Certain Non-Frozen Apple Juice Concentrate from the People's Republic of China: Notice of Preliminary Results of the New Shipper Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (“Department”) is conducting a new shipper review (“NSR”) of the antidumping duty order, covering the period of review (“POR”) of June 1, 2009, through January 20, 2010. If these preliminary results are adopted in our final results of review, we will instruct U.S. Customs and Border Protection (“CBP”) to assess antidumping duties on entries of subject merchandise during the POR for which the importer-specific assessment rates are above de minimis.

EFFECTIVE DATE:

August 5, 2010.

FOR FURTHER INFORMATION CONTACT:

Alexis Polovina, AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington DC 20230; telephone: (202) 482-3927.

SUPPLEMENTARY INFORMATION:

General Background

On June 5, 2000, the Department published in the Federal Register the antidumping duty order on certain non-frozen apple juice concentrate from the People's Republic of China (“PRC”). See Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Certain Non-Frozen Apple Juice Concentrate From the People's Republic of China, 65 FR 35606 (June 5, 2000) (“Order”). On December 15, 2009, pursuant to section 751(a)(2)(B)(i) of the Tariff Act of 1930, as amended (“Act”), and 19 CFR 351.214(c), the Department received a NSR request from Lingbao Xinyuan Fruit Industry Co., Ltd. (“LXFI”). LXFI certified that it is a producer and exporter of the subject merchandise upon which the request was based. On February 4, 2010, the Department initiated the requested antidumping duty NSR. See Certain Non-Frozen Apple Juice Concentrate from the People's Republic of China: Initiation of Antidumping Duty New Shipper Review, 75 FR 5763 (February 4, 2010).

On February 16, 2010, the Department issued original questionnaires to LXFI. Between March 9, 2010, and July 9, 2010, LXFI submitted responses to the original sections A, C, and D questionnaires and supplemental sections A, C, and D questionnaires.

Surrogate Country and Surrogate Values

On March 2, 2010, the Department sent interested parties a letter requesting comments on surrogate country selection and information pertaining to valuing factors of production (“FOP”). On April 22, 2010, LXFI submitted comments on the surrogate country. On June 23, 2010, LXFI submitted surrogate value data. No other party submitted surrogate country or surrogate value data.

Scope of the Order

The product covered by this order is certain non-frozen apple juice concentrate. Apple juice concentrate is defined as 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 order 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 merchandise subject to this order is classified in the Harmonized Tariff Schedule of the United States (“HTSUS”) at subheadings 2106.90.52.00, and 2009.70.00.20 before January 1, 2002, and 2009.79.00.20 after January 1, 2002. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of the order is dispositive.

Non-Market Economy Country Status

In every case conducted by the Department involving the PRC, the PRC has been treated as a non-market economy (“NME”) country. See, e.g., Pure Magnesium from the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 73 FR 76336 (December 16, 2008); and Frontseating Service Valves From the People's Republic of China: Final Determination of Sales at Less Than Fair Value and Final Negative Determination of Critical Circumstances, 74 FR 10886 (March 13, 2009). In accordance with section 771(18)(C)(i) of the Act, any determination that a foreign country is an NME country shall remain in effect until revoked by the administering authority. None of the parties to this proceeding have contested such treatment. Accordingly, we calculated NV in accordance with section 773(c) of the Act, which applies to NME countries.

Separate Rate Determinations

A designation as a NME remains in effect until it is revoked by the Department. See section 771(18)(C) of the Act. Accordingly, there is a rebuttable presumption that all companies within the PRC are subject to government control and, thus, should be assessed a single antidumping duty rate. It is the Department's standard policy to assign all exporters of the merchandise subject to review in NME countries a single rate unless an exporter can affirmatively demonstrate an absence of government control, both in law (de jure) and in fact (de facto), with respect to exports. To establish whether a company is sufficiently independent to be entitled to a separate, company-specific rate, the Department analyzes each exporting entity in an NME country under the test established in the Final Determination of Sales at Less than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991) (“Sparklers”), as amplified by the Notice of 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”).

A. Absence of De Jure Control

The Department considers the following de jure criteria in determining whether an individual company may be granted a separate rate: (1) an absence of restrictive stipulations associated with an individual exporter's business and export licenses; (2) any legislative enactments decentralizing control of companies; and (3) other formal measures by the government decentralizing control of companies. See Sparklers, 56 FR at 20589.

In this review, LXFI submitted a complete response to the separate rates section of the Department's NME questionnaire. The evidence submitted by LXFI includes government laws and regulations on corporate ownership, business licenses, and narrative information regarding the company's operations and selection of management. The evidence provided by LXFI supports a finding of a de jure absence of government control over its export activities. Thus, we believe that the evidence on the record supports a preliminary finding of an absence of de jure government control based on: (1) an absence of restrictive stipulations associated with the exporter's business license; (2) the legal authority on the record decentralizing control over the respondent; and (3) other formal measures by the government decentralizing control of companies.

B. Absence of De Facto Control

The absence of de facto government control over exports is based on whether the respondent: (1) sets its own export prices independent of the government and other exporters; (2) retains the proceeds from its export sales and makes independent decisions regarding the disposition of profits or financing of losses; (3) has the authority to negotiate and sign contracts and other agreements; and (4) has autonomy from the government regarding the selection of management. See Silicon Carbide, 59 FR at 22587; Sparklers, 56 FR at 20589; see also Notice of Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol from the People's Republic of China, 60 FR 22544, 22545 (May 8, 1995).

In this review, LXFI submitted evidence indicating an absence of de facto government control over their export activities. Specifically, this evidence indicates that: (1) the company sets its own export prices independent of the government and without the approval of a government authority; (2) the company retains the proceeds from its sales and makes independent decisions regarding the disposition of profits or financing of losses; (3) the company has a general manager, branch manager or division manager with the authority to negotiate and bind the company in an agreement; (4) the general manager is selected by the board of directors or company employees, and the general manager appoints the deputy managers and the manager of each department. Therefore, the Department preliminarily finds that LXFI has established that it qualifies for a separate rate under the criteria established by Silicon Carbide and Sparklers.

New Shipper Review Bona Fide Analysis

Consistent with the Department's practice, we investigated the bona fide nature of the sale made by LXFI for this NSR. In evaluating whether a single sale in a NSR is commercially reasonable, and therefore bona fide, the Department considers, inter alia, such factors as: (1) timing of the sale; (2) price and quantity; (3) the expenses arising from the transaction; (4) whether the goods were sold at a profit; and (5) whether the transaction was made on an arms-length basis. See Tianjin Tiancheng Pharmaceutical Co. v. the United States, 366 F. Supp. 2d R46, 1250 (CIT 2005). Accordingly, the Department considers a number of factors in its bona fide analysis, “all of which may be specific to the commercial realities surrounding an alleged sale of subject merchandise.” See Hebei New Donghua Amino Acid Co. v. the United States, 374 F. Supp. 2d 1333, 1342 (CIT 2005). In examining LXFI's sale in relation to these factors, the Department observed no evidence that would indicate that this sale was not bona fide. Therefore, we preliminarily find that the new shipper sale by LXFI was made on a bona fide basis. See Memorandum to the File through Alex Villanueva, Program Manager, Office 9 from Alexis Polovina, Case Analyst, Office 9: Antidumping Duty New Shipper Review of Certain Non-Frozen Apple Juice Concentrate from the People's Republic of China: Bona Fide Nature of the Sale Under Review for Lingbao Xinyuan Fruit Industry Co., Ltd. (“LXFI”), dated July 30, 2010.

Based on our investigation into the bona fide nature of the sale, the questionnaire responses submitted by LXFI and the company's eligibility for a separate rate (see Separate Rates Determination section above), we preliminarily determine that LXFI has met the requirements to qualify as a new shipper during this POR. Therefore, for the purposes of these preliminary results of review, we are treating LXFI's sale of subject merchandise to the United States as an appropriate transaction for this NSR.

Surrogate Country

When the Department is investigating imports from an NME country, section 773(c)(1) of the Act directs it to base normal value (“NV”), in most circumstances, on the NME producer's FOPs, valued in a surrogate market economy country or countries considered to be appropriate by the Department. In accordance with section 773(c)(4) of the Act, in valuing the FOPs, the Department shall utilize, to the extent possible, the prices or costs of FOPs in one or more market economy countries that are: (1) at a level of economic development comparable to that of the NME country; and (2) significant producers of comparable merchandise.

The Department determined that India, Philippines, Indonesia, Thailand, Ukraine, and Peru are countries comparable to the PRC in terms of economic development.¹ Once it has identified economically comparable countries, the Department's practice is to select an appropriate surrogate country from the list based on the availability and reliability of data from the countries. See Department Policy Bulletin No. 04.1: Non-Market Economy Surrogate Country Selection Process (March 1, 2004).

Absent world apple juice concentrate production data, the Department considered whether any country listed in the Surrogate Country List was a net-exporter (i.e., exports more apple juice concentrate than it imports) to identify producers of apple juice concentrate. We found that none of the countries listed in the Surrogate Country List were net-exporters of apple juice concentrate. Therefore, the Department considered other countries not listed in the Surrogate Country List and determined that Poland was a net-exporter of apple juice concentrate.

In this proceeding, we received comments regarding surrogate country selection only from LXFI, which supports the selection of Poland. The record also contains surrogate value information from Poland for most inputs, including juice apples, the main input for producing apple juice concentrate. In addition, we have surrogate financial ratios from a Polish juice company. Of the countries that are significant producers of identical merchandise, the record contains reliable surrogate value information from Poland. Therefore, for these preliminary results, we have selected Poland as the surrogate country.

In accordance with 19 CFR 351.301(c)(3)(ii), for the final results in an antidumping new shipper review, interested parties may submit publicly available information to value FOPs within 20 days after the date of publication of these preliminary results.

U.S. Price

For LXFI's sale to the United States, we used the export price (“EP”) methodology, pursuant to section 772(a) of the Act, because the first sale to an unaffiliated purchaser was made prior to importation, and CEP was not otherwise warranted by the facts on the record. We calculated EP based on the price to unaffiliated purchasers in the United States.

In accordance with section 772(c) of the Act, as appropriate, we deducted from the starting price to unaffiliated purchasers foreign inland freight and containerization. We have reviewed each of these services and expenses reported by LXFI and find that they were provided by an NME vendor or paid for using PRC currency. Thus, we based the deduction of these movement charges on surrogate values. See Memorandum to the File through Alex Villanueva, Program Manager, Office 9 from Alexis Polovina, Case Analyst, Office 9: Antidumping Duty New Shipper Review of Certain Non-Frozen Apple Juice Concentrate from the People's Republic of China: Surrogate Values for the Preliminary Results, dated July 30, 2010 (“Surrogate Value Memo”) for details regarding the surrogate values for movement expenses.

Normal Value

1. Methodology

Section 773(c)(1)(B) of the Act provides that the Department shall determine the NV using a FOP methodology if the merchandise is exported from an NME country and the information does not permit the calculation of NV using home-market prices, third-country prices, or constructed value under section 773(a) of the Act. The Department bases NV on the FOPs because the presence of government controls on various aspects of NMEs renders price comparisons and the calculation of production costs invalid under the Department's normal methodologies.

2. Factor Valuations

In past cases, it has been the Department's practice to value various FOPs using import statistics of the primary selected surrogate country from World Trade Atlas (“WTA”), as published by Global Trade Information Services (“GTIS”). See Certain Preserved Mushrooms from the People's Republic of China: Preliminary Results of Antidumping Duty New Shipper Review, 74 FR 50946, 50950 (October 2, 2009). However, in October 2009, the Department learned that the data reported in the Global Trade Atlas (“GTA”) software, published by GTIS, is reported to the nearest digit and thus there is not a loss of data by rounding, as there is with the data reported by the WTA software. Consequently, the Department will now obtain import statistics from GTA for valuing various FOPs.

Furthermore, in accordance with the OTCA 1988 legislative history, the Department continues to apply its long-standing practice of disregarding surrogate values if it has a reason to believe or suspect the source data may be subsidized.² In this regard, the Department has previously found that it is appropriate to disregard such prices from India, Indonesia, South Korea and Thailand because we have determined that these countries maintain broadly available, non-industry specific export subsidies.³ Based on the existence of these subsidy programs that were generally available to all exporters and producers in these countries at the time of the POR, the Department finds that it is reasonable to infer that all exporters from India, Indonesia, South Korea and Thailand may have benefitted from these subsidies.

In accordance with section 773(c) of the Act, we calculated NV based on FOPs reported by LXFI during the POR. To calculate NV, we multiplied the reported per-unit factor-consumption rates by publicly available Polish surrogate values. In selecting the surrogate values, we considered the quality, specificity, and contemporaneity of the data. As appropriate, we adjusted input prices by including freight costs to make them delivered prices. Specifically, we added to Polish import surrogate values a surrogate freight cost using the shorter of the reported distance from the domestic supplier to the factory of production or the distance from the nearest seaport to the factory of production where appropriate. This adjustment is in accordance with the Court of Appeals for the Federal Circuit's decision in Sigma Corp. v. United States, 117 F. 3d 1401, 1407-1408 (Fed. Cir. 1997). We selected Poland as the surrogate country for the reasons explained above in the “Surrogate Country” section. However, where we were unable to find Polish data to value particular FOPs, we valued these inputs using public information on the record from India. We valued inland freight, electricity, coal, water, and containerization using Indian surrogate values.

Polish surrogate values were valued in USD and no conversion was needed. Indian surrogate values denominated in Rupees were converted to USD using the applicable average exchange rate based on exchange rate data from the Department's website. For further details regarding the surrogate values used for these preliminary results, see the Surrogate Value Memo.

As a consequence of the CAFC's ruling in Dorbest II, the Department is no longer relying on the regression-based wage rate described in 19 CFR 351.408(c)(3). The Department is continuing to evaluate options for determining labor values in light of the recent CAFC decision. For these preliminary results, we have calculated an hourly wage rate to use in valuing LXFI's reported labor input by averaging earnings and/or wages in countries that are economically comparable to the PRC and that are significant producers of comparable merchandise. See the Surrogate Value Memo at 5-9 and attachment 7, for further information on the calculation of the wage rate.

The Department relied on data from the following countries to arrive at its wage rate in these preliminary results: Albania, Ecuador, Egypt, El Salvador, Fiji, Guatemala, Guyana, Honduras, India, Indonesia, Mongolia, Nicaragua, Paraguay, Peru, Philippines, Sri Lanka, Thailand, and Ukraine. The Department calculated a simple average of the wage rates from these 18 countries. This resulted in a wage rate derived from comparable economies that are also significant producers of the comparable merchandise, consistent with the CAFC's ruling in Dorbest II and the statutory requirements of section 773(c) of the Act.

Preliminary Results of the Review

As a result of our review, we preliminarily find that the following margins exist for the period June 1, 2009, through January 20, 2010:

Disclosure

The Department will disclose to parties of this proceeding the calculations performed in reaching the preliminary results within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).

Comments

In accordance with 19 CFR 351.301(c)(3)(ii), for the final results of this administrative review, interested parties may submit publicly available information to value FOPs within 20 days after the date of publication of these preliminary results. Interested parties must provide the Department with supporting documentation for the publicly available information to value each FOP. Additionally, in accordance with 19 CFR 351.301(c)(1), for the final results of this NSR, interested parties may submit factual information to rebut, clarify, or correct factual information submitted by an interested party less than ten days before, on, or after, the applicable deadline for submission of such factual information. However, the Department notes that 19 CFR 351.301(c)(1) permits new information only insofar as it rebuts, clarifies, or corrects information recently placed on the record.⁴

Interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of these preliminary results of this NSR. See 19 CFR 351.309(c)(ii). Rebuttal briefs and rebuttals to written comments, limited to issues raised in such briefs or comments, may be filed no later than 5 days after the deadline for submitting the case briefs. See 19 CFR 351.309(d). The Department requests that interested parties provide an executive summary of each argument contained within the case briefs and rebuttal briefs.

Any interested party may request a hearing within 30 days of publication of these preliminary results. See 19 CFR 351.310(c). Requests should contain the following information: (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 we receive a request for a hearing, we plan to hold the hearing seven days after the deadline for submission of the rebuttal briefs at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230.

The Department intends to issue the final results of this NSR, which will include the results of its analysis raised in any such comments, within 90 days of publication of these preliminary results, pursuant to section 751(a)(2)(B)(iv) of the Act.

Assessment Rates

Upon completion of the final results, pursuant to 19 CFR 351.212(b), the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries on a weighted-average basis. The Department intends to issue assessment instructions to CBP 15 days after the date of publication of the final results of review. If these preliminary results are adopted in our final results of review, the Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. Pursuant to 19 CFR 351.212(b)(1), we will calculate importer-specific (or customer) per-unit duty assessment rates. We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review if any importer-specific assessment rate calculated in the final results of this NSR is above de minimis.

Cash-Deposit Requirements

The following cash deposit requirements, when imposed, will be effective upon publication of the final results of this NSR for all shipments of subject merchandise from LXFI entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(2)(C) of the Act: (1) for subject merchandise produced and exported by LXFI, the cash deposit rate will be the rate that is established in the final results of this NSR; (2) for subject merchandise exported by LXFI but not manufactured by LXFI, the cash deposit rate will continue to be the PRC-wide rate (i.e., 51.74 percent); and (3) for subject merchandise manufactured by LXFI, but exported by any other party, the cash deposit rate will be the rate applicable to the exporter. If the cash deposit rate calculated in the final results is zero or de minimis, no cash deposit will be required for those entries of subject merchandise both produced and exported by LXFI. These cash deposit requirements, when imposed, shall remain in effect until further notice.

Notification to Importers

This notice serves as a preliminary 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 this POR. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

We are issuing and publishing this determination in accordance with sections 751(a)(2)(B) and 777(i) of the Act, and 19 CFR 351.214(h) and 351.221(b)(4).