Fresh Garlic from the People's Republic of China: Final Results and Partial Rescission of Antidumping Duty Administrative Review and Final Results of New Shipper Reviews

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On November 18, 2005, the Department of Commerce (“the Department”) published the preliminary results of the administrative review and the preliminary results of the new shipper reviews of the antidumping duty order on fresh garlic from the People's Republic of China. The period of review is November 1, 2003, through October 31, 2004. The administrative review covers twenty-one exporters, and the new shipper reviews cover two exporters.

We invited interested parties to comment on our preliminary results. We specifically invited comments on surrogate country selection for water valuation; however, no parties submitted comments on this issue.¹ Based on our analysis of the comments received, we have made certain changes to our calculations. The final dumping margins for these reviews are listed in the “Final Results of the Reviews” section below.

EFFECTIVE DATE:

May 4, 2006.

FOR FURTHER INFORMATION CONTACT:

Katharine Huang or Blanche Ziv, AD/CVD Operations, Office 8, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-5047 and (202) 482-4207, respectively.

SUPPLEMENTARY INFORMATION:

Background

On November 18, 2005, the Department published the preliminary results of the administrative review and new shipper reviews of the antidumping duty order on fresh garlic from the People's Republic of China. See Fresh Garlic from the People's Republic of China: Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review and Preliminary Results of New Shipper Reviews, 70 FR 69942 (November 18, 2005) (“Preliminary Results”). On December 19, 2005, Taian Fook Huat Tong Kee Foodstuffs Co., Ltd. (“FHTK”) submitted comments on minor errors contained in the Department's preliminary margin calculation for FHTK. In December 2005, we extended the deadline by which interested parties may submit publicly available information to value factors of production to January 5, 2006. Also in December 2005, we postponed the briefing schedule until January 2006 and notified interested parties.

On January 5, 2006, we received surrogate value submissions from the petitioners and five respondents. On January 17, 2006, we received additional surrogate value information from the petitioners in rebuttal to the January 5, 2006, submissions from respondents. We also received submissions from seven respondents⁴ in rebuttal to the January 5, 2006, submission from the petitioners. On January 23, 2006, we received a case brief from the petitioners and their request for a public hearing. We also received case briefs from Linshu Dading, Sunny, Harmoni, Shanyang, Jinan Yipin, FHTK, Weifang Shennong Foodstuff Co., Ltd. (“WSFC”), Jining Trans-High Trading Co., Ltd. (“Trans-High”), Shanghai LJ International Trading Company (“Shanghai LJ”), and Jinxiang Dong Yun Freezing Storage Co., Ltd. (“Dong Yun”). On January 30, 2006, we received rebuttal submissions from the petitioners, Linshu Dading, Sunny, Harmoni, Shanyang, Jinan Yipin, FHTK, Trans-High, Shanghai LJ, Dong Yun, and Taian Ziyang Food Co., Ltd. (“Ziyang”). No comments were submitted by Huaiyang Hongda Dehydrated Vegetable Company (“Hongda”) or Zhangqiu Qingyuan Vegetable Co., Ltd. (“Qingyuan”).

On February 14, 2006, the petitioners submitted a letter withdrawing their request for a hearing. As there were no other requests for a hearing, the Department did not conduct a hearing in these reviews.

On February 14, 2006, we evaluated Trans-High's comments in its case briefs with regard to the copying error in the verification report and identified that Trans-High had based its comments on a draft of the report released for bracketing of business proprietary information, rather than on the official version of the verification report released to the parties. Pursuant to its relevant comments in its case brief, the Department discovered that Trans-High had not picked up the official version of the report from the Department's Central Records Unit (“CRU”). In response to Trans-High's omission, we re-released the official version of the verification report to Trans-High and allowed it one week to submit any comments relevant to the official version. See Letter from Blanche Ziv to Francis Sailer, dated February 14, 2006. Trans-High did not submit any comments in response to this opportunity. See Memorandum from Jennifer Moats to the File entitled, “No Comments on Official Version of Trans-High Verification Report,” dated March 9, 2006.

On March 1, 2006, we issued a letter to all interested parties requesting comments on a change in our allocation of certain labor items from direct labor to manufacturing overhead in the calculation of the surrogate financial ratios. We received comments on our allocation methodology from Linshu Dading, Sunny, Harmoni, Shanyang, and Jinan Yipin on March 10, 2006.

On March 16, 2006, we extended the time limit for the completion of the final results of these reviews, including our analysis of issues raised in case or rebuttal briefs until April 17, 2006. See Notice of Extension of Time Limit for Final Results of Antidumping Duty Administrative Review and New Shipper Reviews: Fresh Garlic from the People's Republic of China, 71 FR 14681 (March 23, 2006).

On March 22, 2006, we issued a letter to all interested parties requesting comments on publicly available information to value garlic bulbs for the final results of review. We received comments from the petitioners, Linshu Dading, Sunny, Harmoni, Shanyang, Jinan Yipin, Ziyang, and FHTK on March 28, 2006.

On April 14, 2006, we extended the time limit for the completion of the final results of these reviews, including our analysis of issues raised in case or rebuttal briefs, until April 26, 2006. See Notice of Extension of Time Limit for Final Results of Antidumping Duty Administrative Review and New Shipper Reviews: Fresh Garlic from the People's Republic of China, 71 FR 20645 (April 21, 2006).

We have conducted these reviews in accordance with sections 751 and 777 of the Tariff Act of 1930, as amended (“the Act”), and 19 CFR 351.213, 351.214 and 352.221 (2005).

Scope of the Order

The products covered by this antidumping duty order are all grades of garlic, whole or separated into constituent cloves, whether or not peeled, fresh, chilled, frozen, provisionally preserved, or packed in water or other neutral substance, but not prepared or preserved by the addition of other ingredients or heat processing. The differences between grades are based on color, size, sheathing, and level of decay.

The scope of this order does not include the following: (a) Garlic that has been mechanically harvested and that is primarily, but not exclusively, destined for non-fresh use; or (b) garlic that has been specially prepared and cultivated prior to planting and then harvested and otherwise prepared for use as seed.

The subject merchandise is used principally as a food product and for seasoning. The subject garlic is currently classifiable under subheadings 0703.20.0010, 0703.20.0020, 0703.20.0090, 0710.80.7060, 0710.80.9750, 0711.90.6000, and 2005.90.9700 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 this order is dispositive. In order to be excluded from the antidumping duty order, garlic entered under the HTSUS subheadings listed above that is (1) mechanically harvested and primarily, but not exclusively, destined for non-fresh use or (2) specially prepared and cultivated prior to planting and then harvested and otherwise prepared for use as seed must be accompanied by declarations to U.S. Customs and Border Protection (“CBP”) to that effect.

Analysis of Comments Received

All issues raised in the post-preliminary comments by parties in this review are addressed in the Issues and Decision Memorandum, dated April 26, 2006 (“Decision Memorandum”), which is hereby adopted by this notice. A list of the issues which parties raised and to which we respond in the Decision Memorandum is attached to this notice as an Appendix. The Decision Memorandum is a public document which is on file in CRU in room B-099 in the main Department building, and is accessible on the Web at http://ia.ita.doc.gov. The paper copy and electronic version of the memorandum are identical in content.

Partial Recession of Administrative Reviews

In the Preliminary Results, the Department issued a notice of intent to rescind the administrative review with respect to Shanghai Ever Rich Trade Company (“Ever Rich”) because we found no evidence that Ever Rich made shipments of subject merchandise during the POR. The Department also issued a notice of intent to rescind the administrative review with respect to Linyi Sanshan Import & Export Trading Co., Ltd. (“Linyi”), Shandong Jining Jishan Textile Co., Ltd. (“Shandong Jining”), Tacheng County Dexing Foods Co., Ltd. (“Tancheng”), and Xiangcheng Yisheng Foodstuff Co., Ltd. (“Yisheng”) because no other parties requested a review of these companies and the petitioners have withdrawn their request. See Preliminary Results, 70 FR at 69944. The Department received no comments on this issue, and we did not receive any further information since the issuance of the Preliminary Results that provides a basis for reconsideration of this determination. Therefore, the Department is rescinding this administrative review with respect to Ever Rich, Linyi, Shandong Jining, Tancheng, and Yisheng.

Separate Rates

In our Preliminary Results, we determined that Dong Yun, FHTK, Hongda, Harmoni, Linshu Dading, Sunny, Ziyang, Jinan Yipin, Trans-High, WSFC, Shanyang, Shanghai LJ, and Qingyuan met the criteria for the application of a separate rate. We determined that Pizhou Guangda Import and Export Co., Ltd. (“Guangda”), H&T Trading Company (“H&T”), Jinxiang Hongyu Freezing and Storing Co., Ltd. (“Hongyu”), Jining Yun Feng Agriculture Products Co., Ltd. (“Yun Feng”), Clipper Manufacturing Ltd. (“Clipper”), and Heze Ever-Best International Trade Co., Ltd. (“Ever Best”) did not qualify for separate rate status and, therefore, are deemed to be included in the PRC entity. See Preliminary Results, 70 FR at 69943. We have not received any information since the issuance of the Preliminary Results that provides a basis for reconsideration of these determinations.

The PRC-Wide Rate and Use of Adverse Facts Available

Guangda, H&T, Hongyu, Yun Feng, Clipper, and Ever-Best

In the Preliminary Results, we determined that the PRC entity (including Guangda, H&T, Hongyu, Yun Feng, Clipper, and Ever-Best) received copies of the questionnaire but did not respond and, therefore, failed to cooperate to the best of its ability in the administrative review. Accordingly, we determined that the use of facts otherwise available in reaching our determination is appropriate pursuant to sections 776(a)(2)(A) and (B) of the Act and that the use of an adverse inference in selecting from the facts available is appropriate pursuant to section 776(b) of the Act. In accordance with the Department's practice, as adverse facts available, we assigned to the PRC entity (including Guangda, H&T, Hongyu, Yun Feng, Clipper, and Ever-Best) the PRC-wide rate of 376.67 percent. For detailed information on the Department's corroboration of this rate, see Preliminary Results, 70 FR at 69942, and Memorandum to the File, entitled “2003-2004 Antidumping Duty Administrative Review of Fresh Garlic from the People's Republic of China: Corroboration of the PRC-Wide Adverse Facts-Available Rate,” dated November 10, 2005.

Normal Value Methodology

The Department's general policy, consistent with section 773(c)(1)(B) of the Act, is to calculate normal value (“NV”) using the factors of production (“FOPs”) that a respondent consumes in order to produce a unit of the subject merchandise. There are circumstances, however, in which the Department will modify its standard FOP methodology, choosing to apply a surrogate value to an intermediate input instead of the individual FOPs used to produce that intermediate input. First, in some cases, a respondent may report factors used to produce an intermediate input that accounts for an insignificant share of total output. When the potential increase in accuracy to the overall calculation that results from valuing each of the FOPs is outweighed by the resources, time, and burden such an analysis would place on all parties to the proceeding, the Department has valued the intermediate input directly using a surrogate value. See, e.g., Notice of Final Antidumping Duty Determination of Sales at Less Than Fair Value and Affirmative Critical Circumstances: Certain Frozen Fish Fillets from the Socialist Republic of Vietnam, 68 FR 37116 (June 23, 2003), and accompanying Issues and Decision Memorandum at Comment 3 (“Fish Fillets Final”).

Also, there are circumstances in which valuing the FOPs used to yield an intermediate product would lead to an inaccurate result because the Department would not be able to account for a significant element of cost adequately in the overall factors buildup. In this situation, the Department would also value the intermediate input directly. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Carbon and Certain Alloy Steel Wire Rod from Ukraine, 67 FR 55785 (August 30, 2002), and Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products from the People's Republic of China, 66 FR 49632 (September 28, 2001). See also Certain Preserved Mushrooms from the People's Republic of China: Final Results of First New Shipper Review and First Antidumping Duty Administrative Review, 66 FR 31204 (June 11, 2001), and accompanying Issues and Decision Memorandum at Comment 2; Notice of Preliminary Determination of Sales at Less Than Fair Value, Affirmative Preliminary Determination of Critical Circumstances and Postponement of Final Determination: Certain Frozen Fish Fillets From the Socialist Republic of Vietnam, 68 FR 498, 449 (January 31, 2003); and Fish Fillets Final.

In the Preliminary Results, the Department found that the respondents in these proceedings are unable to accurately record and substantiate the complete costs of growing garlic based on our analysis of the information on the record and for the reasons outlined in the Memorandum to the File entitled, “2003-2004 Administrative and New Shipper Reviews of the Antidumping Duty Order on Fresh Garlic From the People's Republic of China: Intermediate Input Methodology,” dated November 10, 2005 (“Intermediate Product Memorandum”). See Preliminary Results, at 69948. In order to eliminate the distortions in our calculation of NV for all of the reasons identified in the Intermediate Product Memorandum, we have applied an intermediate-product valuation methodology to all companies for these final results of review. Using this methodology, we calculated NV by starting with a surrogate value for the garlic bulb (i.e., the “intermediate product”), adjusted for yield losses during the processing stages, and adding the respondents' processing costs, which were calculated using their reported usage rates for processing fresh garlic. For a complete explanation of the Department's analysis, and for a more detailed analysis of these issues with respect to each respondent, see Intermediate Product Memorandum and the Decision Memorandum at Comment 1.

In future reviews, should a respondent be able provide sufficient factual evidence that it maintains the necessary information in its internal books and records that would allow us to establish the completeness and accuracy of the reported FOPs, we will revisit this issue and consider whether to use its reported FOPs in the calculation of NV. For further details, see Intermediate Product Memorandum.

Changes Since the Preliminary Results

Based on our analysis of information on the record of these reviews, and comments received from the interested parties, we have made changes to the margin calculations for certain respondents.

We have revalued several of the surrogate values used in the Preliminary Results. The values that were modified for these final results are those for garlic bulbs, foreign brokerage and handling, ocean freight, and the surrogate financial ratio for overhead, selling, general and administrative expenses, and profit. For further details see “Factors Valuations for the Final Results of the Administrative Review,” dated April 26, 2006.

In addition, we have made some company-specific changes since the Preliminary Results. Specifically, we have incorporated, where applicable, post-preliminary clarifications, and performed clerical error corrections for Shanyang, FHTK, Qingyuan, Sunny and Linshu Dading. For further details on these company-specific changes, see Decision Memorandum at Comments 14 through 22. For further information detailing all of these changes, see Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Jinan Yipin Corporation, Ltd.,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Linshu Dading Private Agricultural Products Co., Ltd.,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Sunny Import and Export Ltd.,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Zhengzhou Harmoni Spice Co., Ltd.,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Jinxiang Shanyang Freezing Storage Co.,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Weifang Shennong Foodstuff Co., Ltd.,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Jining Trans-High Trading Co., Ltd.,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the New Shipper Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Shanghai LJ International Trading Company,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Jinxiang Dong Yun Freezing Storage Co., Ltd.,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Taian Ziyang Food Co., Ltd.,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Huaiyang Hongda Dehydrated Vegetable Company,” dated April 26, 2006; Memorandum to the File, entitled “Analysis for the Final Results of the New Shipper Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Zhangqiu Qingyuan Vegetable Co., Ltd.,” dated April 26, 2006; and Memorandum to the File, entitled “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China: Taian Fook Huat Tong Kee Foodstuffs Co., Ltd.,” dated April 26, 2006.

Final Results of the Reviews

The Department has determined that the following final dumping margins exist for the period November 1, 2003, through October 31, 2004:

The Department will disclose calculations performed for these final results to the parties within five days of the date of publication of this notice in accordance with 19 CFR 351.224(6).

Duty Assessment and Cash-Deposit Requirements

The Department will determine, and CBP shall assess, antidumping duties on all appropriate entries. The Department will issue appropriate assessment instructions directly to CBP within 15 days of publication of the final results of these reviews. For assessment purposes, we divided the total dumping duties due for each importer (or customer) by the total quantity of subject merchandise sold to that importer during the POR to calculate a per-unit assessment amount. For duty-assessment rates calculated on this basis, we will direct CBP to assess importer- (or customer-) specific assessment rates based on the resulting per-unit (i.e., per kilogram) amount on each of the applicable importer's (customer's ) entries of the subject merchandise during the POR.

Bonding will no longer be permitted to fulfill security requirements for shipments of fresh garlic from the PRC produced by Xiangcheng San Li and exported by Shanghai LJ, and produced and exported by Qingyuan that are entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of these new shipper reviews. The following cash deposit requirements will be effective upon publication of the final results of these new shipper reviews for all shipments of subject merchandise from Shanghai LJ and Qingyuan 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) For subject merchandise produced by Xiangcheng San Li and exported by Shanghai LJ, and produced and exported by Qingyuan, the cash-deposit rate will be that established in these final results of reviews; (2) for subject merchandise exported by Shanghai LJ but not manufactured by Xiangcheng San Li, the cash deposit rate will continue to be the PRC-wide rate (i.e., 376.67 percent); and (3) for subject merchandise exported by Qingyuan, but manufactured by any other party, the cash deposit rate will be the PRC-wide rate (i.e., 376.67 percent).

Further, the following cash deposit requirements will be effective upon publication of the final results of the administrative review for shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results, as provided by section 751(a)(2)(C) of the Act: (1) For subject merchandise exported by Dong Yun, FHTK, Hongda, Jinan Yipin, Linshu Dading, Sunny, Ziyang, Trans-High, Harmoni, WSFC, and Shanyang, the cash-deposit rate will be that established in these final results of review; (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) for all other PRC exporters of subject merchandise which have not been found to be entitled to a separate rate, the cash-deposit rate will be the PRC-wide rate of 376.67 percent; (4) for all non-PRC exporters of subject merchandise, the cash-deposit rate will be the rate applicable to the PRC exporter that supplied that exporter. These deposit requirements shall remain in effect until publication of the final results of the next administrative review.

Notification of Interested Parties

This notice serves as a final 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 entries during the review period. Pursuant to 19 CFR 351.402(f)(3), failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.

This notice also serves as a reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APO as explained in the administrative protective order itself. Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

This notice of final results of administrative review and new shipper reviews is issued and published in accordance with sections 751(a)(2)(c) and 777(i) of the Act.

Appendix 1

Decision Memorandum

1. Use of Intermediate Input Methodology

2. Valuation of Garlic Bulb

3. Calculation of Surrogate Wage Rate

4. Double Counting of Selling Expenses, Profits, Land Cost, Packing or Processing Costs

5. By-products

6. Valuation of Foreign Brokerage and Handling

7. Valuation of Ocean Freight

8. Valuation of Cartons

9. Valuation of Jars

10. Financial Ratios

11. Sunny's Observed Labor Hours at on-site Verification

12. FHTK's Observed Labor Hours at on-site Verification

13. Trans-High's Observed Labor Hours at on-site Verification

14. Yield Loss Ratio for Shanyang

15. Yield-Loss Ratio to Processing Inputs for FHTK

16. Water and Electricity - FHTK

17. Clerical Error - Valuation of Cartons for Shanyang

18. Clerical Error - Shanyang's Plastic Jars and Lids

19. Exchange Rate Application - FHTK

20. Clerical Error - Linshu Dading Select Gross Unit Prices

21. Clerical Error - Bulb Freight for Sunny and Qingyuan

22. Clerical Error Calculation of Electricity for Qingyuan

23. Clerical Error - Normal Value Calculation for Dong Yun

24. Clerical Error - FOPs for Direct and Indirect Labor - FHTK