Suspension of Antidumping Duty Investigation: Lemon Juice From Argentina, 53991-53995 [E7-18278]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 183 (Friday, September 21, 2007)]
[Notices]
[Pages 53991-53995]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-18278]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-357-818]


Suspension of Antidumping Duty Investigation: Lemon Juice From 
Argentina

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (``the Department'') has suspended 
the antidumping duty investigation involving lemon juice from 
Argentina. The basis for this action is an agreement between the 
Department and S.A. San Miguel A.G.I.C. y F. (``San Miguel'') and 
Citrusvil, S.A. (``Citrusvil'') to revise their prices to eliminate 
completely sales of this merchandise to the United States at less than 
fair value.

DATES: Effective Date: September 10, 2007.

FOR FURTHER INFORMATION CONTACT: Sally Gannon or James Kemp at (202) 
482-0162 and (202) 482-5346, respectively, Bilateral Agreements Unit, 
Office of Policy, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION: 

Background

    On October 11, 2006, the Department initiated an antidumping duty 
investigation under section 732 of the Tariff Act of 1930, as amended, 
(``the Act'') to determine whether imports of lemon juice from 
Argentina are being, or are likely to be sold in the United States at 
less than fair value (71 FR 61710 (October 19, 2006)). On November 3, 
2007, the United States International Trade Commission (``ITC'') 
notified the Department of its affirmative preliminary injury 
determination in this case See Lemon Juice from Argentina and Mexico, 
Inv. Nos. 731-TA-1105-1106 (Preliminary), USITC Pub. No. 3891 (November 
2006). On April 19, 2007, the Department preliminarily determined that 
lemon juice is being, or is likely to be sold in the United States at 
less than fair value (``LTFV''), as provided in section 733 of the Act 
(Lemon Juice from Argentina: Preliminary Determination of Sales at Less 
than Fair Value and Affirmative Preliminary Determination of Critical 
Circumstances, 72 FR 20820 (April 26, 2007) (``Preliminary 
Determination'')). On May 17, 2007, the Department postponed the final 
determination in this investigation until no later than September 10, 
2007 (Lemon Juice from Argentina and Mexico: Postponement of Final 
Antidumping Duty Determinations and Extension of Provisional Measures, 
72 FR 28953 (May 23, 2007)).
    The Department, San Miguel, and Citrusvil, initialed a proposed 
agreement suspending this investigation on August 10, 2007. On August 
13, 2007, we invited interested parties to provide written comments on 
the proposed suspension agreement. On August 24, 2007, the Department 
also invited interested parties to provide written comments on an issue 
related to the draft suspension agreement with respect to purchase 
orders and/or long-term contracts entered into prior to September 10, 
2007. In response to our requests for comment, on August 30, 2007, we 
received comments from the petitioner Sunkist Growers Inc., and 
respondents San Miguel, and Citrusvil. We have taken these comments 
into consideration for the final version of the suspension agreement.
    The Department, San Miguel, and Citrusvil signed the suspension 
agreement on September 10, 2007.

Scope of Investigation

    For a complete description of the scope of the investigation, see, 
Agreement Suspending the Antidumping Investigation on Lemon Juice from 
Argentina, Appendix A, signed September 10, 2007, attached hereto in 
Annex 1.

Suspension of Investigation

    The Department consulted with the parties to the proceeding and has 
considered the comments submitted with respect to the proposed 
suspension agreement. In accordance with sections 734(b) and (d) of the 
Act, we have determined that the agreement will completely eliminate 
sales at less than fair value, that the agreement is in the public 
interest, and that the agreement can be monitored effectively. See, 
Public Interest and Effective Monitoring Memorandum, dated September 
10, 2007. See also, Percentage of Exports Memorandum, dated September 
10, 2007. We find, therefore, that the criteria for suspension of an 
investigation pursuant to sections 734(b) and (d) of the Act have been 
met. The terms and conditions of this agreement, signed September 10, 
2007, are set forth in Annex 1 to this notice.
    Pursuant to section 734(f)(2)(A) of the Act, the suspension of 
liquidation of all entries of lemon juice from Argentina entered, or 
withdrawn from warehouse, for consumption, as directed in the 
Preliminary Determination is hereby terminated. Any cash deposits on 
entries of lemon juice from Argentina pursuant to that suspension of 
liquidation shall be refunded and any bonds shall be released.
    This notice is published pursuant to section 734(f)(1)(A) of the 
Act.

    Dated: September 10, 2007.
Michelle O'Neill,
Deputy Under Secretary for International Trade.

Annex 1--Agreement Suspending the Antidumping Investigation on Lemon 
Juice from Argentina

    Pursuant to section 734(b) of the Tariff Act of 1930, as amended 
(19 U.S.C. 1673c(b)) (the ``Act''), and 19 CFR 351.208 (the 
``Regulations''), the U.S. Department of Commerce (the ``Department'') 
and the signatory producers/exporters of Lemon Juice from Argentina 
(the ``Signatories'') enter into this suspension agreement (the 
``Agreement''). On the basis of this Agreement, on the effective date 
of this Agreement, the Department shall suspend its antidumping 
investigation initiated on October 19, 2006 (17 FR 61710) with respect 
to Lemon Juice from Argentina, subject to the terms and provisions set 
forth below.
    (A) Product Coverage:
    For purposes of this Agreement, the merchandise covered is Lemon 
Juice, as described in Appendix A.
    (B) U.S. Import Coverage:
    The signatory producers/exporters collectively are the producers 
and exporters in Argentina that accounted for substantially all (not 
less than 85 percent) of the subject merchandise imported into the 
United States, as provided in the Department's regulations at 19 CFR 
351.208(c). The Department may, at anytime during the period of the 
Agreement, require additional producers/exporters in Argentina to sign 
the Agreement in order to ensure that not less than substantially all 
imports into the United States are covered by the Agreement.
    In reviewing the operation of the Agreement for the purpose of 
determining whether this Agreement has been violated or is no longer in 
the public interest, the Department will consider imports into the 
United States from all sources of the merchandise described in Section 
A of the

[[Page 53992]]

Agreement. For this purpose, the Department will consider factors 
including, but not limited to, the following: Volume of trade, pattern 
of trade, whether or not the reseller is an original equipment 
manufacturer, and the reseller's export price (EP).
    (C) Basis of the Agreement:
    On and after the effective date of the Agreement, each signatory 
producer/exporter individually agrees to make any necessary price 
revisions to eliminate completely any amount by which the normal value 
(NV) of this merchandise exceeds the U.S. price of its merchandise 
subject to the Agreement. For this purpose, the Department will 
determine the NV in accordance with section 773(e) of the Act and U.S. 
price in accordance with section 772 of the Act. For details of the 
Department's calculation methodology under this Agreement, see Appendix 
B.
    (1) For the period from the effective date of this Agreement 
through the release of the first NVs, each signatory producer/exporter 
agrees not to sell its merchandise subject to this Agreement in the 
United States.
    However, during this period and subsequent periods, as relevant, a 
signatory producer/exporter may proceed with deliveries of subject 
merchandise made pursuant to purchase orders or long-term contracts 
entered into prior to September 10, 2007, if the Department determines, 
in accordance with its regulations, that the signatory producer's/
exporter's appropriate date of sale is the date of the purchase order 
or long-term contract (see Section I(4) below). At any time, should the 
Department determine that the purchase order or long-term contract date 
was not the appropriate date of sale for a signatory producer/exporter 
making such deliveries, the Department may consider such deliveries to 
be in violation of this Agreement (see Section F below). Any signatory 
producer/exporter making such deliveries under this Agreement must 
provide a one-time report to the Department, within 30 days of these 
deliveries having been completed, which contains a listing of the 
contract or purchase order dates, the delivery quantities, the dates of 
delivery, the entry dates, and the prices at which the subject 
merchandise was sold. This information will be subject to verification 
in accordance with Section D(4) of this Agreement.
    (2) For all sales occurring on or after the date of issuance of the 
first NVs, through April 30, 2008 (``First Interim Period''), each 
signatory producer/exporter issued NVs by the Department agrees not to 
sell its merchandise subject to this Agreement to any purchaser in the 
United States at prices that are less than the NVs of the merchandise, 
as determined by the Department on the basis of the sales and cost 
information submitted by the signatory producer/exporter in the course 
of the underlying antidumping duty investigation. The Department will 
issue the final NVs to a signatory producer/exporter for the First 
Interim Period within 14 days after the preliminary NVs are issued 
pursuant to Section E(2) of this Agreement.\1\ The NVs shall be valid 
for these particular signatory producer/exporters during both the First 
Interim Period and the Second Interim Period (as defined in Section 
C(3) below), i.e., those signatory producer/exporters issued NVs for 
the First Interim Period will only be eligible to request new NVs for 
periods subsequent to the Second Interim Period in accordance with 
Section D of this Agreement.
---------------------------------------------------------------------------

    \1\ The issuance of the NVs for any given signatory may be 
delayed depending on the following: (1) Issues related to the 
underlying antidumping duty investigation; (2) to allow sufficient 
time for signatories to respond to the Department's request for 
sales and cost data; and/or (3) to resolve issues raised in comments 
from interested parties or by the Department. In accordance with 
section 773(f) of the Act, the Department will examine relevant 
prices and costs and, for any sales period, may disregard particular 
prices or costs when the prices are not in the ordinary course of 
trade, the costs are not in accordance with the generally accepted 
accounting principles, the costs do not reasonably reflect the costs 
associated with the production and sale of the merchandise, or in 
other situations provided for in the Act or the Department's 
regulations. Examples of possible areas in which adjustments may be 
necessary include, but are not limited to, costs related to energy, 
depreciation, transactions among affiliates, barter transactions, as 
well as items that are not recognized by the home country's 
generally accepted accounting principles.
---------------------------------------------------------------------------

    (3) For all sales occurring from May 1, 2008 through December 31, 
2008 (``Second Interim Period''), each signatory producer/exporter 
issued NVs by the Department agrees not to sell its merchandise subject 
to this Agreement to any purchaser in the United States at prices that 
are less than the NVs of the merchandise, as determined by the 
Department on the basis of information submitted to the Department not 
later than the dates specified in Section D of this Agreement. The 
final NVs for a signatory producer/exporter during the Second Interim 
Period shall be issued no later than April 1, 2008, and, at the 
Department's discretion, may become effective prior to May 1, 2008.
    (4) For all sales occurring after the Second Interim Period, each 
signatory producer/exporter issued NVs by the Department agrees not to 
sell its merchandise subject to this Agreement to any purchaser in the 
United States at prices that are less than the NVs of the merchandise, 
as determined by the Department on the basis of information submitted 
to the Department not later than the dates specified in Section D of 
this Agreement and provided to the signatory producer/exporter no later 
than December 2 of the previous year.\2\ These NVs shall apply to sales 
occurring during the annual period (i.e., January through December) 
beginning 30 days following the date on which the Department provides 
the NVs, as stated in this paragraph.
---------------------------------------------------------------------------

    \2\ For example, on December 2, 2008, the Department will 
provide to each producer/exporter being issued NVs the final 
calculated NVs for the first ensuing annual sales period, from 
January 1, 2009, through December 31, 2009.
---------------------------------------------------------------------------

    (D) Monitoring:
    Each signatory producer/exporter will supply to the Department all 
information that the Department decides is necessary to ensure that the 
producer/exporter is in full compliance with the terms of the 
Agreement. As explained below, the Department will provide each 
signatory producer/exporter a detailed request for information and 
prescribe a required format and method of data compilation, not later 
than the beginning of each reporting period.\3\
---------------------------------------------------------------------------

    \3\ As noted in Section C(2) of this Agreement, the first NVs 
issued for certain signatory producer/exporters may be based on 
sales and cost information submitted by those signatories in the 
underlying antidumping duty investigation, and the resulting NVs 
issued will apply to sales occurring between the issuance date of 
the NVs and December 31, 2008 (i.e., during both the First Interim 
Period and the Second Interim Period, as provided for in Section 
C(2) of this Agreement).
---------------------------------------------------------------------------

    (1) Sales Information:
    The Department will require each producer/exporter to report, in 
electronic form in the prescribed format and using the prescribed 
method of data compilation, each sale of the merchandise subject to the 
Agreement, either directly or indirectly to unaffiliated purchasers in 
the United States, as well as sales in the comparison market (home or 
third country market, as appropriate), including each adjustment 
applicable to each sale, as specified by the Department.
    The first report of sales data, for the Second Interim Period 
pursuant to Section C(3) of this Agreement, shall be submitted to the 
Department, in electronic form (e.g., on diskette, zip disk, or CD ROM) 
in the prescribed format and using the prescribed method of data 
compilation, not later than October 1, 2007, and shall contain the 
specified sales information covering the period January 1, 2006, 
through December 31, 2006. Subsequent reports of sales data shall be 
submitted to the Department not later than May 1 of each

[[Page 53993]]

year, and each report shall contain the specified sales information for 
the annual period ending on December 31 of the previous year,\4\ except 
that if the Department receives information that a possible violation 
of the Agreement may have occurred, the Department may request sales 
data on a more frequent basis.
---------------------------------------------------------------------------

    \4\ For example, on May 1, 2008, sales data for the period 
January 1, 2007, through December 31, 2007, shall be submitted to 
the Department.
---------------------------------------------------------------------------

    (2) Cost Information:
    Producers/exporters must request NVs for all subject merchandise 
that will be sold in the United States. For those products which the 
producer/exporter is requesting NVs, the Department will require each 
producer/exporter to report, in the prescribed format and using the 
prescribed method of data compilation, the following: Its actual cost 
of manufacturing; selling, general and administrative (SG&A) expenses; 
and profit data on an annual basis. As indicated in Appendix B to this 
Agreement, profit will be reported by the producers/exporters on an 
annual basis. Each such producer/exporter also must report anticipated 
increases in production costs in the annual period in which the 
information is submitted resulting from factors such as anticipated 
changes in production yield, changes in production process, changes in 
production quantities or changes in production facilities.
    The first report of cost data, for the Second Interim Period 
pursuant to Section C(3) of this Agreement, shall be submitted to the 
Department not later than October 15, 2007, and shall contain the 
specified cost data covering the period January 1, 2006, through 
December 31, 2006. Each subsequent report shall be submitted to the 
Department not later than May 15 of each year, and each report shall 
contain the specified information for the annual period ending on 
December 31 of the previous year.\5\
---------------------------------------------------------------------------

    \5\ For example, on May 15, 2008, cost date for the period 
January 1, 2007, through December 31, 2007, shall be submitted to 
the Department.
---------------------------------------------------------------------------

    (3) Special Adjustment of Normal Value:
    If the Department determines that the NV it determined for a 
previous annual period was erroneous because the reported costs for 
that period were inaccurate or incomplete, or for any other reason, the 
Department may adjust NV in a subsequent period or periods, unless the 
Department determines that Section F of the Agreement applies.
    (4) Verification:
    Each producer/exporter agrees to permit full verification of all 
cost and sales information annually, or more frequently, as the 
Department deems necessary.
    (5) Bundling or Other Arrangements:
    Producers/exporters agree not to circumvent the Agreement. In 
accordance with the dates set forth in Section D(1) of this Agreement, 
producers/exporters will submit a written statement to the Department 
certifying that the sales reported herein were not, or are not part of 
or related to, any bundling arrangement, on-site processing 
arrangement, discounts/free goods/financing package, swap or other 
exchange where such arrangement is designed to circumvent the basis of 
the Agreement.
    Where there is reason to believe that such an arrangement does 
circumvent the basis of the Agreement, the Department will request 
producers/exporters to provide within 15 days all particulars regarding 
any such arrangement, including, but not limited to, sales information 
pertaining to covered and non-covered merchandise that is manufactured 
or sold by producers/exporters. The Department will accept written 
comments, not to exceed 30 pages, from all parties no later than 15 
days after the date of receipt of such producer/exporter information.
    If the Department, after reviewing all submissions, determines that 
such an arrangement circumvents the basis of the Agreement, it may, as 
it deems most appropriate, utilize one of two options: (1) The amount 
of the effective price discount resulting from such arrangement shall 
be reflected in the NV in accordance with Section D(3) of this 
Agreement, or (2) the Department shall determine that the Agreement has 
been violated and take action according to the provisions under Section 
F of this Agreement.
    (6) Rejection of Submissions:
    The Department may reject any information submitted after the 
deadlines set forth in this section or any information which it is 
unable to verify to its satisfaction. If information is not submitted 
in a complete and timely fashion, or is not fully verifiable, the 
Department may calculate the NV, and/or U.S. price, based on facts 
otherwise available, as it determines appropriate, unless the 
Department determines that Section F of this Agreement applies.
    (E) Disclosure and Comment:
    (1) The Department may make available to representatives of each 
interested party to the proceeding, under appropriately drawn 
administrative protective orders, business proprietary information 
submitted to the Department during the reporting period as well as the 
results of its analysis under section 777 of the Act.
    (2) For sales during the First Interim Period, the Department will 
disclose to each producer/exporter being issued NVs the preliminary 
results and methodology of the Department's calculations of the NVs on 
or after the effective date of this Agreement.\6\ At that time, the 
Department may also make available such information to the interested 
parties to the proceeding in accordance with this section.
---------------------------------------------------------------------------

    \6\ The Department will endeavor to issue the preliminary NVs 
for the First Interim Period within 30 days after the effective date 
of this Agreement, subject to the possible constraints noted in 
footnote 1 of Section C(2) of this Agreement.
---------------------------------------------------------------------------

    (3) For sales during the Second Interim Period, the Department will 
disclose to each producer/exporter being issued NVs the preliminary 
results and methodology of the Department's calculations of the NVs no 
later than March 2, 2008. At that time, the Department may also make 
available such information to the interested parties to the proceeding 
in accordance with this section.
    (4) Not later than November 2 of the year prior to each ensuing 
annual sales period, the Department will disclose to each producer/
exporter being issued NVs the preliminary results and methodology of 
the Department's calculations of the NVs.\7\ At that time, the 
Department may also make available such information to the interested 
parties to the proceeding, in accordance with this section.
---------------------------------------------------------------------------

    \7\ For example, on November 2, 2008, the Department will 
disclose to each producer/exporter being issued NVs the preliminary 
results and methodology of the Department's calculations of the NVs 
for the first ensuing annual sales period, from January 1, 2008, 
through December 31, 2009.
---------------------------------------------------------------------------

    (5) Not later than 7 days after the dates of disclosure under 
Sections E(2), E(3), and E(4), respectively, of this Agreement, the 
parties to the proceeding may submit written comments to the 
Department, not to exceed 15 pages. After reviewing these submissions, 
the Department will provide to each producer/exporter its final NVs, as 
provided in Sections C(2), C(3), and C(4), respectively, of this 
Agreement. In addition, the Department may provide such information to 
interested parties, as specified in this section.
    (F) Violations of the Agreement:
    If the Department determines that the Agreement is being or has 
been violated or no longer meets the requirements of sections 734(b) or 
(d) of the Act, the Department shall take action it determines 
appropriate under section 734(i) of the Act and the regulations.
    (G) Other Provisions:

[[Page 53994]]

    In entering into the Agreement, the signatory producers/exporters 
do not admit that any sales of merchandise subject to the Agreement 
have been made at less than fair value.
    (H) Termination or Withdrawal:
    Termination of the suspended investigation will be considered in 
accordance with the five-year review provisions of section 351.218 of 
the Department's regulations.
    Any producer/exporter may withdraw from the Agreement at any time 
upon notice to the Department. Withdrawal shall be effective 60 days 
after such notice is given to the Department. Upon withdrawal, the 
Department shall follow the procedures outlined in section 734(i)(1) of 
the Act.
    (I) Definitions:
    For purposes of the Agreement, the following definitions apply:
    (1) ``U.S. price'' means the export price or constructed export 
price at which merchandise is sold by the producer or exporter to the 
first unaffiliated person in the United States, including the amount of 
any discounts, rebates, price protection or ship and debit adjustments, 
and other adjustments affecting the net amount paid or to be paid by 
the unaffiliated purchaser, as determined by the Department under 
section 772 of the Act.
    (2) ``Normal value'' means the constructed value (CV) of the 
merchandise, as determined by the Department under section 773 of the 
Act and the corresponding sections of the Department's regulations, and 
as adjusted in accordance with Appendix B to this Agreement.
    (3) ``Producer/Exporter'' means (1) the foreign manufacturer or 
producer, (2) the foreign producer or reseller which also exports, and 
(3) the affiliated person by whom or for whose account the merchandise 
is imported into the United States, as defined in section 771(28) of 
the Act.
    (4) ``Date of sale'' means the date of the invoice as recorded in 
the exporter's or producer's records kept in the ordinary course of 
business, unless the Department determines that a different date better 
reflects the date on which the exporter or producer establishes the 
material terms of sale, as determined by the Department under its 
regulations.
    The effective date of this Agreement is September 10, 2007.
For Argentine Producers/Exporters
    Dated: September 10, 2007.
    Gregory J. Spak, S.A. San Miguel A.G.I.C. y F.

    Dated: September 10, 2007.
    Lizbeth R. Levinson, Citrusvil, S.A.
For U.S. Department of Commerce
    Dated: September 10, 2007.
    Joseph A. Spetrini,
    Acting Assistant Secretary for Import Administration.

    Dated: September 10, 2007.
    Michelle O'Neill, Deputy Under Secretary for International Trade.

Appendix A: Product Coverage

    For purposes of this Agreement, the merchandise covered includes 
certain lemon juice for further manufacture, with or without 
addition of preservatives, sugar, or other sweeteners, regardless of 
the GPL (grams per liter of citric acid) level of concentration, 
brix level, brix/acid ratio, pulp content, clarity, grade, 
horticulture method (e.g., organic or not), processed form (e.g., 
frozen or not-from-concentrate), FDA standard of identity, the size 
of the container in which packed, or the method of packing.
    Excluded from the scope are: (1) Lemon juice at any level of 
concentration packed in retail-sized containers ready for sale to 
consumers, typically at a level of concentration of 48 GPL; and (2) 
beverage products such as lemonade that typically contain 20% or 
less lemon juice as an ingredient.
    Lemon juice is classifiable under subheadings 2009.39.6020, 
2009.31.6020, 2009.31.4000, 2009.31.6040, and 2009.39.6040 of the 
Harmonized Tariff Schedule of the United States (HTSUS). While HTSUS 
subheadings are provided for convenience and customs purposes, our 
written description of the scope of this Agreement is dispositive.

Appendix B: Principles of Cost

General Framework

    The cost information reported to the Department that will form 
the basis of the NV calculations for purposes of the Agreement must 
be: \8\
---------------------------------------------------------------------------

    \8\ See footnote 1 in Section C(2) of this Agreement.
---------------------------------------------------------------------------

     Comprehensive in nature and based on a reliable 
accounting system (i.e., a system based on well-established 
standards that can be tied to the audited financial statements);
     Calculated on an annual weighted-average basis of the 
plants or cost centers manufacturing the product;
     Based on fully-absorbed costs of production, including 
any downtime;
     Valued in accordance with generally accepted accounting 
principles;
     Reflective of appropriately allocated common costs so 
that the costs necessary for the manufacturing of the product are 
not absorbed by other products;
     If the signatory grows and/or harvests its own lemons 
and sells them, the Department will normally allocate the 
agricultural and/or harvesting costs between fresh lemons and lemons 
for processing in accordance with the company's normal books and 
records, as historically kept in the normal course of business; and
     If the signatory produces multiple products from the 
processed lemon, the Department will normally allocate the lemon and 
common processing costs using ratios/methods consistent with those 
historically used by the company in its normal books and records, 
and such allocation ratios/methods will be recalculated for each 
cost reporting period.
    Additionally, a separate figure should be reported for each 
major cost component making up the cost of production.

Cost of Manufacturing (COM)

    Costs of manufacturing are reported by major cost category and 
for major stages of production. Weighted-average costs are used for 
a product that is produced at more than one facility, based on the 
product's cost at each facility and relative production quantities.
    Direct materials costs include the acquisition costs of all 
materials that are identified as part of the finished product and 
may be traced to the finished product in an economically feasible 
way. In contrast to indirect materials, direct materials are applied 
and assigned directly to a finished product. Direct materials costs 
should include transportation charges, import duties, and other 
expenses normally associated with obtaining the materials that 
become an integral part of the finished product.
    Direct labor costs are the labor costs identified with a 
specific product. These costs are not allocated among products 
except when two or more products are produced at the same cost 
center. Direct labor costs should include salary, bonus and overtime 
pay, training expenses, and all fringe benefits. Any contracted-
labor expense should reflect the actual billed cost.
    Variable manufacturing overhead costs include those production 
costs, other than direct materials or direct labor, that generally 
vary in total with changes in the volume of merchandise produced at 
a given level of operations. Variable manufacturing overhead costs 
may include indirect materials (e.g., supplies used in the 
manufacturing process), indirect labor (e.g. supervisory labor paid 
on an hourly basis), utilities (e.g., energy), and other variable 
overhead costs. Because variable overhead costs are typically 
incurred for an entire production line or factory, the costs must be 
allocated to the products produced using a reasonable basis.
    Fixed manufacturing overhead costs include those production 
costs that generally do not vary in total with changes in the volume 
of merchandise produced at a given level of operations. Fixed 
manufacturing overhead costs may include the costs incurred for 
building or equipment rental, depreciation, supervisory labor paid 
on a salary basis, plant property taxes, and factory administrative 
costs. In addition, fixed manufacturing overhead costs include 
research and development (R&D) costs which relate specifically to 
the subject merchandise.

Cost of Production (COP)

    COP is equal to the sum of direct materials, direct labor, 
variable manufacturing overhead, and fixed manufacturing overhead 
(i.e. COM) plus SG&A expenses in the home market (HM).

[[Page 53995]]

    SG&A expenses are those expenses incurred for the operation of 
the corporation as a whole and not directly related to the 
manufacture of a particular product. They include corporate general 
and administrative expenses, financing expenses, and general 
research and development expenses. Additionally, direct and indirect 
selling expenses incurred in the HM for sales of the product under 
investigation are included. Such expenses are allocated to COM using 
a ratio of SG&A costs.

Constructed Value (CV)

    Constructed value is equal to the sum of materials, labor and 
overhead (COM) and SG&A expenses plus profit in the comparison 
market and the cost of packing for exportation to the United States.

Calculation of Suspension Agreement Normal Values

    Normal values (for purposes of the Agreement) are calculated by 
adjusting the CV and are provided for both EP and CEP transactions. 
In effect, any expenses uniquely associated with the covered 
products sold in the HM are subtracted from the CV, and any such 
expenses which are uniquely associated with the covered products 
sold in the United States are added to the CV to calculate the NV.
    ``Export Price''--Generally, a U.S. sale is classified as an 
export price sale when the first sale to an unaffiliated person 
occurs before the goods are imported into the United States. In 
cases where the foreign manufacturer knows or has reason to believe 
that the merchandise is ultimately destined for the United States, 
the manufacturer's sale is the sale subject to review. If, on the 
other hand, the manufacturer sold the merchandise to a foreign 
trader without knowledge of the trader's intention to export the 
merchandise to the United States, then the trader's first sale to an 
unaffiliated person is the sale subject to review. For EP NVs, the 
CV is adjusted for movement costs and differences in direct selling 
expenses such as commissions, credit, warranties, technical 
services, advertising, and sales promotion.
    ``Constructed Export Price''--Generally, a U.S. sale is 
classified as a constructed export price sale when the first sale to 
an unaffiliated person occurs after importation. However, if the 
first sale to an unaffiliated person is made by a person in the 
United States affiliated with the foreign exporter, constructed 
export price applies even if the sale occurs prior to importation, 
unless the U.S. affiliate performs only clerical functions in 
connection with the sale. For CEP NVs, the CV is adjusted similar to 
EP sales, with differences for adjustment to U.S. and HM indirect 
selling expenses.
    Home market direct selling expenses are expenses that are 
incurred as a direct result of a sale. These include such expenses 
as commissions, advertising, discounts and rebates, credit, warranty 
expenses, freight costs, etc. Certain direct selling expenses are 
treated individually, including:

--Commission expenses, i.e., payments to unaffiliated parties for 
sales in the HM.
--Credit expenses, i.e., expenses incurred for the extension of 
credit to HM customers.
--Movement expenses, e.g., foreign inland freight and insurance 
expenses, warehousing, and foreign brokerage, handling and port 
charges.

    U.S. direct selling expenses are the same as HM direct selling 
expenses except that they are incurred for sales in the United 
States. Movement expenses are additional expenses associated with 
importation into the United States, which typically include: U.S. 
inland freight and insurance expenses; U.S. brokerage, handling and 
port charges; U.S. Customs duties, U.S. warehousing; and 
international freight and insurance.
    U.S. indirect selling expenses include general fixed expenses 
incurred by the U.S. sales subsidiary or affiliated exporter for 
sales to the United States and may also include a portion of 
indirect expenses incurred in the HM for export sales.
    The EP and CEP NVs are calculated as follows:

------------------------------------------------------------------------
                           For EP Transactions
-------------------------------------------------------------------------
+ Direct Materials.
+ Direct Labor.
+ Factory Overhead.
= Cost of Manufacturing (COM).
 
+ Home Market SG&A.
= Cost of Production (COP).
 
+ U.S. Packing.
+ Profit.
= Constructed Value.
 
+ U.S. Direct Selling Expense.
+ U.S. Commission Expense.
+ U.S. Movement Expense.
+ U.S. Credit Expense.
- HM Direct Selling Expense.
- HM Commission Expense.\1\
- HM Credit Expense.
= NV for EP Sales.
------------------------------------------------------------------------
\1\ If the company does not have HM commissions, HM indirect expenses
  are subtracted only up to the amount of the U.S. commissions.


------------------------------------------------------------------------
                          For CEP Transactions
-------------------------------------------------------------------------
+ Direct Materials.
+ Direct Labor.
+ Factory Overhead.
= Cost of Manufacturing (COM).
 
+ Home Market SG&A.
= Cost of Production (COP).
 
+ U.S. Packing.
+ Profit.
= Constructed Value.
 
+ U.S. Direct Selling Expense.
+ U.S. Indirect Selling Expense.
+ U.S. Commission Expense.
+ U.S. Movement Expense.
+ U.S. Credit Expense.
+ U.S. Further-Manufacturing Expenses (if any).\1\
+ CEP Profit.
- HM Direct Selling Expense.
- HM Commission Expense. \2\
- HM Credit Expense.
= NV for CEP Sales.
------------------------------------------------------------------------
\1\ The Department will examine any further-manufacturing expenses on
  value-added products sold to the first unaffiliated purchaser in the
  United States by a person affiliated with the foreign producer/
  exporter, and produced from subject merchandise purchased directly
  from that foreign producer/exporter, on a case-by-case basis and
  reserves the right to make adjustments to its reporting requirements
  and calculation methodology for these expenses. For example, in cases
  where a producer/exporter's affiliate makes sales of products with
  significant value added to unaffiliated purchasers in the United
  States, or the range of such products is significant, the Department
  may adjust its reporting requirements and calculation methodology for
  the further manufacturing costs associated with the value-added
  products. Additionally, if the ratio of a producer/exporter's reported
  sales to unaffiliated purchasers versus its sales to affiliated
  persons shifts over time, the Department may make further adjustments
  in its reporting requirements and calculation methodology for the
  further-manufacturing expenses associated with the value-added
  products.
\2\ If the company does not have HM commissions, HM indirect expenses
  are subtracted only up to the amount of the U.S. commissions.

[FR Doc. E7-18278 Filed 9-20-07; 8:45 am]
BILLING CODE 3510-DS-P