Fresh Garlic from the People's Republic of China: Final Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On December 7, 2004, the Department of Commerce (“the Department”) published the preliminary results of the administrative review of the antidumping duty order on fresh garlic from the People's Republic of China. The period of review is November 1, 2002, through October 31, 2003. The review covers twelve manufacturers/exporters.

We invited interested parties to comment on our preliminary results. Based on our analysis of the comments received, we have made certain changes to our calculations. The final dumping margins for this review are listed in the “Final Results of the Reviews” section below.

EFFECTIVE DATE:

June 13, 2005.

FOR FURTHER INFORMATION CONTACT:

Salim Bhahbhrawala or Brian Ledgerwood, AD/CVD Operations, Office 8, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC 20230; telephone: (202) 482-1784 or (202) 482-3836, respectively.

SUPPLEMENTARY INFORMATION:

Background

On December 7, 2004, the Department published the preliminary results of the administrative review of the antidumping duty order on fresh garlic from the People's Republic of China. See Fresh Garlic from the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review and Rescission in Part, 69 FR 70638 (December 7, 2004) (“Preliminary Results”). In the Preliminary Results, we reopened the record to accept independent third-party submissions regarding the factors of production data submitted by certain respondents in this review. On November 28, 2004, January 6, 2005, and January 7, 2005, we received and accepted submissions from the petitioners¹ and five respondents, Jinxiang Dongyun Freezing Storage Co., Ltd. (“Dongyun”), Fook Huat Tong Kee Pte., Ltd. (“FHTK”), Huaiyang Hongda Dehydrated Vegetable Company (“Hongda”), Taiyan Ziyang Food Co., Ltd. (“Ziyang”), and Jining Trans-High Trading Co., Ltd. (“Trans-High”). We received rebuttal submissions from FHTK, Ziyang, and the petitioners on January 19, 2005.

In January 2005, we conducted verification of the data submitted by Linshu Dading Private Agricultural Products Co., Ltd. (“Linshu Dading”) and Sunny Import and Export Co., Ltd. (“Sunny”). Furthermore, on March 22, 2005, we extended to all interested parties an additional opportunity to comment on the intermediate-product methodology used to calculate normal value in the Preliminary Results as well as the impact that certain factors of production had on garlic yield. We received comments for consideration from Dongyun, FHTK, Hongda, Ziyang, and the petitioners on March 29, 2005, and March 30, 2005. Trans-High provided a submission stating that it would reserve its comments for its case briefs.

In April 2005, we released the reports detailing the results of the Linshu Dading and Sunny verifications. Also in April 2005, we received administrative case briefs from nine respondents, Dongyun, FHTK, Hongda, Jinan Yipin Corporation, Ltd. (“Jinan Yipin”), Linshu Dading, Sunny, Ziyang, Trans-High, and Zhengzhou Harmoni Spice Co., Ltd. (“Harmoni”), and rebuttal comments from the petitioners. The petitioners did not file a case brief. We subsequently rejected several submissions made following the Preliminary Results. We determined that these submissions either contained untimely, new factual information, or contained unsolicited, new written argument re-characterizing existing facts on the record. Several of the parties in question filed objections to our decision to reject these submissions.

On May 11, 2005, we conducted a public hearing to discuss the issues raised by the parties in their administrative case and rebuttal briefs. On May 12, 2005, the Department gave all interested parties the opportunity to comment on certain memoranda that we had placed on the record of this proceeding after the deadline for case briefs had passed. We received these comments from Dongyun, Hongda, FHTK, Ziyang, and the petitioners on May 16, 2005.

In the Preliminary Results, we extended the time limit for the completion of the final results of this review, including our analysis of issues raised in any case or rebuttal briefs, until May 30, 2005. See Preliminary Results. On May 26, 2005, we extended again the time limit for the completion of the final results of this review until June 6, 2005. See Notice of Extension of Time Limit for Final Results of Antidumping Duty Administrative Review: Fresh Garlic from the People's Republic of China, 70 FR 30413 (May 26, 2005).

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

Scope of the Order

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

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

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

Analysis of Comments Received

All issues raised in the post-preliminary comments by parties in this review are addressed in the Issues and Decision Memorandum, dated June 6, 2005, (“Decision Memo”) which is hereby adopted by this notice. A list of the issues which parties raised and to which we respond in the Decision Memo is attached to this notice as an Appendix. The Decision Memo is a public document which is on file in the Central Records Unit (“CRU”) in room B-099 in the main Department building, and is accessible on the Web at http://www.ia.ita.doc.gov/. The paper copy and electronic version of the memorandum are identical in content.

Separate Rates

In our Preliminary Results, we determined that Dongyun, FHTK, Hongda, Jinan Yipin, Linshu Dading, Sunny, Ziyang, Trans-High, and Harmoni met the criteria for the application of a separate rate. We determined that Jinxiang Hongyu Freezing and Storing Co., Ltd. (“Hongyu”), Linyi Sanshan Import and Export Trading Co., Ltd. (“Linyi Sanshan”), and Tancheng County Dexing Foods Co., Ltd. (“Dexing Foods”) did not qualify for a separate rate and, therefore, are deemed to be included in the PRC-entity rate. See Preliminary Results, 69 FR at 70638. We have not received any information since the issuance of the Preliminary Results that provides a basis for reconsideration of these determinations.

The PRC-Wide Rate and Use of Adverse Facts Available

Hongyu, Linyi Sanshan, and Dexing Foods

In the Preliminary Results, we determined that the PRC entity (including Hongyu, Linyi Sanshan, and Dexing Foods) did not respond to the questionnaire and, therefore, failed to cooperate to the best of its ability in the administrative review. Accordingly, we determined that the use of facts otherwise available in reaching our determination is appropriate pursuant to sections 776(a)(2)(A) and (B) and that the use of an adverse inference in selecting from the facts available is appropriate pursuant to section 776(b) of the Act. In accordance with the Department's practice, as adverse facts available, we assigned to the PRC entity (including Hongyu, Linyi Sanshan, and Dexing Foods) the PRC-wide rate of 376.67 percent. For detailed information on the Department's corroboration of this rate see Preliminary Results 69 FR at 70640.

The Application of Partial Adverse Facts Available to FHTK and Ziyang

The Department has determined that two respondents, FHTK and Ziyang, did not provide reliable and whole information and did not act to the best of their ability in reporting factors of production data to the Department. More specifically, the Department has determined that FHTK and Ziyang reported untimely, contradictory and confusing information with respect to factors pertaining to herbicide usage, and with respect to other growing and harvesting factors of production. In addition, the Department found that FHTK and Ziyang reported per-mu garlic yields that appeared to be unrealistic when reviewed in light of record information, including their own reported factor input levels (e.g., seed, water, labor), the information provided by those companies' own expert, Dr. Ronald Voss, and the growing and harvesting experience of the other respondents in this review. Therefore, the Department concluded that the factors of production data reported by these companies was not reliable and could not be used. Morever, the Department concluded that these companies did not cooperate to the best of their ability in responding the Department's questionnaires. Accordingly, the Department has applied partial adverse facts available to FHTK and Ziyang's reported growing and harvesting factors of production in its calculations. See “Administrative Review of Fresh Garlic from the People's Republic of China (PRC) (A-570-531): Application of Adverse Facts Available for Fook Huat Tong Kee Pte. in the Final Results of the Administrative Review for the Period 11/01/02 - 10/31/03” dated June 6, 2005 and “Administrative Review of Fresh Garlic from the People's Republic of China (PRC) (A-570-531): Application of Adverse Facts Available for Taiyan Ziyang Food Co., Ltd. in the Final Results of the Administrative Review for the Period 11/01/02 - 10/31/03,” dated June 6, 2005 (collectively, “AFA Memos”).

Section 776(a) of the Tariff Act of 1930, as amended (the Act), provides that if an interested party or any other person (A) withholds information that has been requested by the administering authority; (B) fails to provide such information by the deadlines for the submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782 of the Act; (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 shall, subject to section 782(d), use facts otherwise available in reaching the applicable determination.

Section 782(d) of the Act provides that, if the Department determines that a response to a request for information does not comply with the request, the Department shall promptly inform the person submitting the response of the nature of the deficiency and shall, to the extent practicable, provide that person with an opportunity to remedy or explain the deficiency in light of the time limits established for the completion of the review. In this administrative review, the Department issued its standard questionnaire and, in response to the inadequate responses and information provided by FHTK and Ziyang, supplemented the record with additional questionnaires to the respondents. The Department then took the unusual step of providing two additional opportunities for the companies to provide independent third-party information and comment on the record in an effort to support the validity of their reported FOP information. Accordingly, and pursuant to section 782(d) of the Act, the Department provided FHTK and Ziyang with numerous opportunities to remedy or explain deficiencies on the record.

The Department has concluded that, within the meaning of section 776(a) of the Act, FHTK and Ziyang have failed to provide necessary accurate information in response to the Department's questionnaires and various requests for information. More specifically, we find that FHTK and Ziyang withheld information or did not provide information to the Department pertaining to various factors of production in the form and manner requested by the Department. The lack of this necessary data impeded the conduct of the administrative review. Therefore, the data provided by the respondents is not reliable or usable and the use of facts otherwise available is appropriate.

Section 776(b) of the Act provides that the Department may use an inference adverse to the interests of a party that has failed to cooperate by not acting to the best of its ability to comply with the Department's request for information. See also Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act (URAA), H. Doc. No. 103-316 at 870 (1994). As noted in Nippon Steel Corp. v. United States, 118 F. Supp. 2d 1366, 1378 (Oct. 26, 2000) (Nippon Steel), such a finding is supported by substantial evidence, in accordance with 19 U.S.C. 1516a(b)(1)(B)(i), if the Department “(1) articulates its reasons for concluding a party failed to act to the best of its ability; and (2) explains why the missing information is significant to the review.” In determining if the application of adverse facts available is warranted, the Department may also draw some inferences from a pattern of behavior. See Borden, Inc. v. United States, 22 C.I.T. 1153, 1154 (1998). Furthermore, to determine whether the respondent “cooperated” by “acting to the best of its ability” under section 776(b) of the Act, the Department also considers the accuracy and completeness of submitted information, and whether the respondent has hindered the calculation of accurate dumping margins. Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final Results of Antidumping Duty Administrative Review, 62 FR 53808, 53819-53820 (October 16, 1997).

We conclude that, within the meaning of section 776(b) of the Act, FHTK and Ziyang failed to cooperate by not acting to the best of their abilities in complying with the Department's requests for information for certain Factors of productions and that the use of adverse facts available is appropriate. FHTK and Ziyang's responses to the Department's questions concerning herbicide and PE film contained significant omissions, mischaracterizations, and overall lack of clarity. FHTK's and Ziyang's claims that they did not use herbicide while reporting use of herbicide-impregnated film were contradictory and confusing. Furthermore, these companies reported unreasonably high garlic yields per mu, despite reporting average or lower than average labor-per-mu rates, no herbicide usage, and low water usage rates. These companies' own expert, Dr. Voss, specifically stated that if a company had an unusually high yield and used no herbicide, one would expect other factors, like labor, to be larger-than-average to explain such a relationship. Neither the labor usage rate, nor the water usage rate were larger than average. This disparity is particularly pronounced given that these companies' farms are within 42 kilometers of several other respondents and, despite our requests for information, neither FHTK nor Ziyang provided any evidence on the record that would suggest a geographic or other reason for the disparity.

For the Department to calculate an accurate margin in an NME proceeding, respondents must provide the Department with correct responses to its questionnaires. Despite numerous opportunities to provide factual information or argument to support its reported factors of production, FHTK and Ziyang did not act to the best of their abilities in providing information on the record upon which the Department believed it could rely. By apparently not reporting realistic factor of productions for some factors, these companies have undermined the Department's confidence in all of their reported factors of production harvesting data. Accordingly, we find that the application of an adverse inference is warranted in this case.

In applying an adverse inference, the Department must consider that a respondent may not be rewarded for failing to cooperate and providing the agency with “flawed” information. See NSM Ltd. v. United States, 170 F. Supp. 2d 1280, 1312 (CIT 2001). We believe that an adverse inference, applied to FHTK's and Ziyang's factors of production data, would address satisfactorily their insufficient and/or confusing submissions and provide for a result that “would not benefit [these companies] from [their] lack of cooperation” in the review. See id. at 1312. Accordingly, we have assigned FHTK and Ziyang, as partial adverse facts available, the highest reported usage rate from the remaining seven respondents (Dongyun, Harmoni, Hongda, Jinan Yipin, Linshu Dading, Sunny, and Trans-High) for each of the following fresh garlic production inputs: seed, fertilizer, PE film, herbicide, water, and labor.² See AFA Memos. For the remaining inputs, we have used FHTK's and Ziyang's reported usage rates, and have calculated their margins using the factors of production methodology employed for the remaining seven respondents in this review.

Section 776(c) of the Act provides that, when the Department relies on facts otherwise available and relies on “secondary information,” the Department shall, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. In the instant review, the Department is not relying on secondary information, but rather on primary information because the Department is calculating a dumping margin on the basis of the actual harvest factors of production experience of other respondents (i.e., using the highest harvest usage rates among all respondents). Therefore, this provision does not apply.

Other Changes Since the Preliminary Results

Based on our analysis of information on the record of this review, comments received from the interested parties, and changes due to verification, we have made other changes to the margin calculations for all respondents.

We altered the methodology used to calculate normal value for Dongyun, Hongda, and Trans-High. In the Preliminary Results, we calculated normal value for these three respondents using an intermediate-product methodology. For these final results, we have calculated normal value for Dongyun, Hongda, and Trans-High using the same factors-of-production methodology that we used for Jinan Yipin, Harmoni, Sunny, and Linshu Dading for the Preliminary Results. For further details, see Decision Memo at Comment 1 and the memoranda regarding “Analysis for the Final Results of the Administrative Duty Order on Fresh Garlic from the People's Republic of China” for Dongyun, Hongda, and Trans-High, dated June 6, 2005.

For all of our respondents for which we are calculating a dumping margin, we have revalued several of the surrogate values used in the Preliminary Results. The values that were modified for these final results are those for attachment clips, water, cold storage, ocean freight, foreign brokerage, and the surrogate financial ratios for overhead, selling, general, and administrative expenses, and profit. For further details see “Factors Valuations for the Final Results of the Administrative Review,” dated June 6, 2004. Also, for each respondent for which we calculated dumping margins involving an offset for the sale of garlic sprouts, we adjusted our programs to apply the by-product offset to normal value, instead of to cost of manufacturing, as was done in the Preliminary Results.

In addition, we have made some company-specific changes since the Preliminary Results. Specifically, we have incorporated, where applicable, post-preliminary clarifications, pre-verification corrections, and verification findings for Sunny, Linshu Dading, and Jinan Yipin and performed clerical error corrections for Dongyun, Harmoni, Hongda, Jinan Yipin, Linshu Dading, and Sunny. For further details on these company-specific changes, see Decision Memo at Comments 15 and 16, respectively. We also modified our calculation of the constructed export price profit ratio for Harmoni and Jinan Yipin. See Decision Memo at Comment 14.

For further information detailing all of these changes, see the memoranda regarding “Analysis for the Final Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from the People's Republic of China” for Dongyun, FHTK, Harmoni, Hongda, Jinan Yipin, Linshu Dading, Sunny, Trans-High, and Ziyang, dated June 6, 2005.

Final Results of the Reviews

The Department has determined that the following final dumping margins exist for the period November 1, 2002, through October 31, 2003:

Duty Assessment and Cash-Deposit Requirements

The Department will determine, and U.S. Customs and Border Protection (“CBP”) shall assess, antidumping duties on all appropriate entries. The Department will issue appropriate assessment instructions directly to CBP within 15 days of publication of the final results of this review. For assessment purposes, we calculated importer-specific assessment rates for fresh garlic from the PRC. In order to be consistent, for these final results, we have applied the same assessment rate calculation methodology for all respondents.³ Specifically, we divided the total dumping margins for each importer by the total quantity of subject merchandise sold to that importer during the POR to calculate a per-unite assessment amount. In this and future reviews, we will direct CBP to assess importer-specific assessment rates based on the resulting per-unit (i.e., per kilogram) amount on each entry of the subject merchandise during the POR.

Further, the following cash-deposit requirements will be effective upon publication of these final results of the administrative review for shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results, as provided by section 751(a)(2)(C) of the Act: (1) for subject merchandise exported by Dongyun, FHTK, Hongda, Jinan Yipin, Linshu Dading, Sunny, Ziyang, Trans-High, and Harmoni, the cash-deposit rate will be that established in these final results of review; (2) for all other PRC exporters of subject merchandise which have not been found to be entitled to a separate rate, the cash-deposit rate will be the PRC-wide rate of 376.67 percent; (3) for all non-PRC exporters of subject merchandise, the cash-deposit rate will be the rate applicable to the PRC supplier of that exporter. These deposit requirements shall remain in effect until publication of the final results of the next administrative review.

Cash Deposits Resulting from Subsequent Review Segments

For subsequent review segments, we will establish and collect a per-kilogram cash- deposit amount which will be equivalent to the company-specific dumping margin published in those future reviews. Specifically, the following deposit requirement will be effective upon completion of subsequent review segments of this proceeding for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results, as provided by section 751(a)(2)(C) of the Act: (1) for subject merchandise exported by reviewed respondents, the per-kilogram cash-deposit rate will be the total amount of dumping margins calculated for the POR divided by the total quantity sold during the POR; (2) for all other PRC exporters of subject merchandise which have not been found to be entitled to a separate rate, the cash-deposit rate will be the PRC-wide rate of 376.67 percent; (3) for all non-PRC exporters of subject merchandise, the cash-deposit rate will be the rate applicable to the PRC exporter who supplied that exporter.

Notification of Interested Parties

This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during the review period. Pursuant to 19 CFR 351.402(f)(3) failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.

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

These final results of administrative review and notice are issued and published in accordance with sections 751(a)(3) and 777(i) of the Act.

Appendix 1

Decision Memorandum

1. Intermediate Input Methodology

2. Valuation of Garlic Seed

3. Valuation of Water

4. Valuation of Leased Land

5. Surrogate Financial Ratios

6. Valuation of Garlic Sprouts

7. Valuation of Cartons

8. Valuation of Plastic Jars and Lids

9. Valuation of Attachment Clips

10. Valuation of Cold Storage

11. Valuation of Ocean Freight

12. Calculation of Surrogate Wage Rate

Company Specific Issues

13. Correct Calculation of CEP Profit

14. Use of Most Up-To-Date Information

15: Clerical and Programming Errors

16: Educational Meetings and Other Non-Used Information on the Record

17: Partial Facts Available