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Certain Frozen Warmwater Shrimp from the People's Republic of China: Preliminary Notice of Intent to Rescind Antidumping Duty New Shipper Review

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (“the Department”) is currently conducting the semi-annual 2006 new shipper review of the antidumping duty order on certain frozen warmwater shrimp (“shrimp”) from the People's Republic of China (“PRC”). We preliminarily determine that Maoming Changxing Foods Co., Ltd. (“Maoming Changxing”) has failed to demonstrate its eligibility for a separate rate in this new shipper review. Therefore, we have preliminarily determined that this new shipper review should be rescinded. Interested parties are invited to comment on this preliminary notice of intent to rescind.

EFFECTIVE DATE:

July 26, 2007.

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FOR FURTHER INFORMATION CONTACT:

Anya Naschak, AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-6375.

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SUPPLEMENTARY INFORMATION:

Background

The Department received a timely request from Maoming Changxing, in accordance with 19 CFR 351.214(c), for a new shipper review of the antidumping duty order on shrimp from the PRC.

On September 22, 2006, the Department found that the request for review with respect to Maoming Changxing met all of the regulatory requirements set forth in 19 CFR 351.214(b) and initiated an antidumping duty new shipper review covering the period February 1, 2006, through July 31, 2006. See Certain Frozen Warmwater Shrimp from the People's Republic of China: Initiation of New Shipper Review, 71 FR 57469 (September 29, 2006) (“Initiation Notice”).

On March 13, 2007, the Department extended the deadline for the preliminary results of the new shipper review until July 19, 2007. See Notice of Extension of the Preliminary Results of Antidumping Duty New Shipper Review: Certain Frozen Warmwater Shrimp from thePeople's Republic of China, 72 FR 11324 (March 13, 2007).

On September 27, 2006, we issued an antidumping duty questionnaire to Maoming Changxing. See Letter to Maoming Changxing from Christopher Riker, dated September 27, 2006. On October 12, 2006, the Department placed on the record of this review U.S. Customs and Border Protection (“CBP”) documentation from Maoming Changxing's shipment to the United States during the period of review (“POR”). See Memorandum to the File: Certain Frozen Warmwater Shrimp from the People's Republic of China: Entry Package(s) from U.S. Customs and Border Protection (“CBP”), dated October 12, 2006 (“Entry Documents Memo”). On October 25, 2006, Maoming Changxing responded to section A of the Department's questionnaire. On November 21, 2006, the Department received Maoming Changxing's response to sections C and D, and importer-specific questionnaire response. Between December 5, 2006, and May 1, 2007, the Department issued supplemental section A, C, D, and importer-specific questions to Maoming Changxing, and received responses to these questionnaires between December 29, 2006, and May 10, 2007.

On April 2, 2007, the Department provided parties with an opportunity to submit publicly available information Start Printed Page 41059on surrogate countries and surrogate values for consideration in these preliminary results. See Letter to All Interested Parties from Christopher D. Riker: Antidumping Duty New Shipper Review of Certain Frozen Warmwater Shrimp from the People's Republic of China: Letter enclosing the Office of Policy List of Economically Comparable Countries and Schedule for Comments on Surrogate Country, dated April 2, 2007. The Department did not receive any comments on surrogate country or surrogate values from any interested party in this new shipper review.

Period of Review

The POR for this new shipper review is February 1, 2006, through July 31, 2006.

Verification

The Department conducted verification of Maoming Changxing's questionnaire responses between May 21, 2007, and May 23, 2007, at Maoming Changxing's facility in Maoming, Guangdong, PRC. We used standard verification procedures, including on-site inspection of the exporter's manufacturing and sales facilities, and examination of relevant sales and financial records. Our verification results are outlined in the verification report. For a further discussion, see Memorandum to the File from Anya L. Naschak and Michael Holton: Verification of the Questionnaire Responses of Maoming Changxing Foods Co., Ltd. in the Antidumping New Shipper Review of Certain Frozen Warmwater Shrimp from the People's Republic of China, dated July 19, 2007 (“Maoming Changxing Verification Report”). The verification results are on file in the main Department of Commerce building, in the Central Records Unit, Room B-099.

Scope of Order

The scope of this order includes certain frozen warmwater shrimp and prawns, whether wild-caught (ocean harvested) or farm-raised (produced by aquaculture), head-on or head-off, shell-on or peeled, tail-on or tail-off, deveined or not deveined, cooked or raw, or otherwise processed in frozen form.

The frozen warmwater shrimp and prawn products included in the scope of this investigation, regardless of definitions in the Harmonized Tariff Schedule of the United States (“HTS”), are products which are processed from warmwater shrimp and prawns through freezing and which are sold in any count size.

The products described above may be processed from any species of warmwater shrimp and prawns. Warmwater shrimp and prawns are generally classified in, but are not limited to, the Penaeidae family. Some examples of the farmed and wild-caught warmwater species include, but are not limited to, white-leg shrimp (Penaeus vannemei), banana prawn (Penaeus merguiensis), fleshy prawn (Penaeus chinensis), giant river prawn (Macrobrachium rosenbergii), giant tiger prawn (Penaeus monodon), redspotted shrimp (Penaeus brasiliensis), southern brown shrimp (Penaeus subtilis), southern pink shrimp (Penaeus notialis), southern rough shrimp (Trachypenaeus curvirostris), southern white shrimp (Penaeus schmitti), blue shrimp (Penaeus stylirostris), western white shrimp (Penaeus occidentalis), and Indian white prawn (Penaeus indicus).

Frozen shrimp and prawns that are packed with marinade, spices or sauce are included in the scope of this investigation. In addition, food preparations, which are not “prepared meals,” that contain more than 20 percent by weight of shrimp or prawn are also included in the scope of this investigation.

Excluded from the scope are: (1) Breaded shrimp and prawns ( HTS subheading 1605.20.10.20); (2) shrimp and prawns generally classified in the Pandalidae family and commonly referred to as coldwater shrimp, in any state of processing; (3) fresh shrimp and prawns whether shell-on or peeled (HTS subheadings 0306.23.00.20 and 0306.23.00.40); (4) shrimp and prawns in prepared meals (HTS subheading 1605.20.05.10); (5) dried shrimp and prawns; (6) Lee Kum Kee's shrimp sauce; (7) canned warmwater shrimp and prawns (HTS subheading 1605.20.10.40); (8) certain dusted shrimp; and (9) certain battered shrimp. Dusted shrimp is a shrimp-based product: (1) That is produced from fresh (or thawed-from-frozen) and peeled shrimp; (2) to which a “dusting” layer of rice or wheat flour of at least 95 percent purity has been applied; (3) with the entire surface of the shrimp flesh thoroughly and evenly coated with the flour; (4) with the non-shrimp content of the end product constituting between four and 10 percent of the product's total weight after being dusted, but prior to being frozen; and (5) that is subjected to individually quick frozen (“IQF”) freezing immediately after application of the dusting layer. Battered shrimp is a shrimp-based product that, when dusted in accordance with the definition of dusting above, is coated with a wet viscous layer containing egg and/or milk, and par-fried.

The products covered by this investigation are currently classified under the following HTS subheadings: 0306.13.00.03, 0306.13.00.06, 0306.13.00.09, 0306.13.00.12, 0306.13.00.15, 0306.13.00.18, 0306.13.00.21, 0306.13.00.24, 0306.13.00.27, 0306.13.00.40, 1605.20.10.10, and 1605.20.10.30. These HTS subheadings are provided for convenience and for customs purposes only and are not dispositive, but rather the written description of the scope of this investigation is dispositive.

Preliminary Intent to Rescind

Concurrent with this notice, the Department is issuing a memorandum detailing our analysis of the information on the record of this proceeding with respect to Maoming Changxing's ownership and affiliations. See Memorandum to James C. Doyle: Intent to Rescind the New Shipper Review of Maoming Changxing Foods Co., Ltd. in the Antidumping New Shipper Review of Certain Frozen Warmwater Shrimp from the People's Republic of China, dated July 19, 2007 (“Prelim Rescission Memo”).

We have considered whether Maoming Changxing is eligible for a separate rate. The Department's separate-rate test is not concerned, in general, with macroeconomic/border-type controls, e.g., export licenses, quotas, and minimum export prices, particularly if these controls are imposed to prevent dumping. Rather, the test focuses on controls over the investment, pricing, and output decision-making process at the individual firm level. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from Ukraine, 62 FR 61754, 61757 (November 19, 1997), and 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).

To establish whether a firm is sufficiently independent from government control of its export activities to be entitled to a separate rate, the Department analyzes each entity exporting the subject merchandise under a test arising from the Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991) (“Sparklers”), as amplified by Notice of Final Determination of Sales at Less Than Start Printed Page 41060Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994) (“Silicon Carbide”), 59 FR at 22586-87. In accordance with 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.

In proceedings involving 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 rate. It is the Department's policy to assign all exporters of merchandise subject to investigation in an NME country this single rate unless an exporter can demonstrate that it is sufficiently independent so as to be entitled to a separate rate. As explained below, due to Maoming Changxing's failure to provide verifiable information with respect to its ownership and affiliations, it has not provided the information necessary for the Department to examine whether Maoming Changxing operates independently of de facto government control. Therefore, Maoming Changxing does not satisfy the standards for the assignment of a separate rate.

In its questionnaire responses, Maoming Changxing provided information to the Department regarding its corporate structure, ownership, affiliations with other entities, and its export sales negotiation process. However, as discussed in detail in the Prelim Rescission Memo, critical information submitted on the record of this proceeding by Maoming Changxing could not be verified. Specifically, the Department could not verify the information submitted on the record of this new shipper review regarding Maoming Changxing's ownership due to its failure to document the transfer of incorporating capital into Maoming Changxing from its claimed parent companies or ultimate owners. Maoming Changxing also failed to provide the Department with a complete and official version of the capital verification report of one of its claimed parent companies. Further, Maoming Changxing withheld specifically requested information concerning the existence of an affiliated company. In addition, Maoming Changxing's statements on the record of this proceeding with respect to the source of Maoming Changxing's incorporating capital and the financial interests of various owners were found to be inaccurate at verification. See Maoming Changxing Verification Report and Prelim Rescission Memo. As a result, Maoming Changxing has not affirmatively proven that it is free from de facto government control. Specifically, Maoming Changxing's ownership could not be verified and the information submitted on the record with respect to Maoming Changxing's affiliations could not be verified, thereby precluding the Department from conducting an accurate separate rates analysis. Due to the proprietary nature of these issues, we cannot discuss them in detail in this notice. See Prelim Rescission Memo for a further discussion.[1]

Because of deficiencies between Maoming Changxing's responses and the information discovered at verification, the Department was unable to verify information concerning Maoming Changxing's formation and ownership. As a result, and consistent with the Department's determinations in prior cases, where the Department is unable to verify information submitted regarding a company's formation and ownership, that information cannot serve as the basis for the Department's determination regarding the company's eligibility for a separate rate. See Porcelain-on-Steel Cooking Ware from the People's Republic of China: Notice of Final Results of Antidumping Duty Administrative Review, 71 FR 24641 (April 26, 2006), and accompanying Issues and Decision Memorandum (“POS Cookware I&D Memo”) at Comment 1. Therefore, the Department is unable to conduct a separate rates test. Because Maoming Changxing chose not to disclose the existence of an affiliated company (see Prelim Rescission Memo), and because discrepancies in Maoming Changxing's disclosed corporate structure were not discovered until verification, the Department was not able to ask supplemental questions or consider this entity's relationship with the PRC government. In fact, as noted in the POS Cookware I&D Memo at Comment 1, “it is fundamental that the Department be presented with all of the details of a respondent's corporate structure to adequately determine whether the entity qualifies for a separate rate.” Further, in this case, despite numerous supplemental questions by the Department regarding Maoming Changxing's corporate structure and affiliation, Maoming Changxing failed to notify the Department of the existence of any inaccuracies in information it reported to the Department or seek guidance on the applicable reporting requirements, as contemplated in section 782(c)(1) of the Act.

Therefore, because the Department was unable to determine the actual owners of Maoming Changxing, the Department was unable to determine: (1) whether the export prices are set by or are subject to the approval of a governmental agency; (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 management; and (4) whether the respondent retains the proceeds of its export sales and makes independent decisions regarding disposition of profits or financing of losses. See Silicon Carbide, 59 FR at 22587; see also Notice of Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol From the People's Republic of China, 60 FR 22544, 22545 (May 8, 1995).

Accordingly, as Maoming Changxing did not demonstrate that it was eligible for a separate rate, the Department will continue to consider Maoming Changxing part of the NME entity. Further, with respect to Maoming Changxing's qualifications as a new shipper, because the reported information with respect to its affiliated entities could not be verified, the Department was precluded from conducting a meaningful analysis to determine whether Maoming Changxing or its affiliated companies had not exported or produced the subject merchandise to the United States during the period of investigation pursuant to section 751(a)(2)(B)(i)(II) of the Act. Consistent with the Department's practice, we have therefore determined that Maoming Changxing does not qualify as a new shipper under section 351.214(a) of the Department's regulations because it is part of an entity that shipped during the original period of investigation. Accordingly, we intend to rescind the new shipper review. See, e.g., Freshwater Crawfish Tail Meat From the People's Republic's of China: Rescission of New Shipper Reviews, 72 FR 26782 (May 11, 2007); see also Brake Rotors from the People's Republic of China: Rescission of Second New Shipper Review and Final Results and Partial Rescission of First Antidumping Duty Administrative Review, 64 FR 61581 (November 12, 1999).Start Printed Page 41061

Schedule for Final Results of Review

Unless otherwise notified by the Department, interested parties may submit case briefs within 30 days of the date of publication of this notice in accordance with 19 CFR 351.309(c)(ii). As part of the case brief, parties are encouraged to provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited. Rebuttal briefs, which must be limited to issues raised in the case briefs, must be filed within five days after the case brief is filed. See 19 CFR 351.309(d).

Any interested party may request a hearing within 30 days of publication of this notice in accordance with 19 CFR 351.310(c). Any hearing would normally be held 37 days after the publication of this notice, or the first workday thereafter, at the U.S. Department of Commerce, 14th Street and Constitution Avenue NW, Washington, DC 20230. Individuals who wish to request a hearing must submit a written request within 30 days of the publication of this notice in the Federal Register to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, 14th Street and Constitution Avenue, NW, Washington, DC 20230. Requests for a public hearing should contain: (1) the party's name, address, and telephone number; (2) the number of participants; and, (3) to the extent practicable, an identification of the arguments to be raised at the hearing. If a hearing is held, an interested party must limit its presentation only to arguments raised in its briefs. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time.

The Department will issue the final results or final rescission of this new shipper review, which will include the results of its analysis of issues raised in the briefs, within 90 days from the date of the preliminary results, unless the time limit is extended.

Notification

At the completion of this new shipper review, if a final rescission notice is published, a cash deposit of 112.81 percent ad valorem shall be collected for any entries produced and exported by Maoming Changxing. The Department intends to issue assessment instructions to CBP 15 days after the date of publication of these final results of review. Should the Department reach a final result other than a rescission, an appropriate antidumping duty rate will be calculated for both assessment and cash deposit purposes.

This notice also serves as the only reminder to parties subject to administrative protective orders (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return/destruction of APO material or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanctions.

This new shipper review and this notice are published in accordance with sections 751(a)(2)(B) and 777(i)(1) of the Act.

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Dated: July 19, 2007.

Joseph A. Spetrini,

Deputy Assistant Secretary for Import Administration.

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Footnotes

1.  In addition, the Department found at verification information contrary to Maoming Changxing's description of the sales negotiation and sales execution process, which, if a separate rates test were conducted, calls into question the de facto absence of government control over Maoming Changxing's export activities. However, due to Maoming Changxing's failure to substantiate its ownership and affiliations, these issues are not separately addressed in this notice. See also Prelim Rescission Memo.

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[FR Doc. E7-14461 Filed 7-25-07; 8:45 am]

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