[Federal Register Volume 59, Number 39 (Monday, February 28, 1994)] [Unknown Section] [Page ] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-4503] [Federal Register: February 28, 1994] ----------------------------------------------------------------------- DEPARTMENT OF COMMERCE [A-570-831] Initiation of Antidumping Duty Investigation: Fresh Garlic From the People's Republic of China AGENCY: Import Administration, International Trade Administration, Department of Commerce. EFFECTIVE DATE: February 28, 1994. FOR FURTHER INFORMATION CONTACT: Jennifer Stagner or Diane Mazur, Office of Antidumping Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW, Washington, DC, 20230; telephone (202) 482-1673 or 482-3534, respectively. Initiation of Investigation The Petition On January 31, 1994, we received a petition filed in proper form by the member companies of the Fresh Garlic Producers Association (collectively petitioner). In accordance with 19 CFR 353.12, the petitioner alleges that fresh garlic from the People's Republic of China (PRC) is being, or is likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Tariff Act of 1930, as amended (the Act), and that these imports materially injure, or threaten material injury to, a United States industry. The petitioner has stated that it has standing to file the petition because it is an interested party, as defined under section 771(9)(C) of the Act, and because the petition is filed on behalf of the U.S. industry producing the product subject to this investigation. If any interested party, as described under paragraphs (C), (D), (E), or (F) of section 771(9) of the Act, wishes to register support for, or opposition to, this petition, it should file a written notification with the Assistant Secretary for Import Administration. Scope of Investigation The products covered by this investigation are all grades of fresh garlic, whether or not chilled or frozen, and include whole garlic, whole garlic that has been separated into constituent cloves (cracked garlic), and peeled garlic (skin removed), whether or not packed in any substance. The differences between the grades are based on color, size, sheathing and level of decay. Fresh garlic is used principally as a food product and for seasoning. Fresh garlic, whether or not chilled or frozen, is currently classifiable under subheadings 0703.20.0000, 0710.80.7060, and 0710.80.9750 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 proceeding is dispositive. United States Price and Foreign Market Value Petitioner based United States price (USP) on October 1993 invoices from U.S. importers of the subject merchandise from the PRC. In calculating USP, petitioner deducted amounts for the following: U.S. duties, ocean freight, marine insurance, foreign inland freight expenses, brokers' commission, harbor maintenance and U.S. merchandise processing fees, and commissions charged by the U.S. importers. Petitioner alleges that the PRC is a non-market economy (NME) country within the meaning of section 773(c) of the Act. The Department has determined the PRC to be an NME, within the meaning of section 771(18)(A) of the Act, in previous cases (see e.g., Final Determination of Sales at Less than Fair Value: Certain Compact Ductile Iron Waterworks Fittings and Accessories Thereof from the PRC, 58 FR 37908 (July 14, 1993). In accordance with 771(18)(C) of the Act, that determination continues to apply for purposes of this initiation. In the course of this investigation, parties will have the opportunity to address this NME determination and provide relevant information and argument on this issue. Further, because of the extent of central government control in an NME, the Department considers that a single antidumping margin, should there be one, is appropriate for all exporters from the NME. Only if individual NME exporters are free of central government ownership and can demonstrate an absence of central governmental control with respect to the pricing of exports, both in law and in fact, will they be considered eligible for separate, owner-specific deposit rates. (See Final Determination of Sales at Less Than Fair Value: Helical Spring Lock Washers from the People's Republic of China, 58 FR 48833 (September 20, 1993) for a discussion of the information the Department considers appropriate to warrant calculation of separate rates.) Petitioner based foreign market value on the PRC's factors of production for producing the subject merchandise. To value the factors of production, petitioner used India as a surrogate country. Petitioner argues that India is a country at a comparable level of economic development as the PRC and India is a significant producer of comparable merchandise pursuant to section 773(c)(4) of the Act. Further, India's garlic production is labor intensive and relies on rudimentary agricultural techniques similar to agricultural methods used in the PRC. For purposes of this initiation, we have accepted India as an appropriate surrogate country selection. There appear to be no other countries with comparable economies to the PRC that produce the subject merchandise. In addition, the Department has used India as an appropriate surrogate country selection in other investigations involving merchandise from the PRC. (See Final Determination of Sales at Less Than Fair Value: Sulfanilic Acid from the People's Republic of China (57 FR 29705, July 6, 1992). Petitioner first attempted to value the factors of production using Indian information. Where this was not possible, petitioner valued the factors of production using the U.S. industry's costs, where it was determined that this provided a reasonable basis upon which to value certain factors of production. Petitioner valued the factors of production of the subject merchandise in the PRC as follows:For material costs (seed and fertilizer), petitioner relied on Indian factors based on its foreign market research, using public information whenever possible. For most labor costs (seed cracking, field preparation, planting, weed control, fertilization, irrigation, digging, windrowing and harvesting), petitioner relied on an industry expert's estimate of Chinese factors which was based on the expert's knowledge of the Chinese industry and the expert's own experience with nonmechanized garlic production, using public information whenever possible. Petitioner valued such labor costs on the basis of Indian production experience as developed in its foreign market research. For other labor costs related to hauling, sorting, grading, inspecting, and shrinkage, petitioner relied on the U.S. industry's cost-per-pound for these operations. Petitioner added an amount for all other manufacturing costs and related overhead equal to 10 percent of direct material and labor costs. Petitioner added an amount for shrinkage loss of 7 percent of the cost of production, based on U.S. experience. For selling, general and administrative expenses (SG&A), petitioner used the statutory minimum of ten percent of the cost of production. For profit, petitioner used the statutory minimum of eight percent of the cost of manufacture plus SG&A. Petitioner added an amount for packing based on the average, actual experience of the U.S. industry. Based on petitioner's calculations, the dumping margins range from 266.73 to 376.67 percent. For purposes of this initiation, no adjustments were made to petitioner's calculations. Initiation of Investigation We have examined the petition on fresh garlic and have found that the petition meets the requirements of section 732(b) of the Act. Therefore, we are initiating an antidumping duty investigation to determine whether imports of fresh garlic from the PRC are being, or are likely to be, sold in the United States at less than fair value. International Trade Commission (ITC) Notification Section 732(d) of the Act requires us to notify the ITC of this action and we have done so. Preliminary Determination by the ITC The ITC will determine by March 17, 1994, whether there is a reasonable indication that an industry in the United States is materially injured, or is threatened with material injury, by reason of imports of fresh garlic from the PRC. A negative ITC determination will result in a termination of the investigation; otherwise, the investigation will proceed according to statutory and regulatory time limits. This notice is published pursuant to section 732(c)(2) of the Act and 19 CFR 353.13(b). Dated: February 22, 1994. Joseph A. Spetrini, Acting Assistant Secretary for Import Administration. [FR Doc. 94-4503 Filed 2-25-94; 8:45 am] BILLING CODE 3510-DS-P