Notice of Preliminary Results of New Shipper Review of the Antidumping Duty Order on Certain Frozen Warmwater Shrimp from Ecuador, 34888-34892 [E6-9475]

Download as PDF 34888 Federal Register / Vol. 71, No. 116 / Friday, June 16, 2006 / Notices Executive Order 13132 It has been determined that this notice does not contain ‘‘policies that have Federalism implications,’’ as that phrase is defined in Executive Order 13132, ‘‘Federalism.’’ Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482–4136 or (202) 482– 3773, respectively. SUPPLEMENTARY INFORMATION: Administrative Procedure Act/ Regulatory Flexibility Act Prior notice and an opportunity for public comments are not required by the Administrative Procedure Act or any other law for rules concerning grants, benefits, and contracts (5 U.S.C. 553(a)(2)). Because notice and opportunity for comment are not required pursuant to 5 U.S.C. 553 or any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are inapplicable. Therefore, a regulatory flexibility analysis has not been prepared. Background On August 29, 2005, we received a request from Studmark S.A. to initiate a new shipper review of Studmark’s sales of certain frozen warmwater shrimp from Ecuador. On October 3, 2005, the Department published the notice of initiation of this new shipper antidumping duty review covering the period August 4, 2004, through July 31, 2005. See Notice of Initiation of New Shipper Antidumping Duty Review: Certain Frozen Warmwater Shrimp from Ecuador, 70 FR 57562 (October 3, 2005). We issued a questionnaire to Studmark in October 2005 and received responses in October and November 2005. We issued supplemental questionnaires in December 2005 and January 2006, and received responses to those questionnaires in the same months. In addition, we issued questionnaires to the importer of record, Colorful Butterfly Imports, LLC (Colorful Butterfly), and to Global Shrimp Imports LLC (Global Shrimp), Studmark’s U.S. customer, in December 2005 and January 2006, respectively. These companies provided responses in January 2006. From February 14 through 16, 2006, we conducted a verification of Studmark’s questionnaire responses, which included a visit to Oceanpro, S.A., an unaffiliated producer/exporter of subject merchandise that processed and packed Studmark’s subject merchandise sales to the United States and the home market under a tolling agreement. On April 3, 2006, the Department published an extension of the time period for issuing the preliminary results of this review by an additional 120 days, or until July 26, 2006, in accordance with section 751(a)(2)(B)(iv) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.214(i)(2). See Notice of Extension of Time Limit for the Preliminary Results of New Shipper Review: Certain Frozen Warmwater Shrimp from Ecuador, 71 FR 16556 (April 3, 2006). On April 21, 2006, we issued an additional supplemental questionnaire to Studmark, and received Studmark’s response, dated May 1, 2006, on May 2, 2006. Dated: June 13, 2006. Benjamin Erulkar, Deputy Assistant Secretary of Commerce for Economic Development and Chief Operating Officer. [FR Doc. E6–9519 Filed 6–15–06; 8:45 am] BILLING CODE 3510–24–P DEPARTMENT OF COMMERCE International Trade Administration A–331–802 Notice of Preliminary Results of New Shipper Review of the Antidumping Duty Order on Certain Frozen Warmwater Shrimp from Ecuador Import Administration, International Trade Administration, Department of Commerce. SUMMARY: In response to a request by Studmark S.A. (Studmark), the Department of Commerce (the Department) is conducting a new shipper review of the antidumping duty order on certain frozen warmwater shrimp from Ecuador for the period of review (POR) August 4, 2004, through July 31, 2005. We preliminarily determine that, during the POR, Studmark sold the subject merchandise at less than normal value. Interested parties are invited to comment on these preliminary results. If the preliminary results are adopted in our final results of administrative review, we will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on all appropriate entries. EFFECTIVE DATE: June 16, 2006. FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Gemal Brangman, AD/CVD Operations, Office 2, Import Administration, International Trade wwhite on PROD1PC61 with NOTICES AGENCY: VerDate Aug<31>2005 18:25 Jun 15, 2006 Jkt 208001 Scope of Order The scope of this order includes certain warmwater shrimp and prawns, PO 00000 Frm 00019 Fmt 4703 Sfmt 4703 whether frozen, wild–caught (ocean harvested) or farm–raised (produced by aquaculture), head–on or head–off, shell–on or peeled, tail–on or tail–off,1 deveined or not deveined, cooked or raw, or otherwise processed in frozen form. The frozen warmwater shrimp and prawn products included in the scope of this order, regardless of definitions in the Harmonized Tariff Schedule of the United States (HTS), are products which are processed from warmwater shrimp and prawns through freezing and which are sold in any count size. The products described above may be processed from any species of warmwater shrimp and prawns. Warmwater shrimp and prawns are generally classified in, but are not limited to, the Penaeidae family. Some examples of the farmed and wild– caught warmwater species include, but are not limited to, whiteleg shrimp (Penaeus vannemei), banana prawn (Penaeus merguiensis), fleshy prawn (Penaeus chinensis), giant river prawn (Macrobrachium rosenbergii), giant tiger prawn (Penaeus monodon), redspotted shrimp (Penaeus brasiliensis), southern brown shrimp (Penaeus subtilis), southern pink shrimp (Penaeus notialis), southern rough shrimp (Trachypenaeus curvirostris), southern white shrimp (Penaeus schmitti), blue shrimp (Penaeus stylirostris), western white shrimp (Penaeus occidentalis), and Indian white prawn (Penaeus indicus). Frozen shrimp and prawns that are packed with marinade, spices or sauce are included in the scope of this order. In addition, food preparations, which are not ‘‘prepared meals,’’ that contain more than 20 percent by weight of shrimp or prawn are also included in the scope of this order. Excluded from the scope are: 1) Breaded shrimp and prawns (HTS subheading 1605.20.10.20); 2) shrimp and prawns generally classified in the Pandalidae family and commonly referred to as coldwater shrimp, in any state of processing; 3) fresh shrimp and prawns whether shell–on or peeled (HTS subheading 0306.23.00.20 and 0306.23.00.40); 4) shrimp and prawns in prepared meals (HTS subheading 1605.20.05.10); 5) dried shrimp and prawns; 6) canned warmwater shrimp and prawns (HTS subheading 1605.20.10.40); 7) certain dusted shrimp; and 8) certain battered shrimp. Dusted shrimp is a shrimp–based product: 1) That is produced from fresh (or thawed–from-frozen) and peeled 1 ‘‘Tails’’ in this context means the tail fan, which includes the telson and the uropods. E:\FR\FM\16JNN1.SGM 16JNN1 Federal Register / Vol. 71, No. 116 / Friday, June 16, 2006 / Notices shrimp; 2) to which a ‘‘dusting’’ layer of rice or wheat flour of at least 95 percent purity has been applied; 3) with the entire surface of the shrimp flesh thoroughly and evenly coated with the flour; 4) with the non–shrimp content of the end product constituting between four and 10 percent of the product’s total weight after being dusted, but prior to being frozen; and 5) that is subjected to individually quick frozen (IQF) freezing immediately after application of the dusting layer. Battered shrimp is a shrimp–based product that, when dusted in accordance with the definition of dusting above, is coated with a wet viscous layer containing egg and/or milk, and par–fried. The products covered by this order are currently classified under the following HTS subheadings: 0306.13.00.03, 0306.13.00.06, 0306.13.00.09, 0306.13.00.12, 0306.13.00.15, 0306.13.00.18, 0306.13.00.21, 0306.13.00.24, 0306.13.00.27, 0306.13.00.40, 1605.20.10.10, and 1605.20.10.30. These HTS subheadings are provided for convenience and for customs purposes only and are not dispositive, but rather the written description of the scope of this order is dispositive. wwhite on PROD1PC61 with NOTICES Verification As provided in section 782(i) of the Act, we conducted verification of the sales information provided by Studmark. We used standard verification procedures, including examination of relevant sales and financial records. Our verification results are detailed in the verification report placed in the case file in the Central Records Unit (CRU) in room B– 099 of the main Department building. See March 8, 2006, Memorandum to the File entitled ‘‘Verification of the Sales Response of Studmark, S.A. in the Antidumping New Shipper Review of Certain Frozen Warmwater Shrimp from Ecuador’’ (Verification Report). Product Comparisons To determine whether Studmark made sales of frozen warmwater shrimp to the United States at less than normal value, we compared the export price (EP) to the normal value (NV), as described in the Export Price and Normal Value sections of this notice. As discussed further below, because we determine that a ‘‘particular market situation’’ exists with respect to the Ecuadorian market for frozen warmwater shrimp, we were unable to base NV on Studmark’s sales to the home market. Instead, we have compared the EP sale to constructed value (CV). VerDate Aug<31>2005 18:25 Jun 15, 2006 Jkt 208001 Export Price For the price to the United States, we used EP in accordance with section 772(a) of the Act. We calculated EP because Studmark’s U.S. sale of subject merchandise was made directly to the first unaffiliated purchaser in the United States prior to importation. We based EP on the packed free–on-board (FOB) prices to the first unaffiliated customer in, or for exportation to, the United States. In accordance with section 772(c)(2) of the Act, we made deductions, where appropriate, for movement expenses including foreign inland freight, foreign inland insurance, and foreign brokerage and handling. Studmark reported in its November 9, 2005, Section B and C questionnaire response (QRBC) that it made its U.S. sale on an FOB Ecuador–port basis, but that the foreign inland freight expense was included in the ocean freight expense paid by the U.S. importer. However, at verification, Studmark was unable to support this claim that the importer paid for foreign inland freight. See Verification Report at page 15. As the foreign inland freight expense information provided by Studmark could not be verified, in accordance with section 776(a)(2)(D) of the Act, we are applying the facts otherwise available (FA) for this expense. That is, as Studmark could not support its contention that it did not pay for foreign inland freight, as FA for the preliminary results, we are deducting foreign inland freight expenses in our calculation of EP. The only freight expense information on the record of this review is the freight expense Studmark incurred to transport unprocessed shrimp from its supplying farms to the processing plant. See QRBC at page 93. As FA, we have derived a per–unit foreign inland freight expense by dividing this farm–to-plant freight expense by the quantity of the U.S. sale. Studmark reported at page 61 of the QRBC that there is no inland insurance expense to cover merchandise transport from the plant to the port. However, at verification, our review of Studmark’s transport insurance policy, found at Exhibit 13 of the Verification Report, indicates that the policy covers transport of shrimp from the farm to the processing plant, and from the processing plant to the port. Therefore, to properly account for the inland insurance expense in our EP calculation, we calculated a per–unit amount for the plant–to-port portion of the insurance expense based on half of the reported cost of the insurance premium as FA, in accordance with section 776(a)(1) of the Act. PO 00000 Frm 00020 Fmt 4703 Sfmt 4703 34889 As discussed at pages 15 and 16 of the Verification Report, Studmark incurred foreign brokerage and handling expenses, but reported them as part of its difference–in-merchandise (DIFMER) calculation. We have reclassified this expense as a movement expense and recalculated it, as described at page 16 of the Verification Report. Normal Value A. Selection of Basis for Normal Value Section 773(a)(1) of the Act directs the Department to calculate NV based on the price at which the foreign like product is first sold in the home market, provided that the merchandise is sold in sufficient quantities (or value, if quantity is inappropriate), and that there is no particular market situation that prevents a proper comparison with the EP. Under the statute, the Department will normally consider quantity (or value) insufficient if it is less than five percent of the aggregate quantity (or value) of sales of the subject merchandise to the United States. See Section 773(a)(1)(C) of the Act. In the less–than-fair–value (LTFV) investigation segment of this proceeding, the Department determined that a particular market situation existed which rendered the Ecuadorian market inappropriate for purposes of determining NV for the three respondents in the LTFV investigation. See Memorandum dated June 7, 2004, entitled ‘‘Home Market as Appropriate Comparison Market’’ (Market Memo), as included at Attachment II to the Department’s December 8, 2005, supplemental questionnaire. Specifically, we noted that: • The Ecuadorian shrimp industry, as a whole, is export oriented; • The shrimp sold by the LTFV respondents in the home market was of inferior quality and not suitable for export, and none of these respondents had sufficient home market sales of export–quality merchandise to constitute a viable comparison market; • The LTFV respondents’ marketing and distribution of domestically sold non– export-quality shrimp were perfunctory, with home market sales made on an ‘‘as is,’’ ‘‘as available’’ and ‘‘ex–plant’’ basis; • The non–export quality shrimp was sold at significantly reduced prices to home market customers in order to offset losses. If the non–export-quality shrimp had not been sold in the home market, it would have been disposed of as waste, and the respondents would have had to take a complete loss on the product; • The LTFV respondents did not negotiate over price prior to the E:\FR\FM\16JNN1.SGM 16JNN1 34890 Federal Register / Vol. 71, No. 116 / Friday, June 16, 2006 / Notices wwhite on PROD1PC61 with NOTICES transaction in the home market, but rather sold the shrimp on sight at the plant with transport being the responsibility of the purchaser; and • The majority of the LTFV respondents’ sales was to export markets; home market sales were incidental to the respondents’ overall business operations. We concluded that: Given the evidence on the record regarding the nature of the Ecuadorian market, the marketing and selling practices of the respondents, and the quality distinctions between the overwhelming majority of the frozen shrimp sold in the home market and the shrimp sold for export, we recommend finding that a particular market situation exists which renders the Ecuadorian market inappropriate for purposes of determining normal value in this investigation. As a result, we recommend for purposes of this investigation to determine normal value based on the respondents’ sales to third country markets. See Market Memo at page 6. Accordingly, we based NV in the LTFV investigation on the respondents’ sales to third–country markets. In the December 8, 2005, supplemental questionnaire, we requested that Studmark address how its sales to the home market compare to the sales described in the memorandum, and to explain why its sales to the home market are appropriate for comparison to U.S. sales. Studmark explained at page 8 of its December 21, 2005, supplemental questionnaire response (SQR) that it produced and sold only export–quality shrimp to both the home market and the U.S. market. While in the LTFV investigation, none of the three respondents had sufficient home market sales of export–quality merchandise to constitute a viable comparison market, almost all of Studmark’s sales are of export–quality merchandise and the sales quantity is well above five percent of Studmark’s U.S. sales quantity. Studmark stated that its home market sales of export–quality shrimp are neither perfunctory nor incidental to its export business. Our analysis of Studmark’s sales data confirms that, unlike the LTFV respondents’ home market sales, nearly all of Studmark’s home market sales were of export–quality shrimp comparable to the merchandise sold to the United States and, as noted above, the quantity of these sales was well above five percent of the quantity of the U.S. sale. However, Studmark reported VerDate Aug<31>2005 18:25 Jun 15, 2006 Jkt 208001 that its home market sales process differed from its U.S sales process in that the home market sales prices were negotiated after production, while U.S. sales prices were negotiated prior to production, with prices confirmed through a pro forma invoice. Studmark sold its home market sales on an ex– plant basis, while U.S. sales were sold FOB port. See SQR at page 5. At verification, we found that the home market sales were made on a more perfunctory and incidental basis than Studmark had represented in its questionnaire responses. Studmark explained that it had to buy the entire pond harvests from the shrimp farmers in order to obtain sufficient processed shrimp to complete its U.S. sales order. After arranging for the farm purchases, Studmark determined that it would have a surplus amount of shrimp from the shrimp harvest which would be too small for a container–size sale typical for export orders. Accordingly, Studmark contacted local buyers to purchase the remaining shrimp. See Verification Report at pages 7–8. The export–quality shrimp was sold to a home market customer more than two weeks after the U.S. sale was shipped. See, e.g., home market sales documents included in Exhibit 10 of the Verification Report. Documentation regarding the shrimp Studmark sold to the U.S., which was processed according to a tolling agreement with Oceanpro, S.A., was first submitted for the record on October 6, 2005. In the agreement, Studmark is consistently referred to as ‘‘THE EXPORTER,’’ and described as ‘‘a company whose main activity is the export of seafood, in its different presentations, to markets in USA and Europe.’’ See page 1 of the English translation of the tolling agreement, included as an unnumbered exhibit to the SQR. The tolling agreement describes all the arrangements between the parties on the assumption that all processing performed is for shrimp to be exported. For example, at page 3 of the English translation, the agreement reads ‘‘THE EXPORTER shall make, by its account and previous to each export, the analysis that determine the INP and/or the client abroad....’’ Studmark did not maintain a separate tolling agreement for home market sales. In its February 2, 2006, letter, Studmark stated that ‘‘{t}he tolling agreement previously submitted governed domestic sales as well as export sales.’’ While we note that Studmark’s sales to the home market differ from the LTFV respondents in that the vast majority of its home market sales were of export–quality shrimp, rather than PO 00000 Frm 00021 Fmt 4703 Sfmt 4703 substandard quality shrimp, its home market sales situation is similar to that described in the Market Memo. Studmark’s sales to home market customers are incidental to its principal business of selling to export markets. The home market sales were of products left over from the U.S. sale transaction, and sold on sight at the plant. In general, Studmark’s home market does not differ markedly from the LTFV respondents’ home market where we found a particular market situation under section 773(a)(1)(B)(ii) of the Act. Accordingly, we preliminarily determine that a particular market situation exists for Studmark’s home market during the POR. As a result, we cannot rely on Studmark’s home market sales to calculate NV. Studmark’s only export sale during the POR was to the United States. That is, Studmark had no third–country sales during the POR. The only other basis for calculating NV is CV, based on the data Studmark submitted for DIFMER adjustments, and on data collected at verification. Accordingly, we have calculated NV based on CV, as discussed below. B. Level of Trade Analysis In accordance with section 773(a)(1)(B)(i) of the Act, to the extent practicable, we determine NV based on sales in the home market at the same level of trade (LOT) as U.S. sales. See 19 CFR 351.412. The NV LOT is the level of the starting–price sale in the home market. For EP, the U.S. LOT is based on the starting price, which is usually from the exporter to the importer. To determine whether NV sales are at a different LOT than EP sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer in the home market. If the comparison–market sales are at a different LOT, and the difference affects price comparability, as manifested in a pattern of consistent price differences between sales at different LOTs in the country in which NV is determined, we make an LOT adjustment under section 773(a)(7)(A) of the Act. In the United States, Studmark made EP sales to wholesalers/distributors through the same channel of distribution, performing the identical selling functions. Therefore, we determine that there is only one LOT for EP sales. When NV is based on CV, as in this case, the NV LOT is that of the sales from which we derive selling, general and administrative (SG&A) expenses and profit. (See Notice of Preliminary E:\FR\FM\16JNN1.SGM 16JNN1 Federal Register / Vol. 71, No. 116 / Friday, June 16, 2006 / Notices wwhite on PROD1PC61 with NOTICES Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Fresh Atlantic Salmon from Chile, 63 FR 2664 (January 16, 1998)). As discussed below, we based the CV selling expenses on Studmark’s home market sales as FA, and based CV profit on the weighted–average profits earned by the respondents in the LTFV investigation. We are unable to determine that the LOT of the sales from which we derived selling expenses and profit for CV is different from the EP LOT. Further, there is only one NV LOT, and there is insufficient information on the record that would enable us to determine that an LOT adjustment is warranted. Therefore, we have no basis upon which to make an LOT adjustment to NV. C. Calculation of Normal Value Based on Constructed Value We calculated CV in accordance with section 773(e) of the Act, which indicates that CV shall be based on the sum of a respondent’s cost of materials and fabrication for the subject merchandise, plus amounts for SG&A expenses, profit and U.S. packing costs. We relied on the information submitted by Studmark to calculate CV as follows: To calculate the cost of materials and fabrication, we used the cost of manufacture data Studmark reported in its questionnaire responses for calculating DIFMER adjustments. Based on verification findings, we found that the calculations of the variable costs of manufacture for the DIFMER adjustment included misclassified expenses. Accordingly, we recalculated the variable costs of manufacture and some expenses were reclassified as movement expenses or direct selling expenses. See alternative calculation worksheets in Appendix IV of the Verification Report. To calculate selling expenses, as FA, we used the information Studmark reported for expenses on home market sales. We calculated the general and administrative expense ratio based on the fiscal year 2005 trial balance information, as detailed in the Memorandum to the File entitled Studmark Preliminary Results Notes and Margin Calculation, dated the same as this notice (Preliminary Results Calculation Memo). To calculate profit, for purposes of the preliminary results, we used the weighted–average profit rate derived from LTFV comparision market data from the LTFV respondents, Exportadora de Alimentos S.A. (Expalsa), Exporklore, S.A. and Promarisco, S.A., in accordance with section 773(e)(2)(B)(iii) of the Act. Because Studmark does not have a VerDate Aug<31>2005 18:25 Jun 15, 2006 Jkt 208001 viable comparison market, we could not determine CV profit under section 773(e)(2)(A) of the Act. The statute does not establish a hierarchy for selecting among the alternative profit methodologies. See Statement of Administrative Action Accompanying the URAA, H.R. Rep. No. 103–316, vol. 1, at 840 (1994). Nonetheless, we examined each alternative in searching for an appropriate method. Because Studmark did not have sales of any product in the same general category of products as the subject merchandise, we were unable to apply alternative (i) of section 773(e)(2)(B) of the Act. Further, we cannot calculate profit based on alternative (ii) of this section because there are no other respondents in this review, and 19 CFR 351.405(b) requires that a profit ratio under this alternative be based on home market sales, which we have determined cannot be used. Therefore, we calculated Studmark’s CV profit based on alternative (iii) of section 773(e)(2)(B) of the Act, which is any other reasonable method. As a result, we calculated Studmark’s CV profit ratio as a weighted–average of the profit ratios calculated for the respondents in the LTFV investigation on their sales to their third–country comparison markets. We applied this ratio to the sum of the cost of materials and fabrication, plus the amounts for general and administrative expenses, to calculate an amount for profit. Pursuant to alternative (iii), the Department has the option of using any other reasonable method, as long as the result is not greater than the amount realized by exporters or producers ‘‘in connection with the sale, for consumption in the foreign country, of merchandise that is in the same general category of products as the subject merchandise’’ (i.e., the ‘‘profit cap’’). The Department attempted to identify appropriate profit cap data for sales in Ecuador of merchandise ‘‘in the same general category of products’’ as frozen shrimp through a broad–based internet search. We applied various search terms in English and Spanish and reviewed various business directory Web sites, including Goliath, Thomson Gale’s online–business content service, ‘‘PaginaAmarillas.com’’ (Yellow Pages), and Ecuadorian government sites. See Preliminary Results Calculation Memo for a discussion of the Department’s search attempt. Although we were able to obtain profit ratios for companies listed as the ‘‘1,000 Most Important Companies in 2004’’ from the Ecuadorian Superintendency of Companies, the sector of business that includes the subject merchandise, the agricultural sector, is overly broad PO 00000 Frm 00022 Fmt 4703 Sfmt 4703 34891 because it includes tobacco, meat, and baking companies as well as seafood processors. Moreover, we are unable to ascertain whether the companies sell their merchandise in Ecuador. Among these companies are several shrimp exporters, such as Expalsa, one of the LTFV respondents, and other seafood processing companies, which, based on the limited information observed on internet Web sites, appear to be export– oriented companies. In addition to our own research, we provided Studmark with the opportunity to submit information relevant to the amount of profit to be applied in the CV calculation under section 773(e)(2)(B) of the Act, including the amount of profit normally realized by Ecuadorian exporters or producers in connection with the sale, for consumption of the merchandise that is in the same general category of products as the subject merchandise. See April 21, 2006, supplemental questionnaire (as corrected per a Memorandum to the File dated April 25, 2006). Studmark did not provide any such information in its May 1, 2006, response. Accordingly, as FA, we applied option (iii) without quantifying a profit cap. To determine the most appropriate profit rate under alternative (iii), we weighed several factors. Among them are: (1) The similarity of the potential surrogate companies’ business operations and products to those of respondent; (2) the extent to which the financial data of the surrogate companies reflect sales in the United States as well as the home market; (3) the contemporaneity of the surrogate data with the POR; and (4) the similarity of the customer base. The greater the similarity in business operations, products, and customer base, the more likely that there is a greater correlation between the profit experience of the companies in question. Because the Department typically compares U.S. sales to a NV based on sales in the home market or third country, the Department does not normally construct a NV based on financial data that contains exclusively or predominantly U.S. sales. Finally, contemporaneity is a concern because markets change over time and the more current the data, the more reflective it will be of the market in which the respondent is operating (see Notice of Final Determination of Sales at Less Than Fair Value: Pure Magnesium from Israel, 66 FR 49349 (September 27, 2001), and accompanying Issues and Decision Memorandum at Comment 8, and Notice of Final Determination of Sales at Not Less Than Fair Value: Certain E:\FR\FM\16JNN1.SGM 16JNN1 34892 Federal Register / Vol. 71, No. 116 / Friday, June 16, 2006 / Notices Color Television Receivers from Malaysia, 69 FR 20592 (April 16, 2004), and accompanying Issues and Decision Memorandum at Comment 26). Based on the record of this review to date, we determine that the use of the weighted–average profit rate of the LTFV respondents is a reasonable method for the following reasons. First, the products sold by the other respondents in their respective third– country markets are substantially similar to those sold by Studmark (i.e., sales of frozen, head–off, uncooked shrimp). Second, the CV profit rate for the LTFV respondents excludes sales to the United States. Third, the LTFV respondents sold to distributor/ wholesalers similar to Studmark’s U.S. customer (i.e., they had the same type of customer base). We note that the weighted–average CV profit rate calculated for the LTFV respondents covers a time frame that is not contemporaneous with the POR. The LTFV investigation period was from October 1, 2002, through September 30, 2003, while the instant POR is August 4, 2004, through July 31, 2005. However, there is no other CV profit data available that meets the other criteria and is contemporaneous with the POR, and there is no information currently on the record to indicate that the difference in the time periods is distortive. In addition, the Department verified the LTFV respondents’ third– country market information and ascertained the reliability of the data. Currency Conversion As Studmark reported its prices, expenses, and costs in U.S. dollars, no currency conversions were required in our margin calculations. wwhite on PROD1PC61 with NOTICES Preliminary Results of New Shipper Review As a result of our review, we preliminarily determine that the following percentage margin exists for Studmark for the period August 4, 2004, through July 31, 2005: results, or the first working day thereafter. Interested parties may submit case briefs no later than 30 days after the date of publication of these preliminary results. See 19 CFR 351.309(c)(ii). Rebuttal briefs limited to issues raised in such briefs may be filed no later than 35 days after the date of publication of the preliminary results. See 19 CFR 351.309(d). Parties who submit arguments are requested to submit with the argument (1) a statement of the issue and (2) a brief summary of the argument. Further, parties submitting briefs are requested to provide the Department with an additional copy of the public version of any such briefs on diskette. The Department will issue the final results of this review, which will include the results of its analysis of issues raised in any such comments, or at a hearing, if requested, within 90 days of publication of these preliminary results. Assessment Rate 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. Upon completion of this review, the Department will issue appropriate assessment instructions directly to CBP within 15 days of publication of the final results of this administrative review. Pursuant to 19 CFR 351.212(b), the Department calculated an assessment rate for the importer of subject merchandise based on the ratio of the total amount of antidumping duties calculated for the examined sale, to the total entered value of the examined sale. Where the assessment rate is above de minimis, the importer– specific rate will be assessed uniformly on all entries made during the POR. Cash Deposit Requirements 18:25 Jun 15, 2006 Jkt 208001 PO 00000 Frm 00023 Fmt 4703 Sfmt 4703 Notification to Importers This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping and/or countervailing duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary’s presumption that reimbursement of antidumping and/or countervailing duties occurred and the subsequent increase in antidumping duties by the amount of antidumping and/or countervailing duties reimbursed. This new shipper review is issued and published in accordance with sections 751(a)(2)(B) and 777(i)(1) of the Act. Dated: June 9, 2006. David M. Spooner, Assistant Secretary for Import Administration. [FR Doc. E6–9475 Filed 6–15–06; 8:45 am] BILLING CODE 3510–DS–S DEPARTMENT OF COMMERCE International Trade Administration (A–588–815) Gray Portland Cement and Cement Clinker from Japan: Continuation of Antidumping Duty Order Import Administration, International Trade Administration, Department of Commerce. SUMMARY: As a result of the determinations by the Department of Commerce and the International Trade Commission that revocation of the antidumping duty order on gray portland cement and cement clinker from Japan would be likely to lead to continuation or recurrence of dumping and of material injury to an industry in the United States within a reasonably foreseeable time, the Department is publishing notice of the continuation of this antidumping duty order. EFFECTIVE DATE: June 16, 2006. FOR FURTHER INFORMATION CONTACT: Edythe Artman or Minoo Hatten, Office 5, AD/CVD Operations, Import AGENCY: Bonding will no longer be permitted to fulfill security requirements for shipments from Studmark of certain frozen warmwater shrimp from Ecuador entered, or withdrawn from warehouse, Manufacturer/Exporter Margin (percent) for consumption on or after the Studmark, S.A. ................. 12.53 publication date of the final results of this new shipper review. The following cash–deposit requirements will be The Department will disclose the calculations performed within five days effective upon publication of the final results of this new shipper review for all of the date of publication of this notice shipments of the subject merchandise to the parties of this proceeding in accordance with 19 CFR 351.224(b). An from Studmark, entered or withdrawn from warehouse, for consumption on or interested party may request a hearing after the publication date as provided within 30 days of publication of these for by section 751 (a)(2)(C) of the Act: preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, • for shipments of subject merchandise ordinarily will be held 44 days after the manufactured and exported by date of publication of these preliminary Studmark, the cash deposit rate shall be VerDate Aug<31>2005 the rate determined in the final results of the review; • for shipments of subject merchandise from Studmark but not produced by Studmark, the cash–deposit rate will be the ‘‘All Others’’ rate, 3.58 percent. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review. E:\FR\FM\16JNN1.SGM 16JNN1

Agencies

[Federal Register Volume 71, Number 116 (Friday, June 16, 2006)]
[Notices]
[Pages 34888-34892]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-9475]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-331-802


Notice of Preliminary Results of New Shipper Review of the 
Antidumping Duty Order on Certain Frozen Warmwater Shrimp from Ecuador

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request by Studmark S.A. (Studmark), the 
Department of Commerce (the Department) is conducting a new shipper 
review of the antidumping duty order on certain frozen warmwater shrimp 
from Ecuador for the period of review (POR) August 4, 2004, through 
July 31, 2005. We preliminarily determine that, during the POR, 
Studmark sold the subject merchandise at less than normal value. 
Interested parties are invited to comment on these preliminary results. 
If the preliminary results are adopted in our final results of 
administrative review, we will instruct U.S. Customs and Border 
Protection (CBP) to assess antidumping duties on all appropriate 
entries.

EFFECTIVE DATE: June 16, 2006.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Gemal Brangman, 
AD/CVD Operations, Office 2, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
4136 or (202) 482-3773, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On August 29, 2005, we received a request from Studmark S.A. to 
initiate a new shipper review of Studmark's sales of certain frozen 
warmwater shrimp from Ecuador. On October 3, 2005, the Department 
published the notice of initiation of this new shipper antidumping duty 
review covering the period August 4, 2004, through July 31, 2005. See 
Notice of Initiation of New Shipper Antidumping Duty Review: Certain 
Frozen Warmwater Shrimp from Ecuador, 70 FR 57562 (October 3, 2005).
    We issued a questionnaire to Studmark in October 2005 and received 
responses in October and November 2005. We issued supplemental 
questionnaires in December 2005 and January 2006, and received 
responses to those questionnaires in the same months. In addition, we 
issued questionnaires to the importer of record, Colorful Butterfly 
Imports, LLC (Colorful Butterfly), and to Global Shrimp Imports LLC 
(Global Shrimp), Studmark's U.S. customer, in December 2005 and January 
2006, respectively. These companies provided responses in January 2006.
    From February 14 through 16, 2006, we conducted a verification of 
Studmark's questionnaire responses, which included a visit to Oceanpro, 
S.A., an unaffiliated producer/exporter of subject merchandise that 
processed and packed Studmark's subject merchandise sales to the United 
States and the home market under a tolling agreement.
    On April 3, 2006, the Department published an extension of the time 
period for issuing the preliminary results of this review by an 
additional 120 days, or until July 26, 2006, in accordance with section 
751(a)(2)(B)(iv) of the Tariff Act of 1930, as amended (the Act), and 
19 CFR 351.214(i)(2). See Notice of Extension of Time Limit for the 
Preliminary Results of New Shipper Review: Certain Frozen Warmwater 
Shrimp from Ecuador, 71 FR 16556 (April 3, 2006).
    On April 21, 2006, we issued an additional supplemental 
questionnaire to Studmark, and received Studmark's response, dated May 
1, 2006, on May 2, 2006.

Scope of Order

    The scope of this order includes certain warmwater shrimp and 
prawns, whether frozen, wild-caught (ocean harvested) or farm-raised 
(produced by aquaculture), head-on or head-off, shell-on or peeled, 
tail-on or tail-off,\1\ deveined or not deveined, cooked or raw, or 
otherwise processed in frozen form.
---------------------------------------------------------------------------

    \1\ ``Tails'' in this context means the tail fan, which includes 
the telson and the uropods.
---------------------------------------------------------------------------

    The frozen warmwater shrimp and prawn products included in the 
scope of this order, regardless of definitions in the Harmonized Tariff 
Schedule of the United States (HTS), are products which are processed 
from warmwater shrimp and prawns through freezing and which are sold in 
any count size.
    The products described above may be processed from any species of 
warmwater shrimp and prawns. Warmwater shrimp and prawns are generally 
classified in, but are not limited to, the Penaeidae family. Some 
examples of the farmed and wild-caught warmwater species include, but 
are not limited to, whiteleg shrimp (Penaeus vannemei), banana prawn 
(Penaeus merguiensis), fleshy prawn (Penaeus chinensis), giant river 
prawn (Macrobrachium rosenbergii), giant tiger prawn (Penaeus monodon), 
redspotted shrimp (Penaeus brasiliensis), southern brown shrimp 
(Penaeus subtilis), southern pink shrimp (Penaeus notialis), southern 
rough shrimp (Trachypenaeus curvirostris), southern white shrimp 
(Penaeus schmitti), blue shrimp (Penaeus stylirostris), western white 
shrimp (Penaeus occidentalis), and Indian white prawn (Penaeus 
indicus).
    Frozen shrimp and prawns that are packed with marinade, spices or 
sauce are included in the scope of this order. In addition, food 
preparations, which are not ``prepared meals,'' that contain more than 
20 percent by weight of shrimp or prawn are also included in the scope 
of this order.
    Excluded from the scope are: 1) Breaded shrimp and prawns (HTS 
subheading 1605.20.10.20); 2) shrimp and prawns generally classified in 
the Pandalidae family and commonly referred to as coldwater shrimp, in 
any state of processing; 3) fresh shrimp and prawns whether shell-on or 
peeled (HTS subheading 0306.23.00.20 and 0306.23.00.40); 4) shrimp and 
prawns in prepared meals (HTS subheading 1605.20.05.10); 5) dried 
shrimp and prawns; 6) canned warmwater shrimp and prawns (HTS 
subheading 1605.20.10.40); 7) certain dusted shrimp; and 8) certain 
battered shrimp. Dusted shrimp is a shrimp-based product: 1) That is 
produced from fresh (or thawed-from-frozen) and peeled

[[Page 34889]]

shrimp; 2) to which a ``dusting'' layer of rice or wheat flour of at 
least 95 percent purity has been applied; 3) with the entire surface of 
the shrimp flesh thoroughly and evenly coated with the flour; 4) with 
the non-shrimp content of the end product constituting between four and 
10 percent of the product's total weight after being dusted, but prior 
to being frozen; and 5) that is subjected to individually quick frozen 
(IQF) freezing immediately after application of the dusting layer. 
Battered shrimp is a shrimp-based product that, when dusted in 
accordance with the definition of dusting above, is coated with a wet 
viscous layer containing egg and/or milk, and par-fried.
    The products covered by this order are currently classified under 
the following HTS subheadings: 0306.13.00.03, 0306.13.00.06, 
0306.13.00.09, 0306.13.00.12, 0306.13.00.15, 0306.13.00.18, 
0306.13.00.21, 0306.13.00.24, 0306.13.00.27, 0306.13.00.40, 
1605.20.10.10, and 1605.20.10.30. These HTS subheadings are provided 
for convenience and for customs purposes only and are not dispositive, 
but rather the written description of the scope of this order is 
dispositive.

Verification

    As provided in section 782(i) of the Act, we conducted verification 
of the sales information provided by Studmark. We used standard 
verification procedures, including examination of relevant sales and 
financial records. Our verification results are detailed in the 
verification report placed in the case file in the Central Records Unit 
(CRU) in room B-099 of the main Department building. See March 8, 2006, 
Memorandum to the File entitled ``Verification of the Sales Response of 
Studmark, S.A. in the Antidumping New Shipper Review of Certain Frozen 
Warmwater Shrimp from Ecuador'' (Verification Report).

Product Comparisons

    To determine whether Studmark made sales of frozen warmwater shrimp 
to the United States at less than normal value, we compared the export 
price (EP) to the normal value (NV), as described in the Export Price 
and Normal Value sections of this notice. As discussed further below, 
because we determine that a ``particular market situation'' exists with 
respect to the Ecuadorian market for frozen warmwater shrimp, we were 
unable to base NV on Studmark's sales to the home market. Instead, we 
have compared the EP sale to constructed value (CV).

Export Price

    For the price to the United States, we used EP in accordance with 
section 772(a) of the Act. We calculated EP because Studmark's U.S. 
sale of subject merchandise was made directly to the first unaffiliated 
purchaser in the United States prior to importation. We based EP on the 
packed free-on-board (FOB) prices to the first unaffiliated customer 
in, or for exportation to, the United States. In accordance with 
section 772(c)(2) of the Act, we made deductions, where appropriate, 
for movement expenses including foreign inland freight, foreign inland 
insurance, and foreign brokerage and handling.
    Studmark reported in its November 9, 2005, Section B and C 
questionnaire response (QRBC) that it made its U.S. sale on an FOB 
Ecuador-port basis, but that the foreign inland freight expense was 
included in the ocean freight expense paid by the U.S. importer. 
However, at verification, Studmark was unable to support this claim 
that the importer paid for foreign inland freight. See Verification 
Report at page 15. As the foreign inland freight expense information 
provided by Studmark could not be verified, in accordance with section 
776(a)(2)(D) of the Act, we are applying the facts otherwise available 
(FA) for this expense. That is, as Studmark could not support its 
contention that it did not pay for foreign inland freight, as FA for 
the preliminary results, we are deducting foreign inland freight 
expenses in our calculation of EP. The only freight expense information 
on the record of this review is the freight expense Studmark incurred 
to transport unprocessed shrimp from its supplying farms to the 
processing plant. See QRBC at page 93. As FA, we have derived a per-
unit foreign inland freight expense by dividing this farm-to-plant 
freight expense by the quantity of the U.S. sale.
    Studmark reported at page 61 of the QRBC that there is no inland 
insurance expense to cover merchandise transport from the plant to the 
port. However, at verification, our review of Studmark's transport 
insurance policy, found at Exhibit 13 of the Verification Report, 
indicates that the policy covers transport of shrimp from the farm to 
the processing plant, and from the processing plant to the port. 
Therefore, to properly account for the inland insurance expense in our 
EP calculation, we calculated a per-unit amount for the plant-to-port 
portion of the insurance expense based on half of the reported cost of 
the insurance premium as FA, in accordance with section 776(a)(1) of 
the Act.
    As discussed at pages 15 and 16 of the Verification Report, 
Studmark incurred foreign brokerage and handling expenses, but reported 
them as part of its difference-in-merchandise (DIFMER) calculation. We 
have reclassified this expense as a movement expense and recalculated 
it, as described at page 16 of the Verification Report.

Normal Value

A. Selection of Basis for Normal Value

    Section 773(a)(1) of the Act directs the Department to calculate NV 
based on the price at which the foreign like product is first sold in 
the home market, provided that the merchandise is sold in sufficient 
quantities (or value, if quantity is inappropriate), and that there is 
no particular market situation that prevents a proper comparison with 
the EP. Under the statute, the Department will normally consider 
quantity (or value) insufficient if it is less than five percent of the 
aggregate quantity (or value) of sales of the subject merchandise to 
the United States. See Section 773(a)(1)(C) of the Act.
    In the less-than-fair-value (LTFV) investigation segment of this 
proceeding, the Department determined that a particular market 
situation existed which rendered the Ecuadorian market inappropriate 
for purposes of determining NV for the three respondents in the LTFV 
investigation. See Memorandum dated June 7, 2004, entitled ``Home 
Market as Appropriate Comparison Market'' (Market Memo), as included at 
Attachment II to the Department's December 8, 2005, supplemental 
questionnaire. Specifically, we noted that:
 The Ecuadorian shrimp industry, as a whole, is export 
oriented;
 The shrimp sold by the LTFV respondents in the home market was 
of inferior quality and not suitable for export, and none of these 
respondents had sufficient home market sales of export-quality 
merchandise to constitute a viable comparison market;
 The LTFV respondents' marketing and distribution of 
domestically sold non-export-quality shrimp were perfunctory, with home 
market sales made on an ``as is,'' ``as available'' and ``ex-plant'' 
basis;
 The non-export quality shrimp was sold at significantly 
reduced prices to home market customers in order to offset losses. If 
the non-export-quality shrimp had not been sold in the home market, it 
would have been disposed of as waste, and the respondents would have 
had to take a complete loss on the product;
 The LTFV respondents did not negotiate over price prior to the

[[Page 34890]]

transaction in the home market, but rather sold the shrimp on sight at 
the plant with transport being the responsibility of the purchaser; and
 The majority of the LTFV respondents' sales was to export 
markets; home market sales were incidental to the respondents' overall 
business operations.
We concluded that:
    Given the evidence on the record regarding the nature of the 
Ecuadorian market, the marketing and selling practices of the 
respondents, and the quality distinctions between the overwhelming 
majority of the frozen shrimp sold in the home market and the shrimp 
sold for export, we recommend finding that a particular market 
situation exists which renders the Ecuadorian market inappropriate for 
purposes of determining normal value in this investigation. As a 
result, we recommend for purposes of this investigation to determine 
normal value based on the respondents' sales to third country markets.
See Market Memo at page 6.
Accordingly, we based NV in the LTFV investigation on the respondents' 
sales to third-country markets.
    In the December 8, 2005, supplemental questionnaire, we requested 
that Studmark address how its sales to the home market compare to the 
sales described in the memorandum, and to explain why its sales to the 
home market are appropriate for comparison to U.S. sales. Studmark 
explained at page 8 of its December 21, 2005, supplemental 
questionnaire response (SQR) that it produced and sold only export-
quality shrimp to both the home market and the U.S. market. While in 
the LTFV investigation, none of the three respondents had sufficient 
home market sales of export-quality merchandise to constitute a viable 
comparison market, almost all of Studmark's sales are of export-quality 
merchandise and the sales quantity is well above five percent of 
Studmark's U.S. sales quantity. Studmark stated that its home market 
sales of export-quality shrimp are neither perfunctory nor incidental 
to its export business.
    Our analysis of Studmark's sales data confirms that, unlike the 
LTFV respondents' home market sales, nearly all of Studmark's home 
market sales were of export-quality shrimp comparable to the 
merchandise sold to the United States and, as noted above, the quantity 
of these sales was well above five percent of the quantity of the U.S. 
sale. However, Studmark reported that its home market sales process 
differed from its U.S sales process in that the home market sales 
prices were negotiated after production, while U.S. sales prices were 
negotiated prior to production, with prices confirmed through a pro 
forma invoice. Studmark sold its home market sales on an ex-plant 
basis, while U.S. sales were sold FOB port. See SQR at page 5.
    At verification, we found that the home market sales were made on a 
more perfunctory and incidental basis than Studmark had represented in 
its questionnaire responses. Studmark explained that it had to buy the 
entire pond harvests from the shrimp farmers in order to obtain 
sufficient processed shrimp to complete its U.S. sales order. After 
arranging for the farm purchases, Studmark determined that it would 
have a surplus amount of shrimp from the shrimp harvest which would be 
too small for a container-size sale typical for export orders. 
Accordingly, Studmark contacted local buyers to purchase the remaining 
shrimp. See Verification Report at pages 7-8. The export-quality shrimp 
was sold to a home market customer more than two weeks after the U.S. 
sale was shipped. See, e.g., home market sales documents included in 
Exhibit 10 of the Verification Report.
    Documentation regarding the shrimp Studmark sold to the U.S., which 
was processed according to a tolling agreement with Oceanpro, S.A., was 
first submitted for the record on October 6, 2005. In the agreement, 
Studmark is consistently referred to as ``THE EXPORTER,'' and described 
as ``a company whose main activity is the export of seafood, in its 
different presentations, to markets in USA and Europe.'' See page 1 of 
the English translation of the tolling agreement, included as an 
unnumbered exhibit to the SQR. The tolling agreement describes all the 
arrangements between the parties on the assumption that all processing 
performed is for shrimp to be exported. For example, at page 3 of the 
English translation, the agreement reads ``THE EXPORTER shall make, by 
its account and previous to each export, the analysis that determine 
the INP and/or the client abroad....'' Studmark did not maintain a 
separate tolling agreement for home market sales. In its February 2, 
2006, letter, Studmark stated that ``{t{time} he tolling agreement 
previously submitted governed domestic sales as well as export sales.''
    While we note that Studmark's sales to the home market differ from 
the LTFV respondents in that the vast majority of its home market sales 
were of export-quality shrimp, rather than substandard quality shrimp, 
its home market sales situation is similar to that described in the 
Market Memo. Studmark's sales to home market customers are incidental 
to its principal business of selling to export markets. The home market 
sales were of products left over from the U.S. sale transaction, and 
sold on sight at the plant. In general, Studmark's home market does not 
differ markedly from the LTFV respondents' home market where we found a 
particular market situation under section 773(a)(1)(B)(ii) of the Act. 
Accordingly, we preliminarily determine that a particular market 
situation exists for Studmark's home market during the POR. As a 
result, we cannot rely on Studmark's home market sales to calculate NV.
    Studmark's only export sale during the POR was to the United 
States. That is, Studmark had no third-country sales during the POR. 
The only other basis for calculating NV is CV, based on the data 
Studmark submitted for DIFMER adjustments, and on data collected at 
verification. Accordingly, we have calculated NV based on CV, as 
discussed below.

B. Level of Trade Analysis

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the home market 
at the same level of trade (LOT) as U.S. sales. See 19 CFR 351.412. The 
NV LOT is the level of the starting-price sale in the home market. For 
EP, the U.S. LOT is based on the starting price, which is usually from 
the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP sales, 
we examine stages in the marketing process and selling functions along 
the chain of distribution between the producer and the unaffiliated 
customer in the home market. If the comparison-market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between sales 
at different LOTs in the country in which NV is determined, we make an 
LOT adjustment under section 773(a)(7)(A) of the Act.
    In the United States, Studmark made EP sales to wholesalers/
distributors through the same channel of distribution, performing the 
identical selling functions. Therefore, we determine that there is only 
one LOT for EP sales.
    When NV is based on CV, as in this case, the NV LOT is that of the 
sales from which we derive selling, general and administrative (SG&A) 
expenses and profit. (See Notice of Preliminary

[[Page 34891]]

Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination: Fresh Atlantic Salmon from Chile, 63 FR 2664 
(January 16, 1998)). As discussed below, we based the CV selling 
expenses on Studmark's home market sales as FA, and based CV profit on 
the weighted-average profits earned by the respondents in the LTFV 
investigation. We are unable to determine that the LOT of the sales 
from which we derived selling expenses and profit for CV is different 
from the EP LOT. Further, there is only one NV LOT, and there is 
insufficient information on the record that would enable us to 
determine that an LOT adjustment is warranted. Therefore, we have no 
basis upon which to make an LOT adjustment to NV.

C. Calculation of Normal Value Based on Constructed Value

    We calculated CV in accordance with section 773(e) of the Act, 
which indicates that CV shall be based on the sum of a respondent's 
cost of materials and fabrication for the subject merchandise, plus 
amounts for SG&A expenses, profit and U.S. packing costs. We relied on 
the information submitted by Studmark to calculate CV as follows:
    To calculate the cost of materials and fabrication, we used the 
cost of manufacture data Studmark reported in its questionnaire 
responses for calculating DIFMER adjustments. Based on verification 
findings, we found that the calculations of the variable costs of 
manufacture for the DIFMER adjustment included misclassified expenses. 
Accordingly, we recalculated the variable costs of manufacture and some 
expenses were reclassified as movement expenses or direct selling 
expenses. See alternative calculation worksheets in Appendix IV of the 
Verification Report.
    To calculate selling expenses, as FA, we used the information 
Studmark reported for expenses on home market sales. We calculated the 
general and administrative expense ratio based on the fiscal year 2005 
trial balance information, as detailed in the Memorandum to the File 
entitled Studmark Preliminary Results Notes and Margin Calculation, 
dated the same as this notice (Preliminary Results Calculation Memo).
    To calculate profit, for purposes of the preliminary results, we 
used the weighted-average profit rate derived from LTFV comparision 
market data from the LTFV respondents, Exportadora de Alimentos S.A. 
(Expalsa), Exporklore, S.A. and Promarisco, S.A., in accordance with 
section 773(e)(2)(B)(iii) of the Act. Because Studmark does not have a 
viable comparison market, we could not determine CV profit under 
section 773(e)(2)(A) of the Act. The statute does not establish a 
hierarchy for selecting among the alternative profit methodologies. See 
Statement of Administrative Action Accompanying the URAA, H.R. Rep. No. 
103-316, vol. 1, at 840 (1994). Nonetheless, we examined each 
alternative in searching for an appropriate method. Because Studmark 
did not have sales of any product in the same general category of 
products as the subject merchandise, we were unable to apply 
alternative (i) of section 773(e)(2)(B) of the Act. Further, we cannot 
calculate profit based on alternative (ii) of this section because 
there are no other respondents in this review, and 19 CFR 351.405(b) 
requires that a profit ratio under this alternative be based on home 
market sales, which we have determined cannot be used.
    Therefore, we calculated Studmark's CV profit based on alternative 
(iii) of section 773(e)(2)(B) of the Act, which is any other reasonable 
method. As a result, we calculated Studmark's CV profit ratio as a 
weighted-average of the profit ratios calculated for the respondents in 
the LTFV investigation on their sales to their third-country comparison 
markets. We applied this ratio to the sum of the cost of materials and 
fabrication, plus the amounts for general and administrative expenses, 
to calculate an amount for profit.
    Pursuant to alternative (iii), the Department has the option of 
using any other reasonable method, as long as the result is not greater 
than the amount realized by exporters or producers ``in connection with 
the sale, for consumption in the foreign country, of merchandise that 
is in the same general category of products as the subject 
merchandise'' (i.e., the ``profit cap''). The Department attempted to 
identify appropriate profit cap data for sales in Ecuador of 
merchandise ``in the same general category of products'' as frozen 
shrimp through a broad-based internet search. We applied various search 
terms in English and Spanish and reviewed various business directory 
Web sites, including Goliath, Thomson Gale's online-business content 
service, ``PaginaAmarillas.com'' (Yellow Pages), and Ecuadorian 
government sites. See Preliminary Results Calculation Memo for a 
discussion of the Department's search attempt. Although we were able to 
obtain profit ratios for companies listed as the ``1,000 Most Important 
Companies in 2004'' from the Ecuadorian Superintendency of Companies, 
the sector of business that includes the subject merchandise, the 
agricultural sector, is overly broad because it includes tobacco, meat, 
and baking companies as well as seafood processors. Moreover, we are 
unable to ascertain whether the companies sell their merchandise in 
Ecuador. Among these companies are several shrimp exporters, such as 
Expalsa, one of the LTFV respondents, and other seafood processing 
companies, which, based on the limited information observed on internet 
Web sites, appear to be export-oriented companies.
    In addition to our own research, we provided Studmark with the 
opportunity to submit information relevant to the amount of profit to 
be applied in the CV calculation under section 773(e)(2)(B) of the Act, 
including the amount of profit normally realized by Ecuadorian 
exporters or producers in connection with the sale, for consumption of 
the merchandise that is in the same general category of products as the 
subject merchandise. See April 21, 2006, supplemental questionnaire (as 
corrected per a Memorandum to the File dated April 25, 2006). Studmark 
did not provide any such information in its May 1, 2006, response. 
Accordingly, as FA, we applied option (iii) without quantifying a 
profit cap.
    To determine the most appropriate profit rate under alternative 
(iii), we weighed several factors. Among them are: (1) The similarity 
of the potential surrogate companies' business operations and products 
to those of respondent; (2) the extent to which the financial data of 
the surrogate companies reflect sales in the United States as well as 
the home market; (3) the contemporaneity of the surrogate data with the 
POR; and (4) the similarity of the customer base. The greater the 
similarity in business operations, products, and customer base, the 
more likely that there is a greater correlation between the profit 
experience of the companies in question. Because the Department 
typically compares U.S. sales to a NV based on sales in the home market 
or third country, the Department does not normally construct a NV based 
on financial data that contains exclusively or predominantly U.S. 
sales. Finally, contemporaneity is a concern because markets change 
over time and the more current the data, the more reflective it will be 
of the market in which the respondent is operating (see Notice of Final 
Determination of Sales at Less Than Fair Value: Pure Magnesium from 
Israel, 66 FR 49349 (September 27, 2001), and accompanying Issues and 
Decision Memorandum at Comment 8, and Notice of Final Determination of 
Sales at Not Less Than Fair Value: Certain

[[Page 34892]]

Color Television Receivers from Malaysia, 69 FR 20592 (April 16, 2004), 
and accompanying Issues and Decision Memorandum at Comment 26).
    Based on the record of this review to date, we determine that the 
use of the weighted-average profit rate of the LTFV respondents is a 
reasonable method for the following reasons. First, the products sold 
by the other respondents in their respective third-country markets are 
substantially similar to those sold by Studmark (i.e., sales of frozen, 
head-off, uncooked shrimp). Second, the CV profit rate for the LTFV 
respondents excludes sales to the United States. Third, the LTFV 
respondents sold to distributor/wholesalers similar to Studmark's U.S. 
customer (i.e., they had the same type of customer base). We note that 
the weighted-average CV profit rate calculated for the LTFV respondents 
covers a time frame that is not contemporaneous with the POR. The LTFV 
investigation period was from October 1, 2002, through September 30, 
2003, while the instant POR is August 4, 2004, through July 31, 2005. 
However, there is no other CV profit data available that meets the 
other criteria and is contemporaneous with the POR, and there is no 
information currently on the record to indicate that the difference in 
the time periods is distortive. In addition, the Department verified 
the LTFV respondents' third-country market information and ascertained 
the reliability of the data.

Currency Conversion

    As Studmark reported its prices, expenses, and costs in U.S. 
dollars, no currency conversions were required in our margin 
calculations.

Preliminary Results of New Shipper Review

    As a result of our review, we preliminarily determine that the 
following percentage margin exists for Studmark for the period August 
4, 2004, through July 31, 2005:

------------------------------------------------------------------------
                 Manufacturer/Exporter                  Margin (percent)
------------------------------------------------------------------------
Studmark, S.A.........................................             12.53
------------------------------------------------------------------------

    The Department will disclose the calculations performed within five 
days of the date of publication of this notice to the parties of this 
proceeding in accordance with 19 CFR 351.224(b). An interested party 
may request a hearing within 30 days of publication of these 
preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, 
ordinarily will be held 44 days after the date of publication of these 
preliminary results, or the first working day thereafter. Interested 
parties may submit case briefs no later than 30 days after the date of 
publication of these preliminary results. See 19 CFR 351.309(c)(ii). 
Rebuttal briefs limited to issues raised in such briefs may be filed no 
later than 35 days after the date of publication of the preliminary 
results. See 19 CFR 351.309(d).
    Parties who submit arguments are requested to submit with the 
argument (1) a statement of the issue and (2) a brief summary of the 
argument. Further, parties submitting briefs are requested to provide 
the Department with an additional copy of the public version of any 
such briefs on diskette. The Department will issue the final results of 
this review, which will include the results of its analysis of issues 
raised in any such comments, or at a hearing, if requested, within 90 
days of publication of these preliminary results.

Assessment Rate

    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. Upon completion of this 
review, the Department will issue appropriate assessment instructions 
directly to CBP within 15 days of publication of the final results of 
this administrative review. Pursuant to 19 CFR 351.212(b), the 
Department calculated an assessment rate for the importer of subject 
merchandise based on the ratio of the total amount of antidumping 
duties calculated for the examined sale, to the total entered value of 
the examined sale. Where the assessment rate is above de minimis, the 
importer-specific rate will be assessed uniformly on all entries made 
during the POR.

Cash Deposit Requirements

    Bonding will no longer be permitted to fulfill security 
requirements for shipments from Studmark of certain frozen warmwater 
shrimp from Ecuador entered, or withdrawn from warehouse, for 
consumption on or after the publication date of the final results of 
this new shipper review. The following cash-deposit requirements will 
be effective upon publication of the final results of this new shipper 
review for all shipments of the subject merchandise from Studmark, 
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:
 for shipments of subject merchandise manufactured and exported 
by Studmark, the cash deposit rate shall be the rate determined in the 
final results of the review;
 for shipments of subject merchandise from Studmark but not 
produced by Studmark, the cash-deposit rate will be the ``All Others'' 
rate, 3.58 percent.
These deposit requirements, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) to file a certificate regarding 
the reimbursement of antidumping and/or countervailing duties prior to 
liquidation of the relevant entries during this review period. Failure 
to comply with this requirement could result in the Secretary's 
presumption that reimbursement of antidumping and/or countervailing 
duties occurred and the subsequent increase in antidumping duties by 
the amount of antidumping and/or countervailing duties reimbursed.
    This new shipper review is issued and published in accordance with 
sections 751(a)(2)(B) and 777(i)(1) of the Act.

    Dated: June 9, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-9475 Filed 6-15-06; 8:45 am]
BILLING CODE 3510-DS-S