67 FR 11283, March 13, 2002 A-570-831 Admin Rev: 11/01/99-10/31/00 Public Document G1O3: EAA MEMORANDUM TO: Faryar Shirzad Assistant Secretary for Import Administration FROM: Richard W. Moreland Deputy Assistant Secretary for Import Administration SUBJECT: Issues and Decision Memorandum for the Administrative Review of Fresh Garlic from the People's Republic of China Summary We have analyzed the case and rebuttal briefs of interested parties in the administrative review of the antidumping duty order on fresh garlic from the People's Republic of China (PRC). The period of review covers November 1, 1999, through October 31, 2000. We recommend that you approve the positions that we have developed in the "Discussion of the Issues" section of this memorandum. Below is the list of the issues for which we received comments and rebuttal comments by parties in this review: Use of Facts Available for FHTK Miscellaneous Background On August 24, 2001, the Department published the preliminary results of the new shipper and administrative reviews 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 New Shipper Review, Preliminary Results of Antidumping Duty Administrative Review, and Partial Rescission of Administrative Review, 66 FR 44596 (August 24, 2001) (Preliminary Results). We invited parties to comment on our preliminary results. On September 5, 2001, we received comments on the preliminary results of the administrative review from one of the respondents, Fook Huat Tong Kee Pte., Ltd., and Taian Fook Huat Tong Kee Foods Co., Ltd. (collectively FHTK). On September 17, 2001, we received comments from the petitioners, the members of the Fresh Garlic Producers Association (1), that addressed those submitted by FHTK. On September 24, 2001, the petitioners submitted a case brief pertaining to the preliminary results of the new shipper and administrative reviews. FHTK submitted a case brief on September 28, 2000, in which it restated the comments it had submitted on September 5, 2001. On October 5, 2001, the petitioners submitted a letter in which they noted FHTK's restatement of comments and requested that their September 17, 2001, comments be accepted as a rebuttal brief to FHTK's brief. On the same day, FHTK submitted a rebuttal brief to the petitioners' brief. On October 18, 2001, the petitioners submitted comments on FHTK's rebuttal brief. Discussion of the Issues 1. Use of Facts Available for FHTK Comment 1: FHTK argues that the Department should reconsider its use of adverse facts available with respect to FHTK and that it should issue a supplemental questionnaire in order to allow FHTK to clarify any outstanding issues concerning information requested by the Department. Specifically, FHTK argues four points. First, it argues that, pursuant to 19 CFR 351.301(c)(2)(i), the Department has the discretion to request supplemental information from a respondent even following the preliminary results of review and, since the Department would have time to issue a supplemental questionnaire and conduct a verification prior to an extended deadline of the final results, it should issue a supplemental questionnaire. Second, FHTK argues that, in light of untimely and inaccurate information and speculation relied upon by the Department in its preliminary results of review, the Department should issue a supplemental questionnaire to FHTK in order to issue accurate final results of review. It asserts that a June 22, 2001, submission by the petitioners to the Department was untimely and that this submission, along with a July 13, 2001, meeting at which representatives of the petitioners met with representatives of the Department to discuss the submission, tainted the record with inaccurate information. FHTK further asserts that, apart from the inaccuracies arising from the submission and the meeting, some findings in the preliminary results of review were based on speculation on the part of the Department, such as a finding that FHTK incurred additional, unreported expenses on the subject merchandise between the time the merchandise left its production facility and the time it was loaded onto the ship for export. FHTK notes that there was no record evidence to support this finding and that any questions the Department had concerning additional expenses could have been addressed in a supplemental questionnaire. Third, FHTK argues that the Department should issue a supplemental questionnaire in order to be consistent with its practice of issuing multiple questionnaires. In support of its argument, FHTK cites several previous antidumping duty administrative reviews in which the Department issued a supplemental questionnaire following the release of preliminary results. In addition, it cites two Less-Than-Fair-Value (LTFV) investigations, those of steel concrete reinforcing bars from Ukraine and honey from Argentina, in which the Department accepted additional information following preliminary determinations based on the use of adverse facts available. Fourth, FHTK argues that court precedent shows that the Court of International Trade (CIT) requires that the Department not apply adverse facts available without providing respondents with an opportunity to clarify the record after responding to only one supplemental questionnaire. It cites Mannesmannrohren-Werke AG v. United States, 77 F. Supp.2d 1302 (CIT 1999), in support of this argument. It notes, moreover, that the CIT has consistently held that the Department must have adequate reasons to support a determination of adverse facts available; FHTK cites Mannesmannrohren, at 77 F. Supp.2d at 1325, and Ferro Union, Inc. v. United States, 44 F. Supp.2d 1310, 1335-36 (CIT 1999) in support of this assertion. The petitioners rebut that FHTK's arguments for issuing a second supplemental questionnaire are without merit. They comment that 19 CFR 351.301(c)(2)(i) provides the Department with the discretion to request that a party submit additional factual information but that the Department is not required to issue a supplemental questionnaire under this regulation. The petitioners argue that, given the extensions in time that the Department granted to FHTK to respond to its original and supplemental questionnaires and the numerous and significant deficiencies contained in its responses to the questionnaires, the Department should not exercise its discretion to issue a second supplemental questionnaire to FHTK. The petitioners further argue that, under 19 CFR 351.213(h)(2), the latest date on which the final results may be issued is February 20, 2002, and that, assuming the Department extended the deadline to this date, there would not be time for the issuance of a supplemental questionnaire and verification of the information submitted. The petitioners rebut that their June 22, 2001, submission did not contain new factual information; they assert that this submission consisted of comments on factual information that they and FHTK had placed on the record prior to the April 19, 2001, deadline for submission of new factual information. The petitioners assert that FHTK did not avail itself of the opportunity to rebut any of the "inaccurate" information in the June 22, 2001, submission with new factual information within the ten days following that submission. They note that, likewise, FHTK did not avail itself of the opportunity to comment on the submission between June 22, 2001, and the issuance of the preliminary results. In addition, the petitioners state that FHTK did not provide an argument in its case brief to support its assertions that the information in the June 22, 2001, submission was inaccurate. The petitioners argue that, accordingly, there is no support for FHTK's argument that the Department relied on untimely and inaccurate factual information in its determination of the use of adverse facts available. The petitioners rebut that none of the court cases FHTK cited support the proposition that the Department shall not apply adverse facts available after issuing a single supplemental questionnaire. They argue that the Mannesmannrohren decision is not supportive of this proposition because the record provides no indication that the gross deficiencies in FHTK's responses are attributable to its inability to obtain the requested information, to FHTK not properly understanding the questions asked, or to FHTK overlooking a particular request. The petitioners assert that the other court cases FHTK cited support the proposition that the Department must provide a detailed rationale for its decision to apply adverse facts available but they do not establish precedent for the Department's issuance of a second supplemental questionnaire to FHTK. The petitioners argue that, in contrast to the cited cases, the Department issued a detailed explanation of its decision in an August 14, 2001, decision memorandum, citing the Memorandum from Edythe Artman to Laurie Parkhill on the "Preliminary Results of the Administrative Review of the Antidumping Duty Order on Fresh Garlic from China for the Period of Review November 1, 1999, through October 31, 2000: The Use of Facts Otherwise Available and the Corroboration of Secondary Information" (Preliminary Decision Memorandum). The petitioners assert that, therefore, the cited cases do not provide a basis for a reconsideration of the use of adverse facts available. Department's Position: We have applied adverse facts available to FHTK for these final results of review. For the reasons described below, we find that the issuance of a second supplemental questionnaire to FHTK is not warranted in this case. In the Preliminary Decision Memorandum, we identified general areas and twelve specific areas of information that were incomplete or insufficient in detail. See Preliminary Decision Memorandum at 3-7. A thorough review of the responses to the original and supplemental questionnaires showed that they were so incomplete or insufficient in detail that we could not conduct a verification or calculate a margin based on the information submitted. The purpose of supplemental questionnaires is to clarify initial questionnaire responses so that we more fully understand the responses. When the responses to the original and supplemental questionnaires are so inadequate that the questions must be repeated, we are given little reason to believe that a second supplemental questionnaire will yield complete, detailed responses to the questions. Thus, the responses to the first two questionnaires did not provide us with a basis to conclude that a response to a third questionnaire would be complete and detailed. In addition, the responses to the supplemental questionnaire presented us with information that was inconsistent with information in the responses to the original questionnaire. In an original response, FHTK reported its date of shipment for sales as the same day as the subject merchandise left the port of exit. In our supplemental questionnaire, we requested that FHTK report this date as the date that the merchandise left its production facility. FHTK revised the dates as requested in the supplemental response; however, it did not revise other factors-of-production information (i.e. inland freight amounts, warehousing or refrigerated storage amounts) to account for the costs incurred during the significant period of time created between the time merchandise left the production facility and the time it left the port of exit as a result of the revision. In addition, FHTK reported the use of water and electricity as its two energy sources in its original responses. However, in its supplemental responses, it stated that the water was used on the crops and that the electricity was used to irrigate the crops. These responses left us with the question of what energy source, if any, was employed in the production facility. Clarification in these two areas would not have provided us with sufficient information to conduct a verification or to calculate a margin; thus, the apparent inconsistencies between the original and supplemental responses did not provide a basis for the issuance of an additional questionnaire. Third, although we asked for detailed descriptions of the production, sales, and payment processes in the original and supplemental questionnaires, FHTK did not provide these descriptions in its responses. Consequently, we did not have a working knowledge of its processes and could not formulate follow-up questions about them. Finally, FHTK had stated in its supplemental response, submitted on May 15, 2001, that it would provide copies of its financial documents pertaining to the period of review as soon as they became available. However, FHTK did not submit the documents, which play an integral role in the review process. We also do not find that the petitioners' June 22, 2001, submission warrants the issuance of another supplemental questionnaire. (See our response to Comment 2 below.) With regard to FHTK's assertion that we based our decision to apply adverse facts available on speculative conclusions, the twelve specific areas we discussed in our Preliminary Decision Memorandum were cited as examples of areas in which FHTK's questionnaire responses were incomplete or insufficient in detail. We did not draw affirmative conclusions that information was missing or being withheld; we found that the responses in these areas were simply insufficient for purposes of conducting a verification or calculating a margin. We do not find that our past practice provides a basis for the issuance of a second supplemental questionnaire. As noted by both FHTK and the petitioners, 19 CFR 351.301(c)(2)(i) provides us with the discretion to issue additional supplemental questionnaires. The Department's decisions to obtain additional factual information in the LTFV investigations of steel concrete reinforcing bars from Ukraine and honey from Argentina reflected the facts of those proceedings. We do not find those facts to be similar to those presented in this proceeding, where FHTK has provided incomplete or insufficient information for each section of the original questionnaire. Hence, we do not find that our actions in the investigations cited by FHTK provide a basis for the issuance of an additional questionnaire in this proceeding. We also do not find that the court precedent cited by FHTK warrants the issuance of a second supplemental questionnaire. Both the Mannesmannrohren and Ferro Union decisions cited by FHTK concern the use of an adverse inference in the selection of facts otherwise available. In Mannesmannrohren, the CIT found that ". . . Commerce needs to articulate why it concluded that a party failed to act to the best of its ability, and explain why the absence of this information is of significance to the progress of its investigation." Mannesmannrohren, 77 F. Supp.2d at 1314; see also Ferro Union, 44 F. Supp.2d at 1310, 1332. The Mannesmannrohren court did not find that we were required to contact the respondent for additional information in order to comply with the court's request for an articulation of the adverse facts-available determination. Mannesmannrohren, 77 F. Supp.2d at 1317. Furthermore, we have set forth our reasons for the use of facts otherwise available and the selection of an adverse inference among these facts in detail in our Preliminary Decision Memorandum. In that memorandum, we articulated why we found that FHTK had failed to act to the best of its ability in responding to our questionnaires and we explained why we were unable to complete the review without the complete information requested from FHTK. See Preliminary Decision Memorandum at 7-9. Therefore, we find that we have complied with court precedent concerning the use of adverse facts available. Comment 2: FHTK argues that the Department should issue a supplemental questionnaire in order to correct the record which, through procedural irregularities, contains inaccurate information. FHTK asserts that the petitioners' June 22, 2001, submission contained erroneous factual information and that it should have been rejected by the Department as having been submitted after the April 19, 2001, deadline for submission of factual information. FHTK argues the Department's failure to reject the submission was compounded by its July 13, 2001, meeting with representatives of the petitioners to discuss the information contained in the June 22 submission. FHTK argues that, because the Department referred to the submission and the meeting in its Preliminary Decision Memorandum, the Department relied upon the petitioners' erroneous information in its determination of the use of adverse facts available. It asserts that three of the Department's findings - that FHTK had provided no detailed list of affiliates, that FHTK had not reported factors-of-production information for energy sources used at its production facility, and that FHTK had not provided financial statements and documents pertaining to the period of review - show specifically the Department's reliance on this information. The petitioners respond that there is no merit to FHTK's claims that they submitted new factual information in an untimely manner. Citing four of FHTK's specific claims of new factual information contained in the June 22, 2001, submission, the petitioners comment that, in each instance, the claimed information consisted of either information that had been placed on the record prior to the April 19, 2001, deadline or commentary on information placed on the record before that deadline. They argue that, even if the June 22, 2001, submission was found to contain new factual information, the Department should disregard the information and accept the written argument in the submission. The petitioners further respond that the Department did not rely on information in the June 22, 2001, submission in reaching its preliminary results of review. They assert that the Department's determination to use adverse facts available was an action based on its lengthy and detailed analysis in its Preliminary Decision Memorandum of the factual information submitted by FHTK. The petitioners argue that, therefore, the Department should not issue a second supplemental questionnaire to FHTK and should use adverse facts available for FHTK in its final results. FHTK respond that, in particular, the June 22, 2001, submission contains pages printed from FHTK's website that constitute untimely factual information; it asserts that the pages were printed from the website after the deadline for submission of new factual information had passed. It also responds that, although the petitioners admitted in their September 17, 2001, submission that their June 22, 2001, statements regarding information about energy sources were speculation, the Department nevertheless relied on these statements in its Preliminary Decision Memorandum. The petitioners respond that the pages from the website included in the June 22, 2001, submission are identical to those pages they had submitted previously on March 19, 2001. They assert that, accordingly, this information should not be considered new factual information. Department's Position: We disagree with FHTK's assertions concerning the June 22, 2001, submission from the petitioners. The analysis in our Preliminary Decision Memorandum rested entirely on FHTK's responses to the original and supplemental questionnaires. We noted the receipt of the June 22, 2001, submission from the petitioners and the July 13, 2001, meeting with the petitioners' counsel in the background section of the Preliminary Decision Memorandum. See Preliminary Decision Memorandum at 2. However, in our analysis section of the memorandum, we based all of our findings on FHTK's responses. See Preliminary Decision Memorandum at 3-6. Therefore, our determinations to use the facts otherwise available and to use adverse facts available were based solely on these responses. See Preliminary Decision Memorandum at 7-9. In the event that we found the June 22, 2001, submission to be untimely or inaccurate, it would not affect these determinations. Nevertheless, we will clarify the record on points raised by FHTK. The deadline for submission of factual information was not April 19, 2001. We extended the deadline to May 3, 2001, at the request of the petitioners because we had granted FHTK a corresponding extension of time to file its questionnaire responses. See Letter from Laurie Parkhill to the Fresh Garlic Producers Association (March 9, 2001). The petitioners filed one submission following May 3, 2001. They identified their June 22, 2001, submission as comments to FHTK's supplemental response, received by the Department on May 15, 2001. As with all comments submitted by parties to this proceeding, we accepted them in the course of building a record. We have reviewed the June 22, 2001, submission and find that it consists of comments and does not contain new factual information. The pages at issue from FHTK's website were previously submitted by the petitioners on March 19, 2001; the information contained on both sets of pages that is pertinent to the review is identical. Finally, the discussion of FHTK at the July 13, 2001, meeting with the petitioners' counsel was limited to the comments raised in the June 22, 2001, submission. See Memorandum to the File regarding Meeting with Petitioner's Counsel, on file in the Central Records Unit (July 13, 2001). In light of all of the above considerations, we do not find that the petitioners' June 22, 2001, submission provides a basis for the issuance of a second supplemental questionnaire to FHTK. 2. Miscellaneous Comment 3: The petitioners argue that the Department should consider FHTK's refusal to cooperate in past segments of the proceeding and its efforts to respond to the questionnaires in the current segment when receiving future requests for review from FHTK. They argue that, given FHTK's past and current actions, FHTK should be required to submit a good- faith basis for future requests of administrative reviews in order to avoid waste of Departmental resources and those of the petitioners. FHTK rebuts that it is the Department's policy to treat the record of each review separately. It argues that the petitioners are asking that the Department pass judgment on any future review requested by FHTK before initiation of that review takes place. Department's Position: We do not find that FHTK should be required to submit a good- faith basis for future requests of administrative reviews because of its performance in the past and current reviews. Each administrative review is a separate reviewable segment of the proceeding involving different sales, adjustments, and underlying facts. What transpired in previous reviews is not binding precedent in later reviews. See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan, Romania, Singapore, Sweden and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews, 62 FR 54043, 54083 (October 17, 1997) (where we disagreed with the petitioner's request that we require all respondents to conform their submissions, their allocations, and their methodology to our most recent determinations and ruling). It would be inconsistent with this principle to place an additional requirement on a company requesting a review because of its actions in previous reviews. Therefore, we will not adopt the requirement suggested by the petitioners. Recommendation Based on our analysis of the comments received, we recommend adopting all of the above positions. If these recommendations are accepted, we will publish the final results of the review and the final dumping margins for all of the reviewed firms in the Federal Register. Agree _________ Disagree _________ ____________________ Faryar Shirzad Assistant Secretary for Import Administration ____________________ Date _________________________________________________________________________ footnotes: 1. 1The members of the Fresh Garlic Producers Association are Christopher Ranch L.L.C., Basic Vegetable Products, Colusa Produce Corporation, Crinklaw Farms,,Dalena Farms, Empire Farms, Farm Gate L.L.C., The Garlic Company, Spice World, Thomson International, Inc., and Vessey and Company, Inc. (the Petitioners).