[Federal Register Volume 64, Number 225 (Tuesday, November 23, 1999)]
[Notices]
[Pages 65675-65681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30551]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-855]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Certain Non-Frozen Apple Juice Concentrate From the People's 
Republic of China

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

EFFECTIVE DATE: November 23, 1999.

FOR FURTHER INFORMATION CONTACT: Sally Hastings, Craig Matney, Annika 
O'Hara or Vincent Kane, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-3454, (202) 482-1778, (202) 482-3798, or (202) 482-2815, 
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 1, 1998).

Preliminary Determination

    We preliminarily determine that certain non-frozen apple juice 
concentrate (``NFAJC'') from the People's Republic of China (``PRC'') 
is being, or is likely to be, sold in the United States at less than 
fair value

[[Page 65676]]

(``LTFV''), as provided in section 733 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 initiation of this investigation on July 6, 1999 (64 FR 
36330), the following events have occurred:
    On July 22, 1999, the United States International Trade Commission 
(``ITC'') notified the Department of its affirmative preliminary injury 
determination in this case.
    On June 11, and July 14, 1999, we received entries of appearance by 
counsel on behalf of 12 producers/exporters of the subject merchandise: 
Yantai North Andre Juice Co., Ltd. (North Andre); Shaanxi Haisheng 
Fresh Fruit Juice Co., Ltd. (Haisheng); Sanmenxia Lakeside Fruit Juice 
Co., Ltd. (Lakeside); Shandong Zhonglu Juice Group Co., Ltd. (Zhonglu); 
Yantai Oriental Juice Co., Ltd. (Oriental); Qingdao Nannan Foods Co., 
Ltd. (Nannan); Xianyang Fuan Juice Co., Ltd. (Fuan); Xian Asia Qin 
Fruit Co., Ltd. (Asia Fruit); Shaanxi Machinery & Equipment Import & 
Export Corporation (SAAME); Shaanxi Foreign Economic & Trade 
Development Corporation (SFETDC); Changsha Industrial Products & 
Minerals Import & Export Corporation (Changsha); and Shandong 
Foodstuffs Imports & Export Corporation (Shandong Foodstuffs).
    In response to a request from the Department, on July 22, 1999, the 
12 producers/exporters listed above provided company-specific volumes 
of exports of the subject merchandise to the United States for the 
period October 1, 1998 through March 31, 1999. On July 27 and 29, 1999, 
the Department sent letters to the Chinese Chamber of Commerce for the 
Import and Export of Foodstsuffs, Native produce and Animal By-Products 
(``China Chamber''), with copies to the Ministry of Foreign Trade and 
Economic Cooperation (``MOFTEC'') and the Embassy of the PRC in 
Washington, DC, requesting: (1) the total quantity of NFAJC exported to 
the United States by the PRC during the POI; (2) the names of all 
companies (other than the 12 already identified) that exported NFAJC to 
the United States during the POI and the quantity that each exported; 
and (3) for those exporters which are not also the producers, the names 
of the producers that supply them. On August 11, 1999, the China 
Chamber provided total PRC NFAJC exports to the United States for the 
October 1998 through March 1999 period and the requested company-
specific export and contact information for 18 additional exporters.
    Given the large number of exporters involved, we determined it 
necessary to limit the number of respondents in this investigation to 
the five largest producers/exporters based on their volumes of exports 
to the United States (see August 17, 1998, Decision Memorandum to the 
Acting Deputy Assistant Secretary, Import Administration). We selected 
the following five companies as mandatory respondents: North Andre; 
Haisheng; Oriental; Nannan; and SAAME. On August 17, 1999, the 
Department issued the full antidumping questionnaire to these five 
producers/exporters. On August 18, 1999, we issued a questionnaire 
concerning quantity and value of sales of NFAJC, and company structure, 
ownership, and affiliations (``separate rates questionnaire'') to the 
remaining identified producers/exporters through their counsel or 
through the China Chamber (with copies to MOFTEC and the Embassy of the 
PRC), and requested that they assist in distributing it to all 
exporters who might request separate rates (see PRC-Wide Rate section 
below). On August 18, 1999, Lakeside and Zhonglu requested that they be 
allowed to participate as voluntary respondents in this investigation. 
On September 9, 1999, we accepted Lakeside and Zhonglu as voluntary 
respondents because both companies were suppliers of a mandatory 
respondent and were, therefore, already required to participate in this 
investigation. Counsel withdrew its appearance on behalf of SFETDC on 
August 23, 1999.
    On September 15, 1999, the Department invited interested parties to 
comment on surrogate country selection and to provide publicly 
available information for valuing the factors of production. We 
received responses from both the petitioners and the respondents on 
September 27, 1999. Respondents and petitioners filed rebuttal comments 
on surrogate values on October 4 and 6, 1999, respectively.
    On September 21 and October 5, 1999, the Department received 
sections A, C, and D questionnaire responses from the five mandatory 
and the two voluntary respondents: North Andre; Haisheng; Oriental; 
Nannan; SAAME; Lakeside; and Zhonglu. Fuan, Asia Fruit, Changsha, and 
Shandong Foodstuffs provided responses to the separate rates 
questionnaire on September 21, 1999. We issued supplemental 
questionnaires to respondents in October and received supplemental 
responses in October and November 1999. Between October 14 and 20, 
1999, we received comments on the responses from the petitioners.

Critical Circumstances

    On September 7, 1999, pursuant to the allegation of critical 
circumstances contained in the petition, the Department requested 
information regarding shipments of NFAJC from the seven respondents 
participating in this investigation. Each respondent provided the 
requested information on October 5, 1999. On November 3, 1999, the 
Department issued its preliminary determination that critical 
circumstances exist with respect to SAAME, Lakeside, Haisheng, North 
Andre, Nannan, and for all other exporters covered by this 
investigation. We found that critical circumstances do not exist with 
respect to Oriental and Zhonglu. For a complete discussion of our 
analysis, see Memorandum to Deputy Assistant Secretary Richard W. 
Moreland, dated November 3, 1999, on file in Room B-099 of the 
Department's headquarters and the Preliminary Determination of Critical 
Circumstances: Certain Non-Frozen Apple Juice Concentrate from the 
People's Republic of China, 64 FR 61835 (November 15, 1999).

Scope of Investigation

    For purposes of this investigation, the product covered by the 
scope is all non-frozen concentrated apple juice with a Brix scale of 
40 or greater, whether or not containing added sugar or other 
sweetening matter, and whether or not fortified with vitamins or 
minerals. Excluded from the scope of this investigation are: frozen 
concentrated apple juice; non-frozen concentrated apple juice that has 
been fermented; and non-frozen concentrated apple juice to which 
spirits have been added.
    The petitioners originally excluded from the scope of this 
investigation NFAJC fortified with vitamins or minerals. However, on 
September 24, 1999, the petitioners requested that the Department 
expand the scope to include NFAJC fortified with vitamins or minerals. 
The petitioners made this request based on their concern that 
circumvention might occur if NFAJC with vitamins and minerals were 
excluded from the scope of the investigation. To substantiate this 
claim, they provided an affidavit attesting to the fact that a buyer/
seller of Chinese NFAJC had been told that Chinese exporters were 
considering the possibility of fortifying NFAJC with vitamins or 
minerals as one way to avoid the payment of antidumping duties.

[[Page 65677]]

    On September 28, 1999, the respondents objected to the inclusion of 
NFAJC with vitamins and minerals stating that the ITC's preliminary 
determination was made with respect to NFAJC that did not include added 
vitamins and minerals. The respondents also cited to the antidumping 
and countervailing duty investigations of pasta from Turkey and Italy 
(``Pasta''), where the Department chose to retain the original scope 
rather than expand it at the request of the petitioners to include 
pasta in packages of more than five pounds. (See, Memorandum to Susan 
G. Esserman, Assistant Secretary for Import Administration from Barbara 
Stafford, Deputy Assistant Secretary for Investigations, dated October 
10, 1995, entitled ``Antidumping and Countervailing Duty Investigations 
of Pasta from Italy and Turkey--Scope Issue'')
    In this case, we have preliminarily determined to include NFAJC 
with vitamins and minerals for the following reasons. First, the 
petitioners have provided evidence that circumvention may occur unless 
the scope is expanded. Second, the ITC will have the opportunity to 
examine this issue in its final determination (if necessary). Finally, 
the courts have given the Department discretion in defining the scope. 
``* * * the Department may fashion the scope of an order so as to 
prevent circumvention by parties in the future ``employing inventive 
import strategies.''' (NTN Bearing Corp. of America v. United States, 
747 F. Supp. 726, 731 (CIT 1990). Although we have preliminarily 
included NFAJC with vitamins and minerals in the scope of this 
investigation, we will continue to investigate this matter for our 
final determination.
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (``HTSUS'') at 
subheading 2009.70.20. Although the HTSUS subheading is provided for 
convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.

Period of Investigation

    The period of this investigation (``POI'') corresponds to the 
exporters' two most recent fiscal quarters prior to the filing of the 
petition, i.e., October 1, 1998 through March 31, 1999.

Nonmarket Economy Country and Market Oriented Industry Status

    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: Certain Preserved 
Mushrooms from the People's Republic of China, 63 FR 72255 (December 
31, 1998) (``Mushrooms'')). A designation as an NME remains in effect 
until it is revoked by the Department (see section 771(18)(C) of the 
Act).
    The respondents in this investigation have not requested a 
revocation of the PRC's NME status. We have, therefore, preliminarily 
determined to continue to treat the PRC as an NME.

Separate Rates

    All of the respondents have provided the requested company-specific 
separate rates information and have stated that for each company, there 
is no element of government ownership or control.
    The Department's separate rate test is not concerned, in general, 
with macroeconomic/border-type controls, e.g., export licenses, quotas, 
and minimum export prices, particularly if these controls are imposed 
to prevent dumping. 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), as modified by 
Final Determination of Sales at Less Than Fair Value: Silicon Carbide 
from the People's Republic of China (59 FR 22585, May 2, 1994). Under 
the separate rates criteria, the Department assigns separate rates in 
NME cases only if the 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 government control, including the 
``Foreign Trade Law of the People's Republic of China'' (``Foreign 
Trade Law''), the ``Law of the People's Republic of China on Industrial 
Enterprises Owned by the Whole People'' (``Industrial Enterprises 
Law''), the ``Law of the People's Republic of China on Chinese-Foreign 
Cooperative Joint Ventures' (``Joint Ventures Law''), and the 
``Administrative Regulations of the People's Republic of China 
Governing the Registration of Legal Corporations.''
    In prior cases, the Department has analyzed the Foreign Trade Law 
and found that it establishes an absence of de jure control. (See, 
e.g., 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 Mushrooms.) 
We have no new information in this proceeding which would cause us to 
reconsider this determination. For the purposes of this investigation 
and in prior cases, the Department has also analyzed the Industrial 
Enterprises Law and found that this law establishes mechanisms for 
private control of companies which indicate an absence of de jure 
control. See Pure Magnesium from the People's Republic off China: Final 
Results of New Shipper Review, 63 FR 3085, 3086 (January 21, 1998).
    According to the respondents, NFAJC exports are not affected by 
quota allocations or export license requirements. The producers/
exporters claim to have the autonomy to set the price at whatever level 
they wish through independent price negotiations with their foreign 
customers without government interference.
    Accordingly, we preliminarily determine that there is an absence of 
de jure government control over export pricing and marketing decisions 
of the respondents.
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 
Mushrooms.) 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.
    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export

[[Page 65678]]

functions: (1) Whether the export prices are set by, or subject to the 
approval of, a governmental authority; (2) whether the respondent has 
authority to negotiate and sign contracts and other agreements; (3) 
whether the respondent has autonomy from the government in making 
decisions regarding the selection of its management; and (4) whether 
the respondent retains the proceeds of its export sales and makes 
independent decisions regarding disposition of profits or financing of 
losses (see Mushrooms).
    Each of the 11 respondents in this investigation has asserted the 
following: (1) It establishes its own export prices; (2) it negotiates 
contracts without guidance from any governmental entities or 
organizations; (3) it makes its own personnel decisions; and (4) it 
retains the proceeds from export sales and uses profits according to 
its business needs without any restrictions. Additionally, these 11 
respondents have stated that they do not coordinate or consult with 
other exporters regarding their pricing. This information supports a 
preliminary finding that there is an absence of de facto governmental 
control of the export functions of these companies. Consequently, we 
preliminarily determine that all responding exporters have met the 
criteria for the application of separate rates.

Antidumping Deposit Rate for Those Producers/Exporters That Responded 
Only to the Separate Rates Questionnaire

    For those PRC producers/exporters that responded to our separate 
rates questionnaire but did not respond to the full antidumping 
questionnaire (because they were not selected to respond or because 
they did not submit a voluntary response), we have calculated a 
weighted-average margin based on the rates calculated for those 
producers/exporters that were selected to respond, except that we did 
not include the rate for North Andre which was zero. (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 from the PRC'')).

PRC-Wide Rate

    Information on the record of this investigation indicates that 
there are numerous producers/exporters of the subject merchandise in 
the PRC. As noted in the case history section above, all exporters were 
given the opportunity to respond to the separate rates questionnaire. 
Based upon our knowledge of PRC exporters and the fact that U.S. import 
statistics show that responding companies did not account for all 
imports into the United States from the PRC, we have preliminarily 
determined that PRC exporters of NFAJC failed to respond to our 
questionnaire.
    Section 776(a)(2) of the Act provides that ``if an interested party 
or any other person--(A) withholds information that has been requested 
by the administering authority or the Commission under this title, (B) 
fails to provide such information by the deadlines for submission of 
the information or in the form and manner requested, subject to 
subsections (c)(1) and (e) of section 782, (C) significantly impedes a 
proceeding under this title, or (D) provides such information but the 
information cannot be verified as provided in section 782(i), the 
administering authority and the Commission shall, subject to section 
782(d), use the facts otherwise available in reaching the applicable 
determination under this title.''
    Section 776(b) of the Act further provides that adverse inferences 
may be used when a party has failed to cooperate by not acting to the 
best of its ability to comply with a request for information. The 
producers/exporters that decided not to respond to the separate rates 
questionnaire failed to act to the best of their ability in this 
investigation. Absent a response, we must presume government control of 
these companies (see, e.g., Bicycles from the PRC). Moreover, the 
Department has determined that, in selecting from among the facts 
otherwise available, an adverse inference is warranted.
    In accordance with our standard practice, as adverse facts 
available, we are assigning to those companies that did not respond to 
the Department's separate rates questionnaire the higher of: (1) The 
highest margin stated in the notice of initiation; or (2) the highest 
margin calculated for any respondent in this investigation (see, e.g., 
Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Wire Rod from Japan, 63 FR 40434 (July 29, 1998)). In 
this case, the adverse facts available margin is 54.55 percent, which 
is the highest margin calculated for a respondent in this investigation 
(Lakeside).
    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. 
103-316 (1994) (SAA), states that ``corroborate'' means to determine 
that the information used has probative value. See SAA at 870.
    To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information to be used. In an investigation, if the Department chooses 
as facts available a calculated dumping margin of another respondent, 
it is not necessary to question the reliability of that calculated 
margin. With respect to relevance, however, the Department will 
consider information reasonably at its disposal as to whether there are 
circumstances that would render a margin not relevant. Where 
circumstances indicate that the selected margin may not be appropriate, 
the Department will attempt to find a more appropriate basis for facts 
available (see, e.g., Fresh Cut Flowers from Mexico; Final Results of 
Antidumping Duty Administrative Review, 61 FR 6812, 6814 (February 22, 
1996) (where the Department disregarded the highest margin as adverse 
best information available because the margin was based on another 
company's uncharacteristic business expense resulting in an unusually 
high margin)). In this investigation, there is no indication that the 
highest calculated margin is unreliable or irrelevant and, hence, 
inappropriate to use as adverse facts available. Thus, the Department 
has preliminarily determined the PRC-wide rate to be 54.55 percent.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by North 
Andre, Haisheng, Lakeside, Zhonglu, Oriental, Nannan and SAAME for 
export to or within the United States were made at LTFV, we compared 
the EP or the CEP, as appropriate, to the NV, as described in the 
``Export Price,'' ``Constructed 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 
and CEPs to the NVs.

Export Price

    For North Andre, Haisheng, Lakeside, Zhonglu, Nannan and SAAME, 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 appropriate. We calculated EP based on packed CIF, 
C&F, FOB or delivered prices to the first unaffiliated purchaser in the 
United States. Where appropriate,

[[Page 65679]]

we made deductions from the starting price (gross unit price) for 
billing adjustments, inland freight from the plant/warehouse to the 
port of export, marine insurance, ocean freight, U.S. duty, U.S. 
brokerage and handling, and U.S. inland freight. Because certain 
domestic inland freight expenses, ocean freight and marine insurance 
were paid in RMB, we based these charges on surrogate rates from India. 
(See ``Normal Value'' section for further discussion.)

Constructed Export Price

    For certain sales by Haisheng and all sales by Oriental, we used 
CEP methodology in accordance with sections 772(b), (c) and (d) of the 
Act, because sales to the first unaffiliated purchaser in the United 
States took place after importation. For these companies, we calculated 
CEP based on ex-dock, ex-warehouse, CIF or delivered prices to 
unaffiliated purchasers in the United States. Where appropriate, we 
made deductions for billing adjustments, inland freight in the PRC, 
ocean freight, marine insurance, U.S. duty, U.S. inland freight, and 
U.S. warehousing. Also, where appropriate, we deducted direct and 
indirect selling expenses related to commercial activity in the United 
States. Pursuant to section 772(d)(3) of the Act, where applicable, we 
made an adjustment for CEP profit. We did not adjust for CEP profit for 
Oriental because Oriental's U.S. sales were consignment sales made 
through unaffiliated consignment agents. For these sales, we deducted 
the commission paid to the consignee.

Normal Value

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. Regarding the first criterion, the 
Department has determined that India, Pakistan, Sri Lanka, Egypt, 
Indonesia, and the Philippines are countries comparable to the PRC in 
terms of overall economic development (see memorandum from Jeff May, 
Director, Office of Policy, to Susan Kuhbach, Senior Director, AD/CVD 
Enforcement, Office 1, September 15, 1999) (``Surrogate Memorandum'')).
    Regarding the second criterion (related to significant production 
of comparable merchandise), the petitioners have alleged that India is 
a significant producer of apples, at least among the countries at a 
comparable level of economic development to the PRC. Moreover, the 
petitioners claim, since there is little use for low quality apples 
except to make NFAJC, most countries that produce apples also produce 
NFAJC.
    The respondents have argued that none of the countries found by the 
Department to be economically comparable to the PRC is a significant 
producer of NFAJC. Therefore, instead of relying on one of those 
countries, the respondents urge the Department to use Turkey, a country 
which they claim is a major producer of NFAJC, as the surrogate. Of the 
countries that are significant producers of NFAJC, according to the 
respondents, Turkey is closest to the PRC in terms of economic 
development. In addition to the fact that Turkey is a significant 
producer of comparable merchandise, the respondents also argue that the 
Department has publicly available information on many key factor values 
in Turkey. This is in contrast to India, where much of the factor value 
data submitted by the petitioners is proprietary.
    Regarding the petitioners' argument that India should be used as 
the surrogate country, the respondents disagree, claiming that the 
major input into NFAJC (juice apples) is subsidized. The respondents 
point to the Department's Surrogate Memorandum which, in naming the 
economically comparable countries that could be used as surrogates, 
states ``we know of no direct subsidies on the production or sale of 
any input used in the production of the subject merchandise * * *'' To 
the contrary, the respondents claim, India subsidizes its apple 
producers through a price support scheme known as the Market 
Intervention Scheme (``MIS''). Thus, even if India's level of apple 
production led the Department to view India as a significant producer 
of comparable merchandise, India should not be used because the key 
input into NFAJC in India is subsidized.
    For purposes of the preliminary determination, we have used India 
as our surrogate. First, we note that India is economically comparable 
to the PRC, while Turkey is not. Second, we have been able to develop 
publicly available factor values in India without relying on 
proprietary information submitted by the petitioners.
    The surrogate country memorandum language to which the respondents 
cite concerns the Department's reluctance to use factor prices that may 
not, in some sense, reflect ``fair market value.'' The meaning of 
``fair market value'' in this context is necessarily broad, and 
certainly not limited to the price prevailing in a perfectly 
competitive, distortion-free market, since markets the world over, 
particularly agricultural markets, are distorted by any number of 
government measures and policies such as taxes, tariffs and price/
income support schemes. The concept of ``fair market value'' in this 
context is not so broad, however, that it covers all government market 
interventions, and the Department therefore ``draws a line'' with 
government subsidies that tend to enable producers to lower their price 
to the point where they (the prices) may not reflect fair market value. 
In such cases, the Department considers alternative factor price data. 
There is, however, no need to do so in this case for two reasons: (1) 
The MIS is a price support scheme, similar to those employed in many 
agricultural product markets around the world; and (2) as such, the MIS 
does not raise the fair market value concerns discussed above.
    Although we have used India as the surrogate for this preliminary 
determination, we are considering this matter further for the final 
determination. First, we note the respondents' claim that juice apples 
are not internationally traded inputs. According to the respondents, 
the freight costs of transporting juice apples would be greater than 
the value of the apples themselves. Such a situation may lead the 
Department to place greater emphasis on the significant producer 
criterion that on the economically comparable criterion in making its 
surrogate selection. (See, Preamble to Sec. 351.408 of the Department's 
Proposed Rule, 61 FR 7308, 7344, February 27, 1996) Second, although 
the respondents have claimed that Turkey should be considered a 
significant producer of NFAJC, the information they have submitted in 
support of this claim is limited. The petitioners' information 
regarding production of NFAJC is also lacking. We acknowledge that the 
Department, itself, has had difficulty in developing this information. 
However, better information on NFAJC production would be useful. Third, 
key factor values from India are lacking in several respects. As 
discussed further below, we have used a juice apple price taken from 
the annual report of a single apple juice producer. However, we prefer 
to use input prices that reflect the actions of many buyers and 
sellers. (See, Preamble to Sec. 351.408 of the Department's 
Regulations, 62 FR 27296, 27366) Finally, we have relied on broadly 
aggregated data for factory overhead, SG&A, and profit. We would 
prefer, instead, to use data from producers of

[[Page 65680]]

identical or comparable merchandise in the surrogate country. (See, 
Sec. 351.408(c)(4)) While the petitioners have placed information on 
the record regarding an Indian producer of apple juice, that 
information is proprietary and, hence, its use would be contrary to our 
policy of relying on publicly available data, where possible. (See, 
Sec. 351.408(c)(1)).
    We invite parties to address these issues for the final 
determination.
2. 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 either produced and exported NFAJC to the United States or 
produced NFAJC for exporters that exported NFAJC to the United States 
during the POI. To calculate NV, the reported unit factor quantities 
were multiplied by publicly available Indian values, except as noted 
below.
    In selecting the surrogate values, we considered the quality, 
specificity, and contemporaneity of the data. 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.
    As appropriate, we adjusted input prices to make them delivered 
prices. Where a producer did not report the distance between the 
material supplier and the factory, we used, as facts available, either 
the distance to the nearest seaport (if an import value was used as the 
surrogate value for the factor) or the farthest distance reported for a 
supplier. Where distances were reported and the surrogate value was 
based on Indian import statistics, we added to the surrogate value a 
surrogate freight cost using the shorter of the reported distances from 
either the closest PRC port to the PRC factory, or from the domestic 
supplier to the factory. This adjustment is in accordance with the 
CAFC's decision in Sigma Corp. v. United States, 117 F. 3d 1401 
(Fed.Cir. 1997).
    For a detailed analysis of surrogate values, see the ``Factors of 
Production'' Memorandum from the Team to the file (FOP memo) dated 
November 8, 1999.
    Juice Apples: We valued apples using the price paid by Himachal 
Pradesh Horticultural Produce Marketing and Processing Corporation, as 
reported in the introduction to that company's 1998-99 financial 
statement. Because that value is contemporaneous with the POI, no 
adjustment was necessary.
    Processing Agents: We valued all of the processing agents, except 
for one (PVPP), using Indian import statistics for the period April 
1997 through March 1998. PVPP was not reported in the Indian import 
statistics. For that processing agent, we used an October 1999 price 
quote from a U.S. chemical company.
    Labor: We valued labor using the method described in 19 CFR 
351.408(c)(3).
    Electricity and Coal: To value electricity, we used the 1995 
electricity rates reported in the publication Energy Prices and Taxes, 
4th quarter 1998. We based the value of coal on Indian import 
statistics.
    Factory Overhead, SG&A, and Profit: We derived ratios for factory 
overhead, SGA, and profit, using 1992-93 data from the ``Expenditures 
and Appropriations'' category of the accounts of ``Processing and 
Manufacture--Foodstuffs, Textiles, Tobacco, Leather and Products 
Thereof'' from the Reserve Bank of India Bulletin, January 1997.
    Packing Materials: We calculated values for plastic bags, plastic 
liners , and labels using Indian import statistics from the period 
April 1997-March 1998. We converted values from a per kilogram to a per 
piece basis where necessary. For steel drums, we could not find a 
reliable Indian value. Therefore, we used a 1994 Indonesian price.
    Inland Freight Rates: To value truck freight rates, we used a 1994 
rate from The Times of India inflated to be contemporaneous with the 
POI. With regard to rail freight, we based our calculation on 
information from the Indian Railway Conference Association. We 
calculated an average per kilometer per metric ton rate.
    International Freight: We used a 1996 price quote from a U.S. 
shipping company. Where the PRC producer/exporter used a market economy 
shipper and paid for the shipping in a market economy currency, we 
calculated an average price for shipping paid by that producer/
exporter.
    Marine Insurance: We used a June 1998 prices quote from a U.S. 
insurance provider.
    By-products: Certain respondents reported by-products resulting 
from production of the subject merchandise. For those respondents that 
reported their production of apple essence/aroma, we have offset the 
cost of materials with a by-product credit. The value for apple 
essence/aroma was calculated as a simple average of the various prices 
reported at the July 1999 ITC hearing and November 1999 price quotes 
provided to the Department by two U.S. brokers of food products. 
Certain respondents claimed proprietary treatment for other by-
products. Since we lacked surrogate values for these other by-products, 
we have not adjusted for them in this preliminary determination.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
the Customs Service to suspend liquidation of all imports of subject 
merchandise from the PRC entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register, except for imports from North Andre whose antidumping 
margin is zero. In addition, for all exporters except Oriental and 
Zhonglu, we are directing Customs to suspend liquidation of any 
unliquidated entries of subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the date, which is 90 days prior 
to the date on which this notice is published in the Federal Register. 
We will instruct the Customs Service to require a cash deposit or the 
posting of a bond equal to the weighted-average amount by which the NV 
exceeds the EP or CEP, as appropriate, as indicated in the chart below. 
These suspension of liquidation instructions will remain in effect 
until further notice.

 
------------------------------------------------------------------------
                                      Weighted-
      Exporter/manufacturer        average margin         Critical
                                     percentage        circumstances
------------------------------------------------------------------------
Yantai North Andre Juice Co., Ltd            0.00  Yes.
Shaanxi Haisheng Fresh Fruit                18.58  Yes.
 Juice Co., Ltd.
Sanmenxia Lakeside Fruit Juice              54.55  Yes.
 Co., Ltd.

[[Page 65681]]

 
Shandong Zhonglu Co., Ltd........            9.85  No.
Yantai Oriental Juice Co., Ltd...           14.97  No.
Qingdao Nannan Foods Co., Ltd....           44.24  Yes.
Shaanxi Machinery & Equipment               35.29  Yes.
 Import & Export Corp.
Xian Asia Qin Fruit Co., Ltd.....           28.71  Yes.
Xian Yang Fuan Juice Co., Ltd....           28.71  Yes.
Changsa Industrial Products &               28.71  Yes.
 Minerals Import and Export Co.,
 Ltd.
Shandong Foodstuffs Import and              28.71  Yes.
 Export Corporation.
PRC-wide rate....................           54.55  Yes.
------------------------------------------------------------------------

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

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Public Comment

    Case briefs or other written comments in six copies must be 
submitted to the Assistant Secretary for Import Administration no later 
than January 6, 2000, and rebuttal briefs no later than January 11, 
2000. A list of authorities used and an executive summary of issues 
should accompany any briefs submitted to the Department. Such summary 
should be limited to five pages total, including footnotes. In 
accordance with section 774 of the Act, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. Tentatively, the hearing 
will be held on January 13, 2000, at the U.S. Department of Commerce, 
14th Street and Constitution Avenue, NW, Washington, DC 20230. Parties 
should confirm by telephone the time, date, and place of the hearing 48 
hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs. If 
this investigation proceeds normally, we will make our final 
determination not later than 75 days after the date of the preliminary 
determination.
    This determination is issued and published in accordance with 
sections 733(d) and 777(i)(1) of the Act.

    Dated: November 15, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-30551 Filed 11-22-99; 8:45 am]
BILLING CODE 3510-DS-P