[Federal Register Volume 63, Number 251 (Thursday, December 31, 1998)]
[Notices]
[Pages 72255-72268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34704]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-851]


Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Preserved Mushrooms from the People's Republic of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: December 31, 1998.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Kate Johnson, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-4136 or (202) 482-4929, 
respectively.
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 (``URAA''). In addition, 
unless otherwise indicated, all citations to the Department of Commerce 
(``Department'') regulations are to the regulations at 19 CFR Part 351 
(April 1998).
Final Determination
    We determine that certain preserved mushrooms (``mushrooms'') from 
the People's Republic of China are being sold in the United States at 
less than fair value (``LTFV''), as provided in section 735 of the Act. 
The estimated margins of sales at LTFV are shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    Since the preliminary determination (Preliminary Determination of 
Sales at Less Than Fair Value: Certain Preserved Mushrooms from the 
People's Republic of China, 63 FR 41794, August 5, 1998), the following 
events have occurred:
    The respondent exporters in this investigation, China Processed 
Food Import & Export Company (``China Processed'') and its affiliate 
Xiamen Jiahua Import & Export Trading Company, Ltd. (``Xiamen 
Jiahua''), Shenzhen Cofry Cereals, Oils, & Foodstuffs Company, Ltd. 
(``Shenzhen Cofry''), and Tak Fat Trading Corporation Co. (``Tak 
Fat''), submitted revisions and corrections to their questionnaire 
responses in August 1998. An importer of the subject merchandise, 
Gerber Food (Yunnan) Co., Ltd. (``Gerber''), submitted shipment data on 
August 12, 1998.
    On August 7, 1998, the petitioners in this investigation, L.K. 
Bowman, Inc., Modern Mushroom Farms, Inc., Monterey Mushrooms, Inc., 
Mount Laurel Canning Corp., Mushroom Canning Company, Southwood Farms, 
Sunny Dell Foods, Inc., and United Canning Corp., requested a public 
hearing. An importer of the subject merchandise, Hop Chong Trading 
Company, Inc. (``Hop Chong''), and the respondents subsequently 
requested a public hearing on August 17 and August 25, 1998, 
respectively.
    We issued supplemental questionnaires to the respondents, the China 
Chamber of Commerce of Importers and Exporters of Foodstuffs, Native 
Produce and Animal By-Products (``China Chamber''), and the PRC 
Ministry of Foreign Trade and Economic Cooperation (``MOFTEC'') on 
August 7 and 10, 1998. We received responses to these questionnaires 
from the respondents and the China Chamber on August 21, 1998, and from 
MOFTEC on September 2, 1998.
    In August and September 1998, we conducted verifications of the 
respondents' questionnaire responses, including information provided by 
the producers who supplied the subject merchandise during the POI--
Dongya Food Company Ltd. (``Dongya''), Longhai Cannery Inc. 
(``Longhai''), Mei Wei Foods Industrial Co. Ltd. (``Mei Wei''), Fujian 
Province Putian Cannery (``Putian Cannery''), Fujian Zhaoan Canned Food 
Factory (``Zhaoan''); and Fujian Zishan Group Co., Ltd. (``Zishan'')--
as well as Zhaoan's affiliated can producer Zhangzhou

[[Page 72256]]

Ruida Can Making Co., Ltd. (``Zhangzhou Ruida''). We issued reports on 
our findings of these verifications during September and October 1998.
    The respondents submitted additional surrogate value data on 
October 1, 1998, and petitioners' responded to this submission on 
October 13, 1998.
    The petitioners, respondents, Hop Chong, and importer Liberty Gold 
Fruit Co. Inc. (``Liberty Gold'') submitted case briefs on October 23, 
1998, and rebuttal briefs on October 30, 1998. We held a public hearing 
on November 4, 1998.

Scope of Investigation

    For purposes of this investigation, the products covered are 
certain preserved mushrooms whether imported whole, sliced, diced, or 
as stems and pieces. The preserved mushrooms covered under this 
investigation 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 investigation 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 this investigation 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.
    The merchandise subject to this investigation 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 (``HTS''). Although the HTS subheadings 
are provided for convenience and Customs purposes, the Department's 
written description of the merchandise under investigation is 
dispositive.

Period of Investigation

    The period of this investigation (``POI'') comprises each 
exporter's two most recent fiscal quarters prior to the filing of the 
petition. For all exporters, this period was July 1 through December 
31, 1997.

Nonmarket Economy Country

    The Department has treated the PRC as a nonmarket economy (``NME'') 
country in all past antidumping investigations (see, e.g., 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'') and Final Determination of Sales at Less Than Fair Value: 
Furfuryl Alcohol from the People's Republic of China, 60 FR 22545, May 
8, 1995) (``Furfuryl Alcohol'')). As discussed in the preliminary 
determination, the respondents claimed that economic changes in the PRC 
warrant revocation of PRC's NME status. We determined that the 
information proffered by the respondents provided insufficient support 
for their claim for market economy status and did not address a number 
of important factors for determining market economy status (see 
Memorandum from the Team to Lou Apple, dated July 27, 1998). No further 
information has been provided for the record since the preliminary 
determination. Therefore, in accordance with section 771(18)(C) of the 
Act, we have continued to treat the PRC as an NME in this 
investigation.

Market Oriented Industry Claim

    Shortly before the preliminary determination, the respondents 
claimed that their material inputs were acquired at market prices and 
that, accordingly, the Department should determine that the PRC 
mushroom industry is a market-oriented industry (``MOI'') and should 
rely on the actual PRC prices for valuing these inputs. We did not have 
sufficient time to analyze this claim for the preliminary 
determination. Subsequent to the preliminary determination, we obtained 
additional information from the respondents, China Chamber, and MOFTEC, 
and conducted verifications that included examination of the 
respondents' claims. Based on our analysis, as discussed in detail 
below in Comment 1 of the ``Interested Party Comments'' section of this 
notice, we have determined that the respondents have failed to 
establish that the preserved mushrooms industry is a MOI. Therefore, we 
have continued to calculate normal value using the factors of 
production methodology, in accordance with section 773(c) of the Act.

Separate Rates

    Each respondent exporter has requested a separate company-specific 
rate. China Processed is wholly owned by China National Cereals, Oils, 
& Foodstuffs Import & Export Corp., which in turn is owned by ``the 
whole people.'' Its affiliated exporter Xiamen Jiahua is a domestic 
joint venture between China National Cereals, Oils & Foodstuffs Corp. 
and Xiamen Special Economic Trade Group Cereals, Oils, & Foodstuffs 
Import & Export Company. Both of these companies are also owned by 
``the whole people.'' Shenzhen Cofry is a limited liability company 
owned by the China Ocean Helicopter Company and the Anhui Cereals, 
Oils, & Foodstuffs Import & Export Group, which, in turn, are both 
owned by ``the whole people.'' Tak Fat is a Hong Kong trading company 
which is wholly-owned by Hong Kong entities; therefore, we determined 
that no separate rates analysis is required for this exporter.
    As stated in Silicon Carbide and Furfuryl Alcohol, ownership of the 
company by ``all the people'' does not require the application of a 
single rate. Accordingly, the above-mentioned companies named as 
mandatory respondents as well as the companies who submitted a Section 
A response are eligible for consideration of a separate rate.
    The Department's separate rate test is not concerned, in general, 
with macroeconomic/border-type controls, e.g., export licenses and 
quotas and minimum export prices, particularly if these controls are 
imposed to prevent dumping. The test focuses, rather, on controls over 
the investment, pricing, and output decision-making process at the 
individual firm level. See 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 (``Honey'').
    To establish whether a firm is sufficiently independent from 
government control 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

[[Page 72257]]

in 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

    The respondents have placed on the record a number of documents to 
demonstrate absence of de jure control, including the ``Foreign Trade 
Law of the People's Republic of China'' and the ``Law of the People's 
Republic of China on Industrial Enterprises Owned By the Whole 
People.''
    In prior cases, the Department has analyzed these laws and found 
that they 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 Furfuryl 
Alcohol.) We have no new information in this proceeding which would 
cause us to reconsider this determination.
    As discussed in the preliminary determination, exports of mushrooms 
are also affected by quota allocations under a December 17, 1997, 
Notice Regarding Printing and Distributing ``List of Commodities 
Subject Export License Administration and Issuance of Licenses at 
Different Levels'' and Relevant Issues issued by MOFTEC (``Notice''). 
We noted that, in past cases, the Department has determined that there 
is an absence of government control over export pricing and marketing 
decisions of firms even though there may be some government involvement 
with respect to the export of products subject to investigation. See 
Honey at 14727. In this investigation, the involvement of the PRC 
government under this law is negligible with regard to a determination 
of separate rates. Accordingly, we determined that, within the 
preserved mushroom industry, there is an absence of de jure government 
control over exporting pricing and marketing decisions of firms.

  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 and Furfuryl Alcohol. 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.
    During verification, our examination of correspondence and sales 
documentation revealed no evidence that any of the respondent 
exporters' export prices are set, or subject to approval, by any 
governmental authority, other than the export quota system identified 
above. That these exporters have the authority to negotiate and sign 
contracts and other agreements independent of any government authority 
was evident from our examination of correspondence and written 
agreements and contracts. Finally, we have determined that the 
responding exporters have autonomy from the central government in 
making decisions regarding the appointment of management. We also noted 
that the responding exporters retained proceeds from their export sales 
and made independent decisions regarding disposition of profits and 
financing of losses, based on our examination of financial records and 
purchase invoices (see, e.g., China Processed October 16, 1998, 
verification report at pages 3-4).
    Consequently, we determine that the respondent exporters in this 
investigation have met the criteria for the application of separate 
rates.

Margins for Exporters Whose Responses Were Not Analyzed

    As discussed in the preliminary determination, for the responding 
companies that provided all the questionnaire responses requested of 
them and otherwise fully cooperated with the Department's 
investigation, but nonetheless, were not fully analyzed by the 
Department due to limited resources, we are assigning the weighted-
average of the rates of the three fully analyzed exporting companies, 
or a non-adverse facts available rate. Companies receiving this rate 
are identified by name in the ``Suspension of Liquidation'' section of 
this notice.

PRC-Wide Rate

    As stated in the preliminary determination, U.S. import statistics 
indicate that the total quantity and value of U.S. imports of mushrooms 
from the PRC is greater than the total quantity and value of mushrooms 
reported by all PRC exporters that submitted responses in this 
investigation. Given this discrepancy, it appears that not all 
exporters of PRC mushrooms responded to our questionnaire. Accordingly, 
we are applying a single antidumping deposit rate--the PRC-wide rate--
to all exporters in the PRC, other than those specifically identified 
below under the ``Continuation of Suspension of Liquidation'' section 
of this notice, based on our presumption that the export activities of 
the companies that failed to respond to the Department's questionnaire 
are controlled by the PRC government (see, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: Bicycles from the 
People's Republic of China, 61 FR 19026, April 30, 1996) 
(``Bicycles'').
    As explained in the preliminary determination, this PRC-wide 
antidumping rate is based on adverse facts available, in accordance 
with Section 776 of the Act. As adverse facts available, we are 
assigning the highest margin in the petition, 198.63 percent, because 
the margins in the petition (as recalculated by the Department at 
initiation) were higher than any of the calculated margins.
    Section 776(c) of the Act provides that where the Department 
selects from among the facts otherwise available and relies on 
``secondary information,'' such as the petition, the Department shall, 
to the extent practicable, corroborate that information from 
independent sources reasonably at the Department's disposal. The 
Statement of Administrative Action accompanying the URAA, H.R. Doc. No. 
316, 103d Cong., 2d Sess. (1994) (hereinafter, the ``SAA''), states 
that ``corroborate'' means to determine that the information used has 
probative value. See SAA at 870. As discussed in the preliminary 
determination at 41798, we determined that the calculations set forth 
in the petition have probative value.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by China 
Processed/Xiamen Jiahua, Tak Fat, and Shenzhen Cofry to the United 
States were made at LTFV, we compared the export price (``EP'') to the 
normal value (``NV''), as described in the ``Export Price'' and 
``Normal Value'' sections of this notice, below. In accordance with 
section 777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-
average EPs to weighted-average NVs.

Export Price

China Processed/Xiamen Jiahua

    We used EP 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 (``CEP'') methodology was not otherwise indicated. We 
calculated EP

[[Page 72258]]

based on the same methodology applied in the preliminary determination, 
with the following exceptions:
     We made corrections to the reported billing adjustments on 
certain China Processed sales, as identified in the September 18, 1998, 
pre-verification submission.
     We corrected the starting price for certain sales made by 
Xiamen Jiahua to reflect the price from its affiliated trading company 
to unaffiliated customers, as identified in the September 14, 1998, 
submission (see Comment 15).

Tak Fat

    We used EP 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 CEP methodology 
was not otherwise indicated. We calculated EP based on the same 
methodology applied in the preliminary determination, with the 
following exception:
     We included certain sales in our calculations that were 
excluded in the preliminary determination because they appeared to have 
been made by another exporter. We determined at verification that, in 
fact, these sales were made by Tak Fat.

Shenzhen Cofry

    We used EP 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 CEP methodology 
was not otherwise indicated. We calculated EP based on the same 
methodology applied in the preliminary determination, with the 
following exceptions:
     We recalculated the international freight expenses paid to 
a market-economy supplier based on our verification findings.
     We made revisions to the reported billing adjustment 
amounts based on our verification findings.
     As Shenzhen Cofry's supplier, Zhaoan, used its own trucks 
to transport the finished merchandise to port, according to our 
verification findings, we made no deduction for foreign inland freight.

Normal Value

A. 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, Sri Lanka, Egypt, and Indonesia are countries 
comparable to the PRC in terms of overall economic development (see 
Memorandum on Nonmarket Economy Status and Surrogate Country Selection 
from Jeff May, Director, Office of Policy, to Louis Apple, Office 
Director, AD/CVD Enforcement Group II, Office 5, dated February 23, 
1998). According to the available information on the record and as 
stated in our preliminary determination, we have determined that both 
India and Indonesia meet both statutory requirements for an appropriate 
surrogate country for the PRC. In the final determination, we have 
continued to rely on India as the surrogate country, based on the 
quality and contemporaneity of the currently available data. 
Accordingly, we have calculated NV using Indian surrogate values for 
the PRC producers' factors of production, except in those instances 
where an input was sourced from a market economy and paid for in a 
market economy currency, such as glass jars consumed by Longhai and 
labels consumed by Mei Wei. We have obtained and relied upon publicly 
available information (``PAI'') wherever possible.
    The selection of the surrogate values applied in this determination 
was based on the quality, specificity, and contemporaneity of the data. 
As appropriate, we adjusted input prices to make them delivered prices. 
For those values not contemporaneous with the POI and quoted in a 
foreign currency, we adjusted for inflation using wholesale price 
indices published in the International Monetary Fund's International 
Financial Statistics. For a complete analysis of surrogate values, see 
the Final Determination Valuation Memorandum from the Team to the File 
(``Valuation Memorandum''), dated December 18, 1998. In addition, the 
selection of many of these surrogate values is discussed below in the 
``Interested Party Comments'' section.
B. Factors of Production
    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by the companies in the PRC 
which produced mushrooms for the exporters which sold mushrooms to the 
United States during the POI. As in the preliminary determination, we 
calculated NV based on the factors of production reported by the 
respondents.
    To calculate NV, the verified per-unit factor quantities, adjusted 
where appropriate, were first multiplied by the surrogate values; the 
resulting products were then summed. We then added amounts for 
overhead, selling, general, and administrative expenses (including 
interest) (``SG&A''), and profit, and packing expenses incidental to 
placing the merchandise in packed condition and ready for shipment to 
the United States. We calculated NV based on the same methodology used 
in the preliminary determination with the following exceptions:
    For all respondents: we did not value separately the reported 
factors for salt, ascorbic acid, vitamin C, chlorine, and monosodium 
glutamate because the surrogate value for factory overhead includes 
these factors and we were not able to separate these factors from the 
factory overhead percentage (see Comment 5). We have also reclassified 
labels from a direct material expense to a packing expense (see Comment 
14).

China Processed/Xiamen Jiahua

     We used corrected factor data reported by Zishan in its 
September 18, 1998, submission and resubmitted on November 20, 1998.
     We applied revised packing factors for Longhai and Zishan, 
as reported in the September 18, 1998, submission.
     We applied revised supplier distances for certain Longhai 
inputs, as reported in the September 18, 1998, submission.
     For Dongya, Longhai, and Zishan, we corrected consumption 
factor data for various inputs, as identified in each company's 
verification report. However, we did not use all of the corrected data 
in our calculations because some of the consumption factors are not 
classified as part of factory overhead (see Comment 5).

Shenzhen Cofry

     For Zhaoan, we made revisions to the reported electricity, 
packing material, and packing labor consumption factors based on our 
verification findings.
     Because Zhaoan used its own trucks to transport cartons 
and labels from the suppliers to the factory, according to our 
verification findings, we did not add an input freight value for these 
factors.

Tak Fat

     We valued paper labels consumed by Mei Wei based on the 
market economy price paid for this market economy-sourced input by the 
affiliated exporter Tak Fat.

[[Page 72259]]

     We revised several of the packing material weights used in 
our valuation calculations based on measurements taken at the Mei Wei 
verification.
C. Surrogate Values
    We valued fresh mushrooms using the average of (a) the unit value 
for fresh mushroom purchases derived from the 1996-1997 annual report 
from an Indian preserved mushroom producer, and (b) a published 
September 1996 wholesale price quote for fresh mushrooms (see Comment 3 
and the Valuation Memorandum). We were unable to identify an 
appropriate surrogate value for brined (provisionally preserved) 
mushrooms; thus, as in the preliminary determination, we used the fresh 
mushroom value to value brined mushroom consumption but adjusted the 
reported brined mushroom consumption factor to an amount equivalent to 
a fresh mushroom consumption factor using an industry standard ratio 
(see Comment 4). For tin cans and lids, we used values derived from the 
average unit price paid by an Indian preserved mushrooms producer, Agro 
Dutch Foods (India) (``Agro Dutch'') (see Comment 6). For glass jars, 
and labels, we used Indian import values from Monthly Statistics of the 
Foreign Trade of India (``Monthly Statistics'').
    For Longhai, which resold scrap can material, we made a deduction 
to the surrogate cost of production using an average unit value for tin 
waste and scrap derived from 1997 U.S. import statistics. As in the 
preliminary determination, use of this U.S. value was necessary because 
we were unable to identify an appropriate surrogate value from a 
surrogate country. As in the preliminary determination, we have not 
made a deduction for scrap mushrooms not consumed in the canning/
jarring process because no party has proffered an appropriate surrogate 
value and this factor does not appear to have a significant impact on 
the calculation of NV.
    We valued labor based on a regression-based wage rate, in 
accordance with 19 CFR 351.408(c)(3).
    As in the preliminary determination, we valued electricity using 
the 1996 electricity rates reported in an article ``All Charged Up Over 
the Cost of Power in India'' published in Business World in August 
1996. We based the value of coal on the import values from the Monthly 
Statistics. We revised the valuation of diesel fuel to rely on the 
average of the prices reported in a December 1997 issue of Economic 
Times of India (see Comment 9 and the Valuation Memorandum).
    We based our calculation of factory overhead (which includes 
several materials valued separately in the preliminary determination), 
SG&A expenses, and profit on data contained in the financial reports of 
Agro Dutch (see Comment 5).
    As in the preliminary determination, we valued truck freight rates 
using a 1994 rate from The Times of India. As we were unable to 
identify a surrogate value for inland water transportation, we valued 
boat and barge transportation using the surrogate value for truck 
freight. With regard to rail freight, we based our calculation on 
information from the Indian Railway Conference Association.
    The 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 either the closest PRC port to 
the factory, or from the domestic supplier to the factory on an import-
specific basis.
    For the following reported packing materials: glue, tape, labels, 
corrugated paper, wooden pallets, and shrink wrap, we used import 
values from the Monthly Statistics. While we used the same source for 
the surrogate value for glue, we used a different import category than 
that used for the preliminary determination (see Comment 8).
    In addition, we have corrected the POI average exchange rate used 
to convert all surrogate values in Indian rupees to U.S. dollars 
because in the preliminary determination we inadvertently used the 
International Monetary Fund's Special Drawing Rights rate rather than a 
U.S. dollar rate. For the final determination, we have used the POI 
average of the Federal Reserve exchange rates for India. The use of the 
POI average rate for conversion of the surrogate values, rather than 
the rate on the date of sale under section 773A(a) of the Act, is in 
accordance with our policy and practice, as discussed in Final Results 
of Antidumping Duty Administrative Review and New Shipper Review and 
Determination not to Revoke Order in Part: Tapered Roller Bearings and 
Parts Thereof, Finished and Unfinished, from the People's Republic of 
China, 63 FR 63842, 63854, November 17, 1998.

Critical Circumstances

    We have determined that critical circumstances exist for one of the 
mandatory respondents, Tak Fat, and the non-responding exporters. With 
regard to the other two mandatory respondents, Shenzhen Cofry and 
Xiamen Jiahua, we have determined that critical circumstances do not 
exist based on our analysis of updated shipment data. Furthermore, we 
have reversed our preliminary critical circumstances finding with 
regard to the companies who submitted responses but whose responses 
were not analyzed due to the Department's own administrative 
constraints. In accordance with Final Determination of Sales at Less 
Than Fair Value: Brake Drums and Brake Rotors from the People's 
Republic of China, 62 FR 9160, February 28, 1997 (``Brake Drums and 
Brake Rotors''), and Notice of Preliminary Critical Circumstances 
Determination: Honey from the People's Republic of China, 60 FR 29824, 
June 6, 1995 (``Honey Critical Circumstances''), we do not find 
critical circumstances for these non-mandatory respondents. For 
additional discussion, see Comment 2, below.

Verification

    As provided in section 782(i) of the Act, we verified the 
information submitted by respondents for use in our final 
determination. We used standard verification procedures, including 
examination of relevant accounting and production records, and original 
source documents provided by respondents.

Interested Party Comments

A. General Issues
    Comment 1: Preserved Mushrooms as a Market-Oriented Industry
    The petitioners contend that the Department should reject the 
respondents' claim that the preserved mushrooms industry should be 
treated as a MOI and thus the normal value should be based on 
constructed value using the producers' costs for the inputs, because 
the PRC industry has failed to participate sufficiently in the 
investigation for the Department to determine whether a MOI exists. The 
petitioners assert that much of the PRC industry has not responded to 
the Department's questionnaires, given that only 13 exporters responded 
out of the total of 62 companies to whom the Department issued a 
questionnaire. As Department practice requires a response from all 
producers, the petitioners assert that this deficiency is a fatal flaw 
in the respondents' claim. According to the petitioners, to base the 
MOI determination solely on the basis of the information provided by 
the PRC entities that chose to respond, as the petitioners suggest that 
the respondents

[[Page 72260]]

are contending, would change the MOI analysis in such a way as to 
obviate the usefulness and validity of the test, which rightly requires 
analysis of the entire industry in question.
    In addition, the petitioners contend that the respondents fail to 
meet any of the MOI criteria. As stated in the Amendment to Final 
Determination of Sales at Less than Fair Value and Amendment to 
Antidumping Duty Order: Chrome-Plated Lug Nuts from the People's 
Republic of China, 57 FR 15054, April 24, 1992 (``Lug Nuts''), an 
affirmative MOI finding requires (1) no state controls over pricing or 
production; (2) an industry characterized by private or collective 
ownership; and (3) market-determined prices for virtually all inputs. 
The petitioners' arguments against the respondents' MOI claim address 
all three criteria as follows:

Pricing

     The PRC government is involved in the industry by 
maintaining and enforcing, through the China Chamber, a minimum price 
floor that requires companies to follow the controlled prices.
     The PRC government is also involved through the imposition 
and enforcement of an export quota, which affects production quantities 
since the industry is primarily export-oriented.

Ownership

     The Department must determine that the industry is not 
characterized by private or collective ownership because many producers 
did not respond to the Department's questionnaire and thus are presumed 
to be state-controlled.
     The limited ownership data provided by respondents relies 
on information collected specifically for this proceeding and support 
documentation selected by the respondents. This information constitutes 
an inadequate and biased sampling from which to determine that the 
entire preserved mushroom industry is characterized by private or 
collective ownership.

Market Prices for Inputs

     The respondents' support for the claim that market-
determined prices are paid is inadequate because it lacks objective 
corroboration or is too narrow in scope to be considered as generally 
acceptable throughout the PRC.
     Prices for salt, electricity, vitamin C, citric acid, and 
paper are not market-determined because they are either subject to 
price controls or are controlled by state-owned enterprises.
     The respondents have failed to establish that prices for 
chemicals, coal, labor, real estate, and capital markets, which were 
found not to be market oriented in previous cases, are market oriented.
     The respondents provided no information to indicate that 
suppliers to the preserved mushroom industry paid market-determined 
prices for their inputs (e.g., fertilizer and pesticides for mushroom 
growing), in accordance with the Department's request as part of the 
fourth administrative review of Chrome-Plated Lug Nuts from the PRC.
    The respondents hold that the information they have supplied for 
the record of this investigation to support their MOI claim for the 
preserved mushrooms industry provides sufficient coverage for virtually 
the entire industry. The respondents assert that, because the exporters 
who responded to the Department's questionnaire account for 89 percent 
of POI exports to the United States and the mandatory respondents cover 
57 percent, this information should satisfy the ``virtually entire 
industry'' test. Moreover, the respondents note that the Department 
only issued the MOI questionnaire to the mandatory respondents, the 
producers who supplied the merchandise to them, the China Chamber, and 
MOFTEC, and these entities responded; thus, they maintain that they 
cannot be faulted for not supplying additional information regarding 
industry coverage.
    With regard to the MOI test, the respondents claim that they meet 
all three criteria of this test and point to their submissions and 
verification findings to support their position. The respondents make 
the following arguments to demonstrate that the industry is a MOI:

Pricing

     The PRC government is not involved in setting the prices, 
production quantities, or allocation of preserved mushrooms.
     ``Floor prices'' of preserved mushrooms, to the extent 
they exist, were not established by the PRC government but by the 
exporters to prevent market disruption in foreign markets; and 
notwithstanding this test, examination of the actual sales prices shows 
that the exporters did not follow the floor prices consistently, and 
there is no evidence that MOFTEC enforced them.
     Quota allocations are marketable and can be exchanged 
among the PRC exporters, thus lessening any trade distortions and 
further demonstrating the market orientation of the industry.

Ownership

     There is no state ownership in the preserved mushroom 
production or exporting industries, as none of the 52 canneries is 
currently run by the state and the exporters are all either privately 
owned or collectively owned.
     The Department verified the respondents to confirm the 
absence of state control over their operations, and reviewed the 
business licenses of non-mandatory respondents and producers, thus 
establishing that there is no ``substantial state ownership'' in the 
PRC preserved mushrooms industry.
     The Department cannot presume that the industry is state-
owned due to the failure of some producers to participate in the 
investigation because totaling all of the ownership information 
submitted and reviewed at verification provides sufficient coverage of 
the entire preserved mushroom industry.

Market Prices for Inputs

     The respondents have placed substantial evidence on the 
record, verified by the Department, that they pay market-determined 
prices.
     The disparity in input prices reported by the respondents' 
suppliers demonstrates the absence of government control in pricing, 
except for salt and electricity.
     Even though local governments can control salt and 
electricity prices, these input prices also vary to the same extent as 
the other inputs and, at any rate, these inputs constitute only an 
insignificant amount of the total inputs, by value.
     The respondent exporters and producers reported and the 
Department verified the freedom with which the producers enter and use 
capital markets, and buy and sell machinery and land rights.
     The petitioners' argument that the input pricing criterion 
of the MOI test requires evidence that the inputs used to create the 
inputs to the subject merchandise are market oriented is an expansion 
of the existing MOI test. If this condition is included as part of the 
test, no industry in a NME country would be able to establish MOI 
status because of all the input suppliers the Department would be 
forced to investigate.

DOC Position:

    We disagree with the respondents and have not found the preserved 
mushrooms industry in the PRC to be a MOI.
    As a threshold matter, we agree with the petitioners that the 
respondents

[[Page 72261]]

have not provided information for the record that covers virtually all 
of the producers of the industry. As the petitioners note, only 13 
exporters responded to the Department's questionnaire and provided at 
least some information about their suppliers. The respondents provided 
information that there are at least 52 producers of the subject 
merchandise in the PRC, but there is no information on the record which 
defines how large the universe of preserved mushrooms producers in the 
PRC is with any specificity. While the respondents claim that the 
exporters who responded to the questionnaire account for 89 percent of 
PRC exports to the United States, there is no information on the record 
to identify what percentage of preserved mushrooms producers, including 
those who do not export to the United States, is covered by the 
respondents' data. In addition, the import data on the record indicate 
that there are PRC exporters which did not respond to the 
questionnaire, as noted in the preliminary determination at 41798. Even 
in those cases where the number of investigated firms is limited by the 
Department, a MOI allegation must cover all (or virtually all) of the 
producers in the industry in question (see Final Determination of Sales 
at Less Than Fair Value: Freshwater Crawfish Tail Meat from the PRC, 62 
FR 41347, 41353, August 1, 1997). Thus, the record evidence provides 
only a partial picture of the preserved mushrooms industry.
    Putting aside the coverage problem, the record does not support a 
finding that the preserved mushrooms industry has met all three prongs 
of the MOI test. As noted above, three conditions must be met for the 
Department to determine that a MOI exists: (1) no state controls over 
pricing or production; (2) an industry characterized by private or 
collective ownership; and (3) market-determined prices for virtually 
all inputs. The limited picture available from the record is a positive 
one from the standpoint of the first prong of the MOI test. The PRC 
preserved mushroom industry appears to consist of a large number of 
firms of varying size that do not appear constrained by government 
pricing or output mandates. Ownership of firms in the industry appears 
diverse, consisting of state-owned enterprises (``SOEs''), joint-
ventures, collectives, ``privately run'' enterprises, and stock 
companies (of unknown type). The six producers we verified appear 
unconstrained by government pricing, production mandates, or controls 
that directly interfere with their business operations or efforts to 
make a profit.
    Notwithstanding the issue of PRC industry coverage, even if we were 
to assume that such operational independence exists for the industry as 
a whole, so that the first prong of the MOI test were met, the extent 
of private and collective ownership in the industry, under the second 
prong of the MOI test, is unclear. First, while the industry is, 
indeed, characterized by diverse ownership interests, the number of 
private enterprises and collectives in the industry, and the share of 
total industry production capacity they account for, is quite small. By 
contrast, the largest mushroom cannery in the PRC is a SOE, i.e., a 
company owned ``by all the people,'' accounting for almost 7 percent of 
total industry production capacity accounted for by the producers 
identified by the respondents, and two of the three largest mushroom 
canneries are SOEs, accounting for over 12 percent of this production 
capacity. The eight SOEs together account for approximately 20 percent 
of total industry production capacity accounted for by the identified 
producers (see Exhibit 6-A of the China Chamber's August 21, 1998, 
submission).
    Second, the vast majority of firms in the industry are classified 
as ``shareholding'' enterprises. Shareholding enterprises in the PRC 
are the result of corporatization and other past and current efforts by 
the government to ``invigorate'' SOEs and increase their productive 
efficiency, but in the absence of a system of well-defined, enforceable 
private property rights (and the social and legal institutions 
necessary to support such a system). In the absence of such rights and 
the necessary supporting legal and social institutions, it is not at 
all clear to what extent effective ownership of these ``new'' (or what 
respondents refer to as ``former'') SOEs has changed and how it has 
changed. See Forging Reform in China: The Fate of State-Owned Industry, 
Edward S. Steinfeld, 1998 (relevant pages included in the record as 
part of a December 18, 1998, memorandum to the file). In any case, 
these shareholding enterprises in effect remain SOEs; only their labels 
have changed.
    The status of these shareholding enterprises under the second prong 
of the MOI test is therefore unclear. Where shareholders are 
predominantly private individuals, private enterprises, collectives, or 
foreign-invested enterprises, the shareholding enterprise arguably 
should be classified as equivalent to a private enterprise or 
collective for purposes of the second prong of the MOI test. However, 
where the shareholders are predominantly SOEs (either ``new'' or 
``old''), the shareholding enterprise arguably should remain classified 
as an SOE for purposes of the second prong of the MOI test.
    In this case, the evidence on the record leaves unclear the 
ownership status of the large number of shareholding enterprises in the 
industry and the Department therefore cannot determine that the second 
prong of the MOI test has been met.
    With respect to the third prong of the MOI test, the Department 
remains fundamentally concerned about the price of certain key inputs, 
land and capital, used to produce the subject merchandise. Fresh 
mushrooms are the primary raw material input used to make preserved 
mushrooms, making the price of fresh mushrooms an important determinant 
of the cost and, therefore, the price of the subject merchandise. Since 
the price of land is an important determinant of the cost and, 
therefore, price of agricultural products, like mushrooms, whether the 
price of land in the PRC is market-determined is important from the 
standpoint of the third prong of the MOI test.
    As stated in respondents' August 21, 1998, MOI questionnaire 
responses, land cannot be privately owned in the PRC. That is, there is 
no system of well-defined, enforceable, private property rights to 
protect the interest of individuals who would sell (lease) and buy 
(rent) it with best use and profit in mind. The respondents cite to the 
existence of land-use rights in the PRC, how they are negotiable, how 
terms and conditions of their transfer are negotiated between buyer and 
seller, and how transfer of these rights are not subject to government 
limitation so long as they are registered with the government and the 
relevant land tax is paid. It may be argued that a system of well-
defined, enforceable land-use rights that are complete and fully 
transferable is sufficient to generate market-based outcomes in the 
terms of land use and land values. However, in the PRC, at least, 
despite the respondents' suggestions, no such system appears to exist.
    We note that local trade in land-use rights may be helping to put 
the PRC's scarce land resources to better use, and the preserved 
mushroom producers may, in fact, benefit from such trade. We also note 
the development of secondary land-use rights markets in the PRC, but 
this situation should not obscure the fact that non-market factors 
still play a significant role in determining how and by whom land in 
the PRC is used. That is, land-use rights in the PRC continue

[[Page 72262]]

to be formulated and allocated in large part on an administrative basis 
by village/township/local leaders who have both personal and social 
objectives in mind, e.g., personal income, grain quotas and tax 
collections. The administrative bases upon which land use-rights are 
determined are inconsistent, are not well defined and differ by time 
and place, from village to village and township to township. See Scott 
Rozelle and Guo Li, ``Village Leaders and Land-Rights Formation in 
China,'' American Economic Review, May 1998 (included in the record as 
part of a December 18, 1998, memorandum to the file).
    Based on the above, we conclude that, even though the allocation of 
land may, in some cases and in some sense, be consistent with a market-
based outcome, the price or rent paid for the land (or its use) is not. 
For example, local leaders of a township might decide that it is better 
for their own personal gain (or better for the township) to use a large 
plot of land to build a factory than it is to continue farming the 
land. It is possible that the use of the large plot of land in this 
manner is consistent with the outcome that would arise in a market 
economy context in which a businessperson approached a private 
landowner with an offer to buy or lease the same large plot of land. 
The difference, however, is that in the PRC, there is no true landowner 
(protected by well-defined enforceable private property rights) who, in 
looking out for his or her best interest as a landowner, seeks to 
receive the best possible price. Instead, there is only the local 
leader who controls use rights over the land and who therefore can 
unilaterally modify and transfer those rights from the farmer to him- 
or herself or to the township at what essentially is an arbitrarily 
determined price. Thus, we determine that the price of land, an 
important factor in calculating the cost of producing the subject 
merchandise, is not sufficiently market-based under the third prong of 
the MOI test.
    With respect to capital costs, we note that preserved mushroom 
producers typically invest in different types of equipment that cut/
slice, cook, sterilize, and can mushrooms, as identified in the 
production process descriptions included in the questionnaire responses 
of the producers. Two respondents also reported meeting a substantial 
share of their working capital needs through bank loans. Capital costs 
are, therefore, not insignificant in the production of preserved 
mushrooms. The respondents reported similar working capital loan rates, 
which one respondent explained are set, with upper and lower limits, by 
the central government. These rates apply directly to the loans that 
banks extend to the producers and other enterprises in the PRC, and 
while the central government sets these rates with inflation in mind, 
there is no basis to believe that such administratively-set rates are 
market-based. In fact, the World Bank has identified the PRC's interest 
rate setting practices as one of several key areas of ongoing, but 
still incomplete, reform in the banking and finance sectors. See 
``Monetary and Exchange Rate System Reform in China: An Experiment in 
Gradualism,'' IMF, Occasional Paper 141, September 1996 (included in 
the record as part of a December 18, 1998, memorandum to the file). 
Thus, we determine that the cost of capital, an important factor in 
calculating the cost of producing the subject merchandise, is not 
sufficiently market-based under the third prong of the MOI test.
    Because we have determined that the preserved mushrooms industry is 
not a MOI for the reasons discussed above, we are not using the costs 
reported by the respondents in calculating NV. Therefore, the issue 
raised by the petitioners--that the cost information is inadequate--is 
moot.
    Comment 2: Critical Circumstances
    The respondents argue that, because the last antidumping case on 
the subject merchandise resulted in a negative determination (1983 
canned mushrooms case), there is no history of dumping in the United 
States and therefore there is no reasonable basis to believe or suspect 
that critical circumstances exist under section 733(e)(1) of the Act. 
Further, the respondents contend that the Department should examine the 
imports of the subject merchandise with a seasonal-trends analysis. 
Finally, respondents and importers Liberty Gold and Hop Chong argue 
that the Department should not extend its findings to companies which 
responded but are not being examined. For those companies, these 
parties contend that the Department should either examine the available 
company-specific shipment data on the record or follow the practice set 
forth in Brake Drums and Brake Rotors and not find critical 
circumstances.
    Hop Chong further argues that it has been denied due process in 
this proceeding because it has not had the opportunity to provide 
shipment data for review by the Department, nor to comment on the 
import data that may be used eventually by the Department in its final 
analysis.
    The petitioners contend that critical circumstances exist based on 
an established history of dumping--a Brazilian antidumping duty order--
and a massive surge in imports. Because critical circumstances apply to 
all of the examined exporters and the import statistics also show a 
massive surge in subject merchandise imports, the petitioners assert 
that critical circumstances should continue to apply to all exporters, 
including those who provided data to the Department that were not 
examined. The petitioners claim that the situation in Brake Drums and 
Brake Rotors and Honey Critical Circumstances do not apply in this case 
because in those cases, the Department did not find critical 
circumstances for most of the examined exporters, whereas here, the 
Department has found critical circumstances for all of the examined 
exporters and has also observed a massive surge in the import 
statistics.

DOC Position:

    We continue to find critical circumstances for mandatory respondent 
Tak Fat as well as all non-responding PRC exporters covered by the PRC-
wide rate. However, in the final determination, we did not find 
critical circumstances with respect to mandatory respondents Shenzhen 
Cofry and China Processed/Xiamen Jiahua based on updated shipment data, 
as described below. In addition, we agree with the respondents, Hop 
Chong and Liberty Gold with respect to excluding the non-mandatory 
respondents from any affirmative critical circumstances finding, in 
accordance with our past practice, as described below.
    Section 733(e)(1) of the Act provides that if there is a reasonable 
basis to believe or suspect that critical circumstances exist, the 
Department will determine whether: (A)(i) there is a history of dumping 
and material injury by reason of dumped imports in the United States or 
elsewhere of the subject merchandise, or (ii) the person by whom, or 
for whose account, the merchandise was imported knew or should have 
known that the exporter was selling the subject merchandise at less 
than its fair value and that there was likely to be material injury by 
reason of such sales, and (B) there have been massive imports of the 
subject merchandise over a relatively short period.
    As discussed in the preliminary determination, the first critical 
circumstances criterion is satisfied for this investigation based on 
the fact that Brazil has levied antidumping duties against preserved 
mushrooms from the PRC. Brazil's antidumping duty order will be in 
force until January 2003. Therefore, we determine that there is a

[[Page 72263]]

history of dumping of mushrooms elsewhere by PRC producers/exporters 
and thus the first statutory criterion is met (see section 
733(e)(1)(A)(i) of the Act), contrary to the respondents' assertions.
    Because we have found that the first statutory criterion is met, we 
must consider the second statutory criterion: whether imports of the 
merchandise have been massive over a relatively short period. According 
to 19 CFR 351.206(h), we consider the following to determine whether 
imports have been massive over a relatively short period of time: (1) 
volume and value of the imports; (2) seasonal trends (if applicable); 
and (3) the share of domestic consumption accounted for by the imports.
    When examining volume and value data, the Department typically 
compares the export volume for equal periods immediately preceding and 
following the filing of the petition. Under 19 CFR 351.206(h), unless 
the imports in the comparison period have increased by at least 15 
percent over the imports during the base period, we normally will not 
consider the imports to have been ``massive.'' To determine whether or 
not imports of subject merchandise have been massive over a relatively 
short period for the final determination, we compared each mandatory 
respondent's export volume for the seven months subsequent to the 
filing of the petition (January-July 1998) to that during the seven 
months prior to the filing of the petition (June-December 1997). These 
periods were selected based on the Department's practice of using the 
longest period for which information is available from the filing of 
the petition through the effective date of the preliminary 
determination.
    Based on our analysis, we find that the increase in imports was 
greater than 15 percent with respect to Tak Fat. However, with respect 
to Shenzhen Cofry and China Processed/Xiamen Jiahua, we find that the 
increase in imports was less than 15 percent. Although the respondents 
have claimed that these imports should be examined in the context of a 
seasonal trend analysis, we are unable to discern a seasonal pattern 
for Tak Fat, based on the information on the record.
    As both of the statutory criteria for finding critical 
circumstances have been met for respondent Tak Fat, we therefore 
determined that critical circumstances exist for this exporter. Because 
we determined that imports were not massive for Shenzhen Cofry and 
China Processed/Xiamen Jiahua, both of the statutory criteria for 
finding critical circumstances have not been met for these exporters 
and, accordingly, we did not find critical circumstances. For those 
companies subject to the PRC-wide rate (i.e., companies which did not 
respond to the Department's questionnaire), we determined, based on the 
facts available, and making the adverse inference permitted under 
section 776(b) of the Act because these entities did not respond to our 
questionnaires, that there were massive imports of preserved mushrooms 
with respect to these companies. Therefore, we determined that critical 
circumstances exist with regard to these companies, consistent with 
Brake Drums and Brake Rotors. With regard to the respondents who were 
not analyzed in this investigation, we have reconsidered our 
preliminary determination finding of critical circumstances. For the 
final determination, we are following the practice set forth in Brake 
Drums and Brake Rotors at 9165 and Honey Critical Circumstances. 
Therefore, because the Department did not analyze company-specific data 
for the non-mandatory respondents due to the Department's own 
administrative constraints, we do not believe it is appropriate to find 
critical circumstances with regard to these companies.
B. Surrogate Value Issues
    Comment 3: Valuation of Fresh Mushrooms
    The respondents claim that the fresh mushroom surrogate value used 
in the preliminary determination--average unit value derived from three 
Indian producers' annual reports--is inappropriate because the growing 
method used by the Indian producers is completely different from that 
used by the PRC growers. Thus, the respondents argue that the 
Indonesian value they placed on the record is more appropriate because 
it reflects a growing method closer to that of the PRC producers and no 
Indian fresh mushroom price is of the same quality in that regard. If 
the Department nevertheless relies on Indian data for valuing fresh 
mushrooms, the respondents propose a September 1996 wholesale price for 
mushrooms quoted in the Indian publication Business Line. The 
respondents contend that this price is a more appropriate surrogate 
value because the value used in the preliminary determination, derived 
from the financial statements of three Indian producers, was based on 
transfer prices of vertically-integrated Indian producers and there is 
no information on the record indicating that these values reflect arms-
length market prices.
    The petitioners contend that India remains the appropriate 
surrogate country and thus, consistent with the Department's 
regulations and practice, Indian values should be used except where 
Indian values are unreliable or inappropriate. The petitioners argue 
that the respondents have failed to demonstrate that the Indian values 
are inappropriate and, therefore, the Department should continue to use 
the value derived from the Indian producers because it represents the 
experience of Indian producers over an annual period that is at least 
partly contemporaneous with the POI. The petitioners reject the 
respondents' characterization of the Indonesian growers' techniques as 
``low tech'' and assert that attributing differences in Indian and 
Indonesian surrogate values solely to growing techniques is 
oversimplified and faulty. The petitioners state that the Indian value 
proposed by the respondents is inferior because it reflects experience 
in North India, away from the primary Indian mushroom growing area in 
South India, and because it is a single price observed prior to the 
POI.

DOC Position:

    We disagree with the respondents with respect to the use of 
Indonesian fresh mushroom prices over Indian prices for the fresh 
mushroom surrogate value. Because we have already determined that India 
is the appropriate surrogate country, we would use data from Indonesia 
only if the Indonesian surrogate value is superior in terms of 
specificity, quality, and contemporaneity. The Indonesian mushroom 
price proposed by the respondents is not superior in any respect. The 
respondents claim that the Indonesian value is more specific to the PRC 
factor than the Indian prices because the Indonesian mushrooms 
allegedly are produced in a manner more similar to that of the PRC 
mushrooms. However, the factor to be valued here is fresh mushrooms, 
and based on the information on the record, there is no physical 
difference among the mushrooms grown in India, Indonesia, and the PRC, 
regardless of the means used to produce them. In other words, there is 
no distinguishing physical characteristic that makes an Indonesian 
mushroom more similar to a PRC mushroom than an Indian mushroom.
    Even if the Department were to consider the production method of an 
input as a factor in determining the appropriate surrogate value, the 
available evidence does not support the respondents' argument that 
Indonesian production methods are ``low tech''

[[Page 72264]]

compared to Indian production methods and thus more similar to PRC 
production methods. The respondents rely on the statements in the 
Indonesian respondents' April 3, 1998, questionnaire responses that 
their mushrooms are grown in ``sheds'' and on other information 
indicating that the ambient climate is a factor for the location of 
Indonesian farms to conclude that such operations are equivalent to the 
PRC grower's ``huts'' which lack climate control (see Respondents' May 
28, 1998, submission at pages 5-7 and Exhibit 2). However, the 
information on the public record of the companion investigation of 
certain preserved mushrooms from Indonesia indicates that the 
Indonesian growers are not like the PRC growers and, in fact, are more 
like the ``high tech'' Indian growers, as noted by the petitioners at 
pages 11-12 and Exhibit 1 of their June 3, 1998, submission. For 
example, while the PRC growers used a fixed bed system (May 28, 1998, 
submission at page 5), the Indonesian respondents used a tray system 
(see P.T. Dieng Djaya/Surya Jaya Abadi Perkasa's (``Dieng/Surya Jaya'') 
and P.T. Zeta Agro Corporation's April 23, 1998, responses at pages 51 
and 22, respectively 1). Contrary to the respondents' 
assertions, the Indonesian growers employ a climate control system 
(see, e.g., Dieng/Surya Jaya's June 22, 1998, response at pages 7-9, 
respectively). Accordingly, there is no basis to reject the Indian 
surrogate values in favor of the Indonesian surrogate values.
---------------------------------------------------------------------------

    \1\ Relevant pages from the public versions of the Indonesian 
responses have been included in the Valuation Memorandum.
---------------------------------------------------------------------------

    With regard to the Indian mushroom prices, we have analyzed further 
the average unit values from the three Indian producers to derive the 
surrogate value in the preliminary determination. We found that two of 
the unit values are based on the producer's sales of fresh mushrooms to 
unspecified domestic customers, while the unit value for the third 
company, Premier Mushrooms Farms (``Premier''), is based on its 
purchases of fresh mushrooms for its canning operations. As the factor 
to be valued is fresh mushrooms consumed as an input for preserved 
mushrooms, we find the unit value derived from Premier's fresh 
mushrooms purchases during 1996-1997 to be more specific for the factor 
being valued than the value derived from the other two producers' fresh 
mushroom sales.
    Moreover, in comparing the Premier mushrooms purchase price to the 
Business Line quote, we found no basis to conclude that either price is 
superior to the other in terms of quality, specificity, and 
contemporaneity. Both prices are equally specific--a wholesale trade 
level price to canners of fresh mushrooms grown in India. Both prices 
are essentially from the same time period--the price quote is from 
September 1996, while the Premier annual report covers the period of 
April 1996 through March 1997. Neither source is from the POI, and the 
price quote corresponds to the mid-point of the annual report's time 
period. Both prices are based on PAI and there is no basis to determine 
that one is more reliable than the other. Thus, we find that these 
surrogate values are equally valid. Accordingly, we have based the 
surrogate value for fresh mushrooms on the simple average of these two 
sources for the final determination.
    With regard to petitioners' arguments on the price quote, we find 
no basis to determine that a surrogate value is inferior simply on the 
grounds that it is from a part of the surrogate country that is not the 
purported principal production area of the subject merchandise. The 
petitioners have provided no evidence that this price is unacceptable 
for that reason.
    Comment 4: Valuation of Brined (Provisionally Preserved) Mushrooms
    The petitioners contend that the Department should value brined 
mushrooms used as a material input for the subject merchandise by 
adjusting the brined mushroom consumption factor to a fresh mushroom 
equivalent, as applied in the preliminary determination. The 
petitioners state that this methodology is reasonable because it 
accounts for the higher yield and costs associated with brined mushroom 
inputs, and there is no alternative surrogate value for brined 
mushrooms on the record.
    The respondents assert that the Department has already accounted 
for the costs of using brined rather than fresh mushrooms as an input 
through the higher consumption factors of labor and water used to 
debrine mushrooms before canning. The respondents contend that the 
increased consumption of these factors serves as an adjustment factor 
for the brined mushroom input. Thus, the respondents argue that, if the 
Department continues to adjust the brined mushroom factor to a fresh 
mushroom factor, it must reduce the labor and water consumption factors 
to avoid double-counting these values.

DOC Position:

    In the absence of a better methodology, we agree with petitioners 
and continue to adjust the brined mushroom input factor to a fresh 
mushroom equivalent in the same manner as that in the preliminary 
determination. We made the adjustment by applying an industry standard 
ratio to the brined mushroom factor. Furthermore, we find no basis on 
which to conclude that the alleged increased labor and water factors 
for brined mushrooms served as an adjustment factor. There is no 
information on the record to demonstrate that brined mushroom inputs 
had different labor and water factors associated with them. Our review 
of the factors shows no relatively higher consumption factor 
corresponding to subject merchandise produced from brined mushrooms. 
Accordingly, we have no basis to assume that these factors are double-
counted through the brined mushroom adjustment methodology employed.
    Comment 5: Valuation of Overhead, SG&A and Profit
    The respondents contend that the ratios used to calculate factory 
overhead, SG&A, and profit in the preliminary determination, as derived 
from the annual reports of three Indian producers of preserved 
mushrooms, are inappropriate for calculating the surrogate values for 
these factors. According to the respondents, these Indian producers are 
large, vertically integrated, technologically advanced farms/canneries, 
while the PRC producers who supply the respondent exporters are canners 
who purchase mushrooms from low technology farms. Thus, the respondents 
continue, these Indian ratios are based on production costs reflecting 
growing costs. The respondents contend that a more appropriate source 
for these ratios is the data provided by respondents from the 
Indonesian vegetable and fruit canning industry, since this information 
reflects the experience of a surrogate country food canning industry. 
In the alternative, the respondents state that if the data from Indian 
annual reports are to be used, the Department should rely only on the 
Agro Dutch Annual Report because the other two companies' reports 
reflect a disproportionate amount of non-subject merchandise.
    The petitioners respond that the respondents have provided no 
evidence that the Indonesian figures are based on data that are more 
representative than the Indian data. The petitioners note that the 
Indonesian data include data from the production of non-subject 
merchandise and there is no evidence that these data relate solely to 
canning operations. According to the petitioners, the Indonesian data 
may also include fully integrated producers (i.e. producers who grow 
the product as well as can it) since the Indonesian

[[Page 72265]]

producers of preserved mushrooms are also mushroom growers. In 
addition, while the petitioners concede that one of the three Indian 
companies' financial data may be distortive due to a disproportionate 
amount of non-subject merchandise, they assert that the other two, Agro 
Dutch and Saptarishi Agro, are predominantly producers of preserved 
mushrooms. The petitioners argue that, as the respondents have failed 
to identify any significant difference in the quality and 
representativeness of the data contained in the financial statements of 
these latter two companies, the Department should use this financial 
data to value the surrogate value percentages.

DOC Position:

    We agree with the petitioners with respect to the selection of 
Indian financial statement data. As we discussed above, we have 
determined that India is the appropriate surrogate country. Thus, we 
rely on Indian data unless alternate data is superior in terms of 
specificity, quality, and contemporaneity. In this instance, the 
Indonesian data offered by the respondents are not superior in any 
respect. While both sets of financial data are equivalent in terms of 
time period, the Indian data are more specific to the industry under 
investigation. While the Department would take into consideration 
whether the Indian data included a high proportion of mushroom growing 
production over canning operations, we note that there is no basis on 
which to conclude that the Indonesian canned vegetable producer data do 
not also include growing production data--a point conceded by the 
respondents at the Department's hearing (see Transcript of November 4, 
1998, hearing at page 77).
    However, we have revised our preliminary determination methodology 
to base the surrogate values for factory overhead, SG&A, and profit 
solely on the data from the Agro Dutch 1996-1997 financial statement. 
Although we used the data from all three Indian producers for the 
preliminary determination, we have concluded based on further analysis 
of the data that only the Agro Dutch data are appropriate for use in 
the final determination. As noted by both the respondents and the 
petitioners, the Transchem data are based on a higher proportion of 
nonsubject merchandise than those of the other two producers. However, 
we also note that Saptarishi Agro has accounted for its raw materials 
in a manner inconsistent with this investigation. As discussed in more 
detail in the Valuation Memorandum, Saptarishi Agro's materials total 
is comprised of raw materials and packing materials. The packing 
material amount is almost as large as the raw materials amount. The raw 
materials schedule does not include cans or jars in the listing of the 
major raw materials. Accordingly, we have made the reasonable 
assumption that Saptarishi Agro included the costs of containers in the 
packing materials amount, and we are unable to break out this amount 
further. In turn, we cannot calculate a materials total consistent with 
our methodology that would enable us to properly calculate factory 
overhead, SG&A, and profit ratios from Saptarishi Agro's data. 
Therefore, we have relied solely on the Agro Dutch data.
    We also note that the factory overhead ratio calculated using Agro 
Dutch's financial statement appears to include the costs for materials 
such as salt, water, chlorine, and ascorbic acid (vitamin C). As 
discussed in more detail in the Valuation Memorandum, according to the 
public versions of Agro Dutch's questionnaire responses in the 
companion certain preserved mushrooms from India investigation, raw 
materials costs in the financial statement include mushroom growing 
costs and cans, but not the other factors. The unspecified materials 
appear to be included under ``consumables,'' since water is 
specifically identified as being part of this category (see Agro 
Dutch's April 21, 1998, public version response at page 59, also 
included in the Valuation Memorandum). Consumables are included in the 
factory overhead calculation and we have no further information from 
Agro Dutch's public responses to break out this information further. 
Accordingly, we have also revised our preliminary determination 
methodology to value raw materials other than fresh mushrooms and 
containers as part of factory overhead, and have not valued them 
separately so as to avoid double-counting.
    Because we are including the valuation of all factors other than 
mushrooms and containers in factory overhead, the specific valuation 
and factor consumption issues raised by the parties concerning 
chlorine, salt, vitamin C, and citric acid are moot.
    Comment 6: Valuation of Cans
    The respondents contend that the Department should value tin cans 
based on the domestic prices for Indian tin cans, as placed on the 
record by respondents. The respondents argue that these values, derived 
from Agro Dutch's Annual Report, are appropriate because (a) they match 
the fact that the PRC producers obtain all of their tin cans from 
domestic sources, (b) they are consistent with the Department's 
preference for domestic surrogate values, as stated in Brake Drums and 
Brake Rotors at 9163, and (c) they are more specific than the Import 
Statistics value used in the preliminary determination, which was based 
on a ``basket'' HTS category for tin containers of 50 liters or less.
    The petitioners assert that the Department should continue to value 
cans based on the Indian import statistics average unit value because 
it more accurately reflects the experience of the Indian industry, 
which imports the overwhelming majority of the cans used in the 
production of the subject merchandise. Alternatively, if the Department 
uses Agro Dutch's purchase data to value cans, petitioners contend that 
the Department should calculate the value using both domestic and 
imported cans, since the purchases from both sources reflect the 
commercial environment of the surrogate country. The petitioners add 
that this value should also be adjusted to reflect the different rates 
of consumption based on can size, using data supplied by the 
petitioners.

DOC Position:

    We agree with the respondents with regard to the source of the 
surrogate value and, therefore, have revised our preliminary 
determination methodology to value tin cans based on the unit values 
derived from the 1996-1997 Agro Dutch Annual Report, since this 
information is more specific to the input being valued than the import 
statistics. However, we agree with the petitioners that there is no 
reason to base this value solely on the domestic purchase value. There 
is no basis in Department practice or precedent to select only the 
domestic surrogate value when the overwhelming majority of that input 
consumed by a producer in the surrogate country is imported. In 
selecting the appropriate surrogate value, the Department is attempting 
to reflect the purchase experience of a producer in the surrogate 
country, not necessarily to mimic the purchase pattern of the producer 
in the NME.
    In addition, we have adjusted the Agro Dutch unit price data for 
can size according to the weight-based methodology outlined by the 
respondents (see Valuation Memorandum). We note that the petitioners' 
adjustment methodology is based on a single price quote offered to an 
unidentified party. Because we have no further information to test the 
representativeness or reliability of this quote, we determined that 
this information is insufficient for our price adjustment purposes. 
Therefore, we

[[Page 72266]]

have relied on the weight-based alternative which, as noted by the 
respondents, was used by the petitioners in their calculations for the 
antidumping duty petition.
    Comment 7: Valuation of Water Inputs
    The respondents claim that the Department erred in valuing 
separately the water placed in the container with the mushrooms. Citing 
such cases as Final Determination of Sales at Less Than Fair Value: 
Persulfates from the PRC, 62 FR 27222, May 19, 1997, and Final 
Determination of Sales at Less Than Fair Value: Saccharin from the PRC, 
59 FR 58818, November 15, 1994, the respondents state that it is the 
Department's practice to presume that water consumption is included in 
the factory overhead ratio calculation and that, in this investigation, 
there is no evidence on the record to reject this presumption. Without 
such evidence, the respondents allege that the separate water valuation 
results in double-counting of the water input.
    The petitioners contend that water is a direct input for particular 
segments of the preserved mushrooms production process and, thus, water 
consumed in that process should be treated as a direct material valued 
separately from factory overhead. The petitioners argue that the 
respondents have misstated the Department's practice in that the 
Department's presumption that water consumption is part of factory 
overhead is dependent on whether the input is classified as an indirect 
material in the production process. In this instance, petitioners 
continue, the water in the can is a required input in the production 
process and thus a direct material. As such, the petitioners contend 
that the presumption should be that water is not part of factory 
overhead, consistent with Final Results of Administrative Review: 
Helical Spring Lock Washers from the PRC, 62 FR 61794, November 19, 
1997.

DOC Position:

    We agree with petitioners in principle that water packed in the can 
or jar with the preserved mushrooms is a direct material. However, as 
discussed above under Comment 7, we have determined that all water 
consumed by the Indian producer Agro Dutch is recorded in its financial 
statement as part of ``consumables,'' which are a component of factory 
overhead. It is not possible to break out this water consumption from 
the rest of the ``consumables'' included in the financial statement. 
Accordingly, since all water consumption, for whatever purpose, is 
included in factory overhead, we have not valued water separately so as 
to avoid double counting.
    Comment 8: Valuation of Glue
    The respondents argue that the Department's selection of a 
surrogate value for glue consumed in the packing process, which was 
derived from Indian import statistics, was incorrect because the value 
used was based on retail-level size containers. According to the 
respondents, the verifications demonstrated that the PRC producers 
obtain glue in larger size containers, and thus the respondents contend 
that glue should be valued based on a value exclusive of glue sales in 
containers of one kilogram or less. For this surrogate value, the 
respondents advocate use of the Indonesian import statistics value that 
they placed on the record of this investigation.

DOC Position:

    Based on further analysis of the surrogate value data on the 
record, we have revised our selection of the Indian surrogate value to 
rely on a different set of Indian import statistics than that used for 
the preliminary determination. The imports statistics we have used in 
the final determination correspond to a type of glue more similar to 
that employed by the respondents, which is covered by the HTS category 
for glue that the respondents proposed in their May 28, 1998, 
submission (see Valuation Memorandum). We have made this change to the 
surrogate value selected because the revised value appears to be more 
specific to the type of glue consumed by the producers, and not because 
of the size of the containers associated with the glue.
    Comment 9: Valuation of Diesel Fuel
    The petitioners contend that diesel fuel should be valued using 
prices reported in the Indian publication Economic Times of India 
(``Times''). The petitioners claim that the Times value is superior to 
the unit value derived from Indian import statistics used in the 
preliminary determination because it is based on domestic sources, more 
product-specific, and more contemporaneous than the import statistics 
value.

DOC Position:

    We agree with the petitioners with regard to the source of the 
surrogate value at issue. This source is contemporaneous with the POI, 
while the import statistics values are based on 1995-1996 values. For 
the final determination, we have applied the average of the ``old'' 
prices listed in the Times value for diesel fuel. We used the ``old'' 
prices rather than the ``new'' prices published in the Times because, 
according to the published report, the latter did not take effect until 
the very end of the POI. Thus, it is a reasonable assumption that the 
``old'' prices were in effect during the POI.
C. Production Factor Issues
    Comment 10: Allocation Methodology for Input Factors
    The petitioners argue that the consumption factors for three 
producers, Longhai, Putian, and Zishan, should be recalculated to 
allocate over the different can sizes based on drained-weight of the 
mushrooms, rather than net or packed weight. The petitioners contend 
that to allocate factors on a basis other than drained weight is 
distortive because per-unit EP is based on drained weight.
    The respondents reply that the petitioners are mistaken and, in 
fact, the producers reported consumption factors on a drained-weight 
basis. The respondents state that the producers in question all record 
production on a net-weight basis, but they all converted production 
factors to drained weight using net weight as the allocation basis.

DOC Position:

    We agree with the respondents. Our verification reports for 
Longhai, Putian, and Zishan confirm that the consumption factors have 
been reported on a drained-weight basis (see, e.g., Longhai 
verification report of October 13, 1998, at pages 4-5) and therefore no 
recalculation is necessary.
    Comment 11: Treatment of Cans and Jars as Direct Materials or 
Packing Materials
    The respondents claim that the Department erred in classifying 
containers (i.e. tin cans and glass jars) as direct materials and 
instead should consider these items to be packing materials. The 
respondents contend that section 773(c)(1)(B) of the Act specifies that 
the cost of containers shall be added to NV after accounting for the 
factors of production utilized in producing the merchandise. According 
to the respondents, the containers are simply a means of transporting 
preserved mushrooms and are not an integral part of the product. As 
such, the respondents continue, valuation of container materials should 
not be included in the valuation of the cost of manufacturing. The 
respondents distinguish the facts in the instant case from those in 
Washington Red Raspberries Commission v. United States, 859 F.2d 898 
(Fed. Cir. 1988) (``Red Raspberries''), in which the Department's 
treatment of containers as an integral part of the subject merchandise 
was affirmed by the Court

[[Page 72267]]

of Appeals for the Federal Circuit. In this respect, the respondents 
argue that the containers case do not preserve the mushrooms but serve 
merely as a vessel in which to ship them.
    The petitioners state that the containers are properly treated as 
part of the direct materials factors as they are an integral part of 
the production process and subject merchandise. The petitioners also 
cite the decision in Red Raspberries to support the position that, 
where the materials are not incidental to the cost of the merchandise, 
but rather the product cannot exist in its natural form but for the 
container, that container cost may be included in direct materials.

DOC Position:

    Consistent with our approach in the three other preserved mushrooms 
investigations, including Final Determination of Sales at Less Than 
Fair Value: Certain Preserved Mushrooms from Chile, 63 FR 56613, 
October 22, 1998, we have treated the containers (i.e., cans or jars) 
as part of the subject merchandise. We note that preserved mushrooms 
include the container as an integral part of the product, as noted 
above in the ``Scope of Investigation'' section of this notice, and the 
product does not exist as the subject merchandise without the 
container. This treatment is also consistent with our rationale in Red 
Raspberries and our methodology in similar cases involving preserved 
products, such as the Final Determination of Sales at Less Than Fair 
Value: Canned Pineapple Fruit from Thailand, 60 FR 29553, June 5, 1995.
    Comment 12: Accounting for Water Loss
    The petitioners contend that the Department should adjust the 
reported water input consumed by the PRC producers (i.e. the water 
packed in the cans or jars) to account for water lost during 
production. According to the petitioners, most of the producers 
reported a theoretical factor for this water input which failed to 
account for water lost. As Putian accounted for this input loss through 
a theoretical water waste ratio, the petitioners contend that the 
Department should apply Putian's water waste ratio to the other 
producers as facts available.
    The respondents state that the petitioners have misunderstood the 
producers' reporting. According to the respondents, the reporting 
methodology accounts for all water consumed by the producers and thus 
includes any water that was allegedly lost. They add that while 
Putian's methodology was different than that employed by the other 
producers, it provided the same results.

DOC Position:

    We agree with the respondents. The verification reports indicate 
that the producers have accounted adequately for water consumption. 
However, as noted above in our responses to Comment 5 and Comment 7, 
all water consumed is included in factory overhead and we have not 
included a separate value for water in the final determination. Thus, 
since all water factors consumed have been valued as part of factory 
overhead, this issue is moot.
    Comment 13: Facts Available for Can Supplier Input Factors
    The petitioners contend that the Department should apply facts 
available for the factors of production reported by Zhaoan's affiliated 
can supplier, Zhangzhou Ruida, because the Department was unable to 
verify these factors. Citing Zhangzhou Ruida's verification report, the 
petitioners assert that the factors could not be verified because the 
manufacturer had used a cost-based allocation methodology rather than a 
quantity-based allocation methodology. As facts available for these 
inputs, the petitioners claim that the Department should apply the 
surrogate value selected for cans.

DOC Position:

    We agree with the petitioners. As discussed in the verification 
report, Zhangzhou Ruida was unable to support its response and 
therefore we cannot rely on its information for the final 
determination. Accordingly, we have applied the surrogate value for 
cans, as identified in Comment 6 above, to Zhaoan's can consumption 
factors.
    Comment 14: Treatment of Labels as Packing Materials
    As discussed above under Comment 11, the respondents assert that 
the containers used for preserved mushrooms should be treated as 
packing materials rather than direct materials. Similarly, the 
respondents contend that the labels affixed to the containers should 
also be considered packing materials.

DOC Position:

    We agree with respondents with respect to labels. While cans are an 
integral part of the subject merchandise (see Comment 11), cans may or 
may not have labels, which serve more as a packaging component to 
identify and market the finished product. Therefore, we have valued 
labels as part of packing materials in the final determination.
D. Company-Specific Issues
    Comment 15: Xiamen Jiahua's Sales Prices
    Xiamen Jiahua contends that certain U.S. sales prices should be 
revised to reflect the price charged by Xiamen Jiahua's affiliated 
trading company to unaffiliated customers, as Xiamen Jiahua reported at 
the commencement of verification, rather than the previously reported 
prices, which reflect the sale from Xiamen Jiahua to the affiliated 
trading company.

DOC Position:

    We agree and have revised the sales data pursuant to Xiamen 
Jiahua's September 14, 1998, submission, which we verified. This 
revision is in accordance with the statutory requirement of section 
772(a) of the Act to base EP on the price to the first unaffiliated 
customer.
    Comment 16: Dongya Firewood Consumption
    The petitioners state that the Department should include a 
valuation for firewood consumed by Dongya to start the boilers used in 
production of the subject merchandise in the Dongya NV calculation. The 
petitioners note that consumption of this input was not reported by 
Dongya in the questionnaire response.
    Dongya responds that the firewood is used as kindling to ignite 
coal used to generate steam in the production process. As such, Dongya 
contends that this input is properly regarded as part of factory 
overhead rather than a separate factor of production.

DOC Position:

    We agree with Dongya and treated firewood as part of factory 
overhead, rather than valuing it separately.
    Comment 17: Zishan Scrap Factors
    The petitioners argue that, as Zishan was unable to support the 
sale and receipt of payment for scrap materials at verification, the 
Department should not adjust Zishan's NV to account for the sale of 
these by-products.
    Zishan states that it demonstrated to the Department at 
verification that it sells its by-product. While it did not provide 
support for one particular month requested by the Department, Zishan 
claims that nevertheless, it established the fact for another month 
examined at verification and thus is entitled to an adjustment in the 
calculation of its NV.

DOC Position:

    We agree with the petitioners and have rejected Zishan's by-product 
adjustment to its NV because Zishan was unable to document sales of its 
by-

[[Page 72268]]

products during the POI. The by-product sales shown at verification 
occurred several months prior to the POI. December was the only month 
of the POI where there was subject merchandise production and since 
Zishan could not support by-product sales for that month or any other 
month of the POI, we have no basis to conclude that it in fact sold its 
by-products during the POI.

Continuation of Suspension of Liquidation

    In accordance with section 735(c)(1)(B) of the Act, we are 
directing the Customs Service to continue to suspend liquidation of all 
imports of subject merchandise that are entered, or withdrawn from 
warehouse, for consumption on or after August 5, 1998, the date of 
publication of the preliminary determination in the Federal Register 
except for subject merchandise exported by Tak Fat or other companies 
not specifically named below. For merchandise exported by Tak Fat or by 
other companies not specifically named below, we are directing the 
Customs Service to continue to suspend liquidation of all imports of 
the subject merchandise that are entered, or withdrawn from warehouse, 
for consumption on or after May 7, 1998, the date 90 days prior to the 
date of publication of the preliminary determination in the Federal 
Register, in accordance with our critical circumstances finding. 
Furthermore, we will instruct the Customs Service to refund all bonds 
and cash deposits posted on subject merchandise exported by all the 
companies specifically named below, except Tak Fat, that was entered or 
withdrawn from warehouses for consumption prior to August 5, 1998.
    The Customs Service shall continue to require a cash deposit or the 
posting of a bond equal to the weighted-average amount by which the NV 
exceeds the EP, as indicated in the chart below. These suspension of 
liquidation instructions will remain in effect until further notice.

 
------------------------------------------------------------------------
                                        Weighted-
                                         average          Critical
        Exporter/manufacturer            margin        circumstances
                                       percentage
------------------------------------------------------------------------
China Processed Food I&E Co./Xiamen       154.71   No
 Jiahua I&E Trading Company, Ltd..
Tak Fat Trading Co...................     178.59   Yes
Shenzhen Cofry Cereals, Oils, &           126.16   No
 Foodstuffs Co., Ltd..
Gerber (Yunnan) Food Co..............     158.79   No
Jiangsu Cereals, Oils & Foodstuffs        158.79   No
 Group Import & Export Corporation.
Fujian Provincial Cereals, Oils &         158.79   No
 Foodstuffs I&E Corp..
Putian Cannery Fujian Province.......     158.79   No
Xiamen Gulong I&E Co., Ltd...........     158.79   No
General Canned Foods Factory of           158.79   No
 Zhangzhou.
Zhejiang Cereals, Oils & Foodstuffs       158.79   No
 I&E Corp..
Shanghai Foodstuffs I&E Corp.........     158.79   No
Canned Goods Co. of Raoping..........     158.79   No
PRC-wide Rate........................     198.63   Yes
------------------------------------------------------------------------

    The PRC-wide rate applies to all entries of subject merchandise 
except for entries from exporters/factories that are identified 
individually above.

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (ITC) of our determination. As our final 
determination is affirmative, the ITC will, within 45 days, determine 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry. If the ITC determines that material 
injury, or threat of material injury does not exist, the proceeding 
will be terminated and all securities posted will be refunded or 
canceled. If the ITC determines that such injury does exist, the 
Department will issue an antidumping duty order directing Customs 
officials to assess antidumping duties on all imports of the subject 
merchandise entered for consumption on or after the effective date of 
the suspension of liquidation.
    This determination is issued and published in accordance with 
sections 735(d) and 777(i)(1) of the Act.

    Dated: December 18, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-34704 Filed 12-30-98; 8:45 am]
BILLING CODE 3510-DS-P