMATION CONTACT:

Lyman Armstrong or Cindy Robinson, AD/CVD Enforcement, Office 6, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-3601 or (202) 482-3797, respectively.

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SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations:

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to Department regulations refer to the regulations codified at 19 CFR Part 351 (April 2001).

Case History

On July 24, 1996, the Department published in the Federal Register the antidumping duty order on pasta from Turkey (61 FR 38545). On July 2, 2001, we published in the Federal Register the notice of “Opportunity to Request Administrative Review” of this order, for the period July 1, 2000, through June 30, 2001 (66 FR 34910).

On July 31, 2001, we received a request for review from Filiz, a Turkish exporter/producer of pasta, in accordance with 19 CFR 351.213(b)(2). In addition, on July 31, 2001, Filiz submitted a letter to the Department requesting, pursuant to 19 CFR 351.222(b), revocation of the antidumping duty order with respect to its sales of the subject merchandise. On August 20, 2001, we published the notice of initiation of this antidumping duty administrative review covering the period July 1, 2000 through June 30, 2001, for Filiz. See Notice of Initiation, 66 FR 43570 (August 20, 2001).

On August 28, 2001, we sent the antidumping duty questionnaires to Filiz. For Filiz, the Department disregarded sales that failed the cost test during the most recently completed segment of the proceeding in which this company participated.[1] Therefore, pursuant to section 773(b)(2)(A)(ii) of the Act, we had reasonable grounds to believe or suspect that sales by this company of the foreign like product under consideration for the determination of NV in this review were made at prices below the cost of production (COP). Thus, we initiated a cost investigation of Filiz at the time we initiated the antidumping review.

Filiz submitted its sections A through D questionnaire responses on October 25, 2001. The Department issued a supplemental sections A through D questionnaire to Filiz on February 6, 2002. Filiz submitted its response to our supplemental questionnaire on March 4, 2002.

On March 12, 2002, the Department published a notice postponing the preliminary results of this review until July 30, 2002.[2] See Certain Pasta from Italy and Turkey: Extension of Preliminary Results of Antidumping Duty Administrative Reviews, 67 FR 11095 (March 12, 2002).

We verified the sales and cost information submitted by Filiz from March 20 through March 29, 2002. On May 7, 2002, petitioners submitted comments requesting that the Department not revoke the antidumping duty order with respect to Filiz. On May 8, 2002 Filiz submitted rebuttal comments regarding revocation with respect to its sales of subject merchandise.

Scope of Review

Imports covered by this review are shipments of certain non-egg dry pasta in packages of five pounds (2.27 kilograms) or less, whether or not enriched or fortified or containing milk or other optional ingredients such as chopped vegetables, vegetable purees, milk, gluten, diastases, vitamins, coloring and flavorings, and up to two percent egg white. The pasta covered by this scope is typically sold in the retail market, in fiberboard or cardboard cartons, or polyethylene or polypropylene bags of varying dimensions.

Excluded from the scope of this review are refrigerated, frozen, or canned pastas, as well as all forms of egg pasta, with the exception of non-egg dry pasta containing up to two percent egg white.

The merchandise subject to review is currently classifiable under item 1902.19.20 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheading is provided for convenience and Customs purposes, the written description of the merchandise subject to the order is dispositive.

Scope Rulings

The Department has issued the following scope ruling to date:

(1) On October 26, 1998, the Department self-initiated a scope inquiry to determine whether a package weighing over five pounds as a result of allowable industry tolerances is within the scope of the antidumping and countervailing duty orders. On May 24, 1999 we issued a final scope ruling finding that, effective October 26, 1998, pasta in packages weighing or labeled up to (and including) five pounds four ounces is within the scope of the antidumping and countervailing duty orders. See “Memorandum from John Brinkmann to Richard Moreland,” dated May 24, 1999, in the case file in the Central Records Unit, main Commerce building, room B-099 (the CRU).

Verification

As provided in section 782(i) of the Act, we verified the cost and sales information provided by Filiz. We used standard verification procedures, including on-site inspection of the manufacturer's facilities and examination of relevant sales and financial records. Our verification results are outlined in a verification report placed in the case file in the CRU. We revised certain sales and cost data based on verification findings, see, Filiz's Preliminary Calculation Memorandum (Preliminary Calculation Memorandum) (July 31, 2002) and Verification of the Sales Questionnaire of Filiz (July 22, 2002) on file in the CRU.

Product Comparisons

In accordance with section 771(16) of the Act, the Department first attempted to match contemporaneous sales of products sold in the U.S. and comparison markets that were identical with respect to the following characteristics: (1) Pasta shape; (2) type of wheat; (3) additives; and (4) enrichment. Where there were no sales of identical merchandise in the home market to compare with U.S. sales, we compared U.S. sales with the most similar product based on the characteristics listed above, in descending order of priority.

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For purposes of the preliminary results, where appropriate, we have calculated the adjustment for differences in merchandise based on the difference in the variable cost of manufacturing between each U.S. model and the most similar home market model selected for comparison.

Comparisons to Normal Value

To determine whether sales of certain pasta from Turkey were made in the United States at less than fair value, we compared the export price (EP) to the normal value (NV), as described in the Export Price and Normal Value sections of this notice. Because Turkey's economy experienced high inflation during the POR (over 60 percent), as is Department practice, we limited our comparisons to home market sales made during the same month in which the U.S. sale occurred and did not apply our 90/60 contemporaneity rule. See, e.g., Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Pasta From Turkey, 63 FR 68429, 68430 (December 11, 1998) and Certain Porcelain on Steel Cookware from Mexico: Final Results of Antidumping Duty Administrative Review, 62 FR 42496, 42503 (August 7, 1997). This methodology minimizes the extent to which calculated dumping margins are overstated or understated due solely to price inflation that occurred in the intervening time period between the U.S. and home market sales.

Export Price

For the price to the United States, we used EP in accordance with section 772(a) of the Act because the merchandise was sold by the producer or exporter outside the United States to the first unaffiliated purchaser in the United States prior to importation and constructed export price was not otherwise warranted based on the facts on the record. We based EP on the packed C&F prices to the first unaffiliated customer in the United States.

In accordance with section 772(c)(2) of the Act, we made deductions, where appropriate, for movement expenses including inland freight from plant or warehouse to port of exportation, foreign brokerage handling and loading charges, and international freight. In addition, we increased the EP by the amount of the countervailing duties paid that were attributable to an export subsidy, in accordance with section 772(c)(1)(C).

Normal Value

A. Selection of Comparison Markets

In order to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating NV, we compared Filiz's volume of home market sales of the foreign like product to the volume of its U.S. sales of the subject merchandise. Pursuant to section 773(a)(1)(B) of the Act, because Filiz's aggregate volume of home market sales of the foreign like product was greater than five percent of its aggregate volume of U.S. sales of the subject merchandise, we determined that the home market was viable for Filiz.

B. Arm's Length Test

Sales to affiliated customers for consumption in the home market which were determined not to be at arm's length were excluded from our analysis. To test whether these sales were made at arm's length, we compared the prices of sales of comparison products to affiliated and unaffiliated customers, net of all movement charges, direct selling expenses, discounts, rebates, and packing. Pursuant to 19 CFR 351.403(c) and in accordance with our practice, where the prices to the affiliated party were on average less than 99.5 percent of the prices to unaffiliated parties, we determined that the sales made to the affiliated party were not at arm's length. See, e.g., Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Review: Roller Chain, Other Than Bicycle, From Japan, 62 FR 60472, 60478 (November 10, 1997), and Antidumping Duties; Countervailing Duties: Final Rule (Antidumping Duties), 62 FR 27295, 27355-56 (May 19, 1997). We included in our NV calculations those sales to affiliated customers that passed the arm's-length test in our analysis. See 19 CFR 351.403; Antidumping Duties, 62 FR at 27355-56.

C. Cost of Production Analysis

1. Calculation of COP

Before making any comparisons to NV, we conducted a COP analysis, pursuant to section 773(b) of the Act, to determine whether the respondent's comparison market sales were made below the COP. We calculated the COP based on the sum of the cost of materials and fabrication for the foreign like product, plus amounts for selling, general, and administrative (SG&A) expenses and packing, in accordance with section 773(b)(3) of the Act. We relied on the respondent's information as submitted, except in instances where we used revised data based on verification findings. See the Preliminary Calculation Memorandum on file in the CRU, for a description of any changes that we made.

As noted above, we determined that the Turkish economy experienced high inflation during the POR. Therefore, to avoid the distortive effect of inflation on our comparison of costs and prices, we requested that the respondent submit the product-specific cost of manufacturing (COM) incurred during each month of the period for which it reported home market sales. We then calculated an average COM for each product after indexing the reported monthly costs to an equivalent currency level using the Turkish wholesale price index from the International Financial Statistics published by the International Monetary Fund (IMF). We then restated the average COM in the currency value of each respective month.

2. Test of Comparison Market Prices

As required under section 773(b) of the Act, for Filiz, we compared the weighted-average COP to the weighted-average per unit price of the comparison market sales of the foreign like product, to determine whether Filiz's sales had been made at prices below the COP within an extended period of time in substantial quantities. For Filiz, we determined the net comparison market prices for the below-cost test by subtracting from the gross unit price any applicable movement charges, discounts, rebates, direct and indirect selling expenses (also subtracted from the COP), and packing expenses. We added interest revenue.

3. Results of COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of sales of a given product were at prices less than the COP, we did not disregard any below-cost sales of that product because we determined that the below-cost sales were not made in “substantial quantities.” Where 20 percent or more of Filiz's sales of a given product during the twelve-month period were at prices less than the COP, we determined such sales to have been made in “substantial quantities” within an extended period of time in accordance with section 773(b)(2)(B) and (C) of the Act. In such cases, because we compared prices to POR-average costs (indexed for inflation), we also determined that such sales were not made at prices which would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. Therefore, for purposes of this administrative review, for Filiz we Start Printed Page 51197disregarded the below-cost sales and used the remaining sales as the basis for determining NV, in accordance with section 773(b)(1) of the Act.

D. Calculation of Normal Value Based on Comparison Market Prices

We calculated NV based on ex-factory or delivered prices to comparison market customers. We made deductions from the starting price for inland freight, warehousing, inland insurance, discounts, and rebates. In accordance with sections 773(a)(6)(A) and (B) of the Act, we added U.S. packing costs and deducted comparison market packing costs, respectively. In addition, we made circumstance of sale adjustments for direct expenses, including imputed credit, advertising, promotions, and warranties, in accordance with section 773(a)(6)(C)(iii) of the Act.

When comparing U.S. sales with comparison market sales of similar, but not identical, merchandise, we also made adjustments for physical differences in the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. Pursuant to section 351.411 of the Department's regulations, we based this adjustment on the difference in the variable COM for the foreign like product and subject merchandise, using twelve-month average costs, as adjusted for inflation for each month of the twelve-month period, as described in the Cost of Production Analysis section above.

E. Level of Trade (LOT)

In accordance with section 773(a)(1)(B) of the Act, we determined NV based on sales in the comparison market at the same LOT as the U.S. EP sales, to the extent practicable. When there are no sales at the same LOT, we compare U.S. sales to comparison market sales at a different LOT.

Pursuant to section 351.412 of the Department's regulations, to determine whether comparison market sales are at a different LOT, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated (or arm's length) customers. If the comparison-market sales are at a different LOT and the differences affect 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 an a LOT adjustment under section 773(a)(7)(A) of the Act.

For Filiz, all EP sales were compared to home market sales at the same LOT. Therefore, no LOT adjustment was necessary.

For a detailed description of our LOT methodology and a summary of company-specific LOT findings for these preliminary results, see, Preliminary Calculation Memorandum on file in the CRU.

Intent Not To Revoke

On July 31 2001, Filiz submitted a letter to the Department requesting, pursuant to 19 CFR 351.222(b), revocation of the antidumping duty order with respect to its sales of the subject merchandise.

The Department “may revoke, in whole or in part” an antidumping duty order upon completion of a review under section 751 of the Act. While Congress has not specified the procedures that the Department must follow in revoking an order, the Department has developed a procedure for revocation that is described in 19 CFR 351.222. This regulation requires, inter alia, that one or more exporters and producers covered by the order submit the following: (1) A certification that the company has sold the subject merchandise at not less than NV in the current review period and that the company will not sell at less than NV in the future; (2) a certification that the company sold the subject merchandise in each of the three years forming the basis of the request in commercial quantities; and (3) an agreement to immediate reinstatement of the order if the Department concludes that the company, subsequent to the revocation, has sold subject merchandise at less than NV. See 19 CFR 351.222(e)(1). Upon receipt of such a request, the Department will consider the following in determining whether to revoke the order in part: (1) Whether the producer or exporter requesting revocation has sold subject merchandise at not less than NV for a period of at least three consecutive years; (2) whether continued application of the AD order is otherwise necessary to offset dumping; and (3) whether the producer or exporter requesting revocation in part has agreed in writing to the immediate reinstatement of the order, as long as any exporter or producer is subject to the order, if the Department concludes that the exporter or producer, subsequent to revocation, sold the subject merchandise at less than NV. See 19 CFR. 351.222(b)(2).

In accordance with 19 CFR 351.222(e), Filiz's request was accompanied by certifications from Filiz that it had not sold the subject merchandise at less than NV for a three-year period including this review period, and would not do so in the future. In addition, Filiz stated that it had sold subject merchandise in commercial quantities during this time. Filiz also agreed to immediate reinstatement in the relevant antidumping order, as long as any firm is subject to the order, if the Department concludes under 19 CFR 351.216 that, subsequent to revocation, Filiz sold the subject merchandise at less than NV. The Department conducted verifications of Filiz's responses for this period of review.

In the two prior reviews of this order we determined that Filiz sold pasta from Turkey at not less than NV or at de minimis margins. We have preliminarily determined that Filiz sold pasta products at less than NV during the instant review period. However, in determining whether a requesting party is entitled to revocation, the Department must be able to determine that the company has continued to participate meaningfully in the U.S. market during each of the three years at issue. See, e.g., Notice of Preliminary Results of Antidumping Administrative Review and Intent Not To Revoke Order in Part: Pure Magnesium from Canada (Pure Magnesium from Canada), 63 FR 26147 (May 12, 1998) and Notice of Preliminary Results of Antidumping Administrative Review and Intent Not To Revoke Order in Part: Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From the Republic of Korea 65 FR 54197 (September 7, 2000).

This practice has been codified in 19 CFR 351.222(e), which states that a party requesting a revocation review is required to certify that it has sold the subject merchandise in commercial quantities during the periods forming the basis of the revocation request. See also, Section 351.222(d)(1) of the Department's regulations, which states that, “before revoking an order or terminating a suspended investigation, the Secretary must be satisfied that, during each of the three (or five) years, there were exports to the United States in commercial quantities of the subject merchandise to which a revocation or termination will apply.”; see also, the preamble of the Department's latest revision of the revocation regulation stating: “The threshold requirement for revocation continues to be that respondent not sell at less than normal value for at least three consecutive years and that, during those years, respondent exported subject merchandise to the United States in commercial quantities” Amended Regulation Concerning the Revocation of Antidumping and Countervailing Duty Orders, 64 FR 51236, 51237 (September 22, 1999). For purposes of revocation, the Department must be able to determine that past Start Printed Page 51198margins reflect a company's normal commercial activity. Sales during the POR which, in the aggregate, are an abnormally small quantity do not provide a reasonable basis for determining that the discipline of the order is no longer necessary to offset dumping. As the Department has previously stated, the commercial quantities requirement is a threshold matter. See e.g., Pure Magnesium from Canada, 64 FR 50489, 50490 (September 17, 1999). Thus, a party must have meaningfully participated in the marketplace in order to substantiate the need for further inquiry regarding whether continued imposition of the order is warranted.

Based on the current record, we find that Filiz did not sell merchandise in the United States in commercial quantities during the three consecutive reviews cited by Filiz to support its request for revocation. During the current POR (July 2000 through June 2001), Filiz made only one sale in the United States. Moreover, the total tonnage of this sale was small. By contrast, during the period covered by the antidumping investigation (May 1994 through April 1995), Filiz made numerous sales in the United States whose total quantity is 400 times greater than the quantity Filiz sold in the United States during the fifth administrative review period (the current review period). See Verification of the Sales Questionnaire of Filiz at exhibit 20. In other words, Filiz's sales for the entire year covered by the fifth review period were only 0.22 percent of its sales volume during the twelve-months covered by the investigation. Similarly, during the third and fourth administrative reviews, Filiz made only one sale during each of these respective reviews. See Verification of the Sales Questionnaire of Filiz at exhibit 20. Even, if Filiz receives a de minimis margin during the review at issue, this margin is not based on commercial quantities within the meaning of the revocation regulation. The number of sales and total sales volume is so small, both in absolute terms, and in comparison with the period of investigation and other review periods, that it does not provide any meaningful information about Filiz's normal commercial experience without the discipline of the antidumping duty order. See, Preliminary Calculation Memorandum. Therefore, we find that Filiz did not meaningfully participate in the marketplace, and thus, because it has not sold the subject merchandise for three years in commercial quantities within the meaning of 19 CFR 351.222(e), does not qualify for revocation.

Because the requirements under the regulations have not been satisfied, if these preliminary findings are affirmed in our final results, we do not intend to revoke the antidumping duty order with respect to merchandise produced and exported by Filiz.

Currency Conversion

Because this proceeding involves a high-inflation economy, we limited our comparison of U.S. and home market sales to those occurring in the same month (as described above) and only used daily exchange rates. See Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Pasta From Turkey, 63 FR 68429 (December 11, 1998).

The Department's preferred source for daily exchange rates is the Federal Reserve Bank. However, the Federal Reserve Bank does not track or publish exchange rates for the Turkish Lira. Therefore, we made currency conversions based on the daily exchange rates from the Dow Jones Service, as published in the Wall Street Journal.

Preliminary Results of Review

As a result of our review, we preliminarily determine that the following percentage weighted-average margin exists for the period July 1, 2000 through June 30, 2001:

Manufacturer/exporterMargin (percent)
Filiz16.06

The Department will disclose the calculations performed within five days of the date of publication of this notice to the parties of this proceeding in accordance with 19 CFR 351.224(b). An interested party may request a hearing within 30 days of publication of these preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, will be held 44 days after the date of publication, or the first working day thereafter. Interested parties may submit case briefs no later than 30 days after the date of publication of these preliminary results of review. Rebuttal briefs, limited to issues raised in such briefs, may be filed no later than 37 days after the date of publication. Parties who submit arguments are requested to submit with the argument (1) a statement of the issue, (2) a brief summary of the argument and (3) a table of authorities. Further, we would appreciate it if parties submitting written comments would provide the Department with an additional copy of the public version of any such comments on diskette. The Department will issue the final results of this administrative review, which will include the results of its analysis of issues raised in any such comments, or at a hearing, if requested, within 120 days of publication of these preliminary results.

Assessment Rate

Pursuant to 19 CFR 351.212(b), the Department calculated an assessment rate for each importer of the subject merchandise. Upon issuance of the final results of this administrative review, if any importer-specific assessment rates calculated in the final results are above de minimis (i.e., at or above 0.5 percent) the Department will issue appraisement instructions directly to the U.S. Customs Service to assess antidumping duties on appropriate entries by applying the assessment rate to the entered value of the merchandise. For assessment purposes, we calculated importer-specific assessment rates for the subject merchandise by aggregating the dumping margins for all U.S. sales to each importer and dividing the amount by the total entered value of the sales to that importer.

Cash Deposit Requirements

To calculate the cash-deposit rates for each producer and/or exporter included in this administrative review, we divided the total dumping margins for each company by the total net value for that company's sales during the review period.

The following deposit rates will be effective upon publication of the final results of this administrative review for all shipments of certain pasta from Turkey entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(2)(C) of the Act: (1) The cash deposit rate for the company listed above will be the rate established in the final results of this review except if the rate is less than 0.5 percent and, therefore, de minimis, the cash deposit will be zero; (2) for previously reviewed or investigated companies, the cash deposit rate will continue to be the company-specific rate published for the most recent final results in which that manufacturer or exporter participated; (3) if the exporter is not a firm covered in this review, a prior review, or the original less-than-fair-value (LTFV) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent final results for the manufacturer of the merchandise; and (4) if neither the exporter nor the manufacturer is a firm Start Printed Page 51199covered in this or any previous review conducted by the Department, the cash deposit rate will be 51.49 percent, the “All Others” rate established in the LTFV investigation. See Notice of Antidumping Duty Order and Amended Final Determination of Sales at Less Than Fair Value: Certain Pasta from Turkey, 61 FR 38546 (July 24, 1996).

These cash deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Importers

This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) 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 is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

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Dated: July 31, 2002.

Faryar Shirzad,

Assistant Secretary for Import Administration.

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Footnotes

1.  The fourth administrative review covering the period July 1, 1999, through June 30, 2000, was the most recently completed review for Filiz. See Certain Pasta From Turkey: Final Results of Antidumping Duty Administrative Review and Determination Not To Revoke the Antidumping Duty Order in Part, 67 FR 298 (January 3, 2002).

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2.  There was a typographical error in the notice of “Extension of Preliminary Results of Antidumping Duty Administrative Reviews”; the preliminary results of this review are actually due on July 31, 2002.

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[FR Doc. 02-19986 Filed 8-6-02; 8:45 am]

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