[Federal Register Volume 65, Number 7 (Tuesday, January 11, 2000)]
[Notices]
[Pages 1588-1590]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-638]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-858]


Initiation of Antidumping Investigation: Citric Acid and Sodium 
Citrate From the People's Republic of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: January 11, 2000.

FOR FURTHER INFORMATION CONTACT: Sunkyu Kim, AD/CVD Enforcement Group 
I, Office 2, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-2613.

Initiation of Investigation

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department of Commerce's (the 
Department's) regulations are to 19 CFR Part 351 (April 1999).

The Petition

    On December 15, 1999, the Department received a petition filed in 
proper form by Archer Daniels Midland Company, Cargill, Incorporated, 
and Tate & Lyle Citric Acid, Inc. (collectively, the petitioners). On 
December 20, 1999, the Department requested further information on 
industry support from the petitioners. The Department received 
supplemental information in response to that request on December 27, 
1999.
    In accordance with section 732(b) of the Act, the petitioners 
allege that imports of citric acid and sodium citrate from the People's 
Republic of China (PRC) are being, or are likely to be, sold in the 
United States at less than fair value within the meaning of section 731 
of the Act, and that such imports pose a serious and imminent threat of 
material injury to an industry in the United States.
    The Department finds that the petitioners filed the petition on 
behalf of the domestic industry because they are interested parties as 
defined in sections 771(9) (C) and (D) of the Act and have demonstrated 
sufficient industry support. See ``Determination of Industry Support 
for the Petition'' section, below.

Scope of Investigation

    The scope of the investigation includes all grades and granulation 
sizes of citric acid and sodium citrate in any type of packaging and in 
either dry form or in any solution, including, but not limited to, 
solutions of water, alcohol and ether. The scope of the investigation 
includes the hydrous and anhydrous forms of citric acid and the 
dihydrate and anhydrous forms of sodium citrate, otherwise known as 
citric acid sodium salt. Sodium citrate includes both trisodium citrate 
and monosodium citrate which are also known as citric acid trisodium 
salt and citric acid monosodium salt, respectively.
    Citric acid and sodium citrate are classifiable under 2918.14.0000 
and 2918.15.1000 of the Harmonized Tariff Schedule of the United States 
(HTSUS), respectively. Although the HTSUS subheadings are provided for 
convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.
    During our review of the petition, we discussed the definition of 
the scope of the investigation with the petitioners to ensure that the 
definition accurately reflects the products for which they are seeking 
relief. As we discussed in the preamble to the Department's 
regulations, we are setting aside a period for parties to raise issues 
regarding product coverage. See Antidumping Duties; Countervailing 
Duties: Final Rule, 62 FR 27296, 27323 (May 19, 1997). The Department 
encourages all parties to submit such comments by January 25, 2000. 
Comments should be addressed to Import Administration's Central Records 
Unit at Room 1870, U.S. Department of Commerce, Pennsylvania Avenue and 
14th Street, NW, Washington, DC 20230. This scope consultation period 
is intended to provide the Department with ample opportunity to 
consider all comments and consult with parties prior to the issuance of 
the preliminary determination.

Determination of Industry Support for the Petition

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) At least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition.
    Section 771(4)(A) of the Act defines the term ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who account for production 
of the domestic like product. The International Trade Commission (ITC), 
which is responsible for determining whether the domestic industry has 
been injured, must also determine what constitutes a domestic like 
product in order to define the industry. While both the Department and 
the ITC must apply the same statutory provision regarding the domestic 
like product (section 771(10) of the Act), they do so for different 
purposes and pursuant to separate and distinct authority. In addition, 
the Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
domestic like product, such differences do not render the decision of 
either agency contrary to the law.1 Section 771(10) of the 
Act defines

[[Page 1589]]

domestic like product as ``a product which is like, or in the absence 
of like, most similar in characteristics and uses with, the article 
subject to an investigation under this title.'' Thus, the reference 
point from which the domestic like product analysis begins is ``the 
article subject to an investigation,'' i.e., the class or kind of 
merchandise to be investigated, which normally will be the scope as 
defined in the petition. In this case, the petitioners claim that all 
citric acid and sodium citrate constitute one class or kind of 
merchandise.
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    \1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 
639, 644 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefor from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    Based on our analysis of the information and arguments presented to 
the Department, we have determined that, for purposes of initiation of 
this investigation, there is a single domestic like product which is 
defined in the ``Scope of Investigation'' section, above.
    Moreover, the Department has determined that the petition and 
supplemental information contain adequate evidence of sufficient 
industry support. See January 4, 2000, Initiation Checklist (public 
version on file in the Central Records Unit of the Department of 
Commerce, Room B-099). The petitioners demonstrated that they account 
for all of the domestic production of citric acid; however they did not 
provide data on the total domestic production of sodium citrate. The 
Department is aware that U.S. companies other than the petitioners 
purchase citric acid and convert it into sodium citrate. If we 
conservatively estimate the maximum quantity of sodium citrate produced 
by non-petitioning U.S. companies, from imported citric acid and 
domestically-produced citric acid, the petitioners still account for 
more than 50 percent of the U.S. production of citric acid and sodium 
citrate. Therefore, the producers who support the petition account for 
more than 50 percent of the production of the domestic like product. 
See January 4, 2000, Initiation Checklist (public version on file in 
the Central Records Unit of the Department of Commerce, Room B-099).
    We received a letter in opposition to the petition from Proctor & 
Gamble, Inc., which is both a domestic producer of the subject 
merchandise, as well as an importer of subject merchandise from the 
PRC. Because Proctor & Gamble, Inc. is an importer of the subject 
merchandise from the PRC, the Department may disregard Proctor & 
Gamble, Inc.'s position, in accordance with section 732(c)(4)(B)(ii) of 
the Act. The Department has disregarded Proctor & Gamble, Inc.'s 
opposition because, according to Proctor & Gamble, Inc., they are a 
major purchaser and user of domestic and imported citric acid and 
sodium citrate. However, even if the Department had considered Proctor 
& Gamble, Inc.'s opposition to the petition, the petitioners, as 
discussed above, have demonstrated that they account for more than 50 
percent of the total production of the domestic like product. 
Accordingly, the Department determines that this petition is filed on 
behalf of the domestic industry within the meaning of section 732(b)(1) 
of the Act.

Export Price and Normal Value

    The following describes the allegations of sales at less than fair 
value upon which our decision to initiate this investigation is based. 
Should the need arise to use any of this information in our preliminary 
or final determinations for purposes of facts available under section 
776 of the Act, we may re-examine the information and revise the margin 
calculations, if appropriate.
    The petitioners identified 102 known or potential PRC producers of 
subject merchandise. The petitioners based export price (EP) on 
brokers' offers for the sale of PRC-origin anhydrous citric acid and 
sodium citrate in solution to U.S. purchasers. For citric acid, the 
petitioners made deductions from the starting price for a U.S. 
distributor mark-up, U.S. and home market freight expenses, 
international movement expenses, U.S. customs, processing and harbor 
fees, and a solution expense. For sodium citrate, the petitioners made 
the same deductions as for citric acid but did not make a deduction for 
solution expense. We adjusted the petitioners' calculation of EP for 
sodium citrate to include a deduction for solution expense because the 
starting price quoted was for sodium citrate in solution.
    Because the PRC is considered a nonmarket economy (NME) country 
under section 771(18) of the Act, the petitioners based normal value 
(NV) on the factors of production valued in a surrogate country, in 
accordance with section 773(c) of the Act. For purposes of the 
petition, the petitioners selected India as the most appropriate 
surrogate market economy. The petitioners developed information on the 
representative factors of production for citric acid in the PRC from 
their knowledge of citric acid production in the PRC. For sodium 
citrate, the petitioners based the factors of production on their 
experience in manufacturing the product because the information 
available to them did not include the factors for sodium citrate 
production in the PRC.
    The petitioners valued raw material inputs based on publicly 
available price data in India. The petitioners identified the major 
material input in the production of citric acid and sodium citrate as 
starch. The petitioners valued starch using the average Indian import 
value for a type of starch which most closely corresponds to the 
particular type of starch used by the Chinese producer, as published in 
Chemical Weekly on November 9, 1999. The petitioners also identified 
additional material inputs used in the production of citric acid and 
sodium citrate. The additional material inputs were valued using both 
Chemical Weekly and United Nations Trade Statistics publications. Where 
appropriate, the petitioners adjusted the values reported in Chemical 
Weekly to exclude sales and excise taxes. For starch and other raw 
materials, the petitioners increased the unit value to include 
estimated transportation costs. However, because the petitioners did 
not provide an appropriate surrogate value for costs associated with 
transporting inputs in the PRC, we adjusted the petitioners' normal 
value calculation by excluding freight costs associated with 
transporting raw material inputs.
    To value energy inputs, the petitioners used publicly available 
prices in India, with the exception of one input. For this particular 
input, the petitioners relied on a U.S. producer's experience. However, 
because the petitioners did not provide an appropriate surrogate value 
for the cost of this input in the PRC, we adjusted the petitioners' 
normal value calculation by excluding this input's cost from the 
calculation.
    For labor and packing materials, the petitioners estimated the 
consumption amounts based on their own experiences. The petitioners 
valued labor based on a regression-based wage rate, in accordance with 
19 CFR 351.408 (c)(3). For packing materials, the petitioners used 
1996-1997 Indian import values from the Monthly Statistics of Foreign 
Trade of India.
    Where appropriate, the petitioners adjusted the factor values for 
inflation using either the Indian wholesale price index (WPI) or the 
U.S. WPI for the period April through June 1999, as published in the 
International Monetary Fund's International Financial Statistics (IFS 
Data). Additionally, the petitioners converted factors based on Indian 
rupees to U.S. dollars using an average Indian rupee to U.S. dollar 
exchange rate from the monthly average rates as

[[Page 1590]]

reported in the IFS Data for the period April through August 1999.
    Finally, for factory overhead, selling, general, and administrative 
expenses (SG&A), and profit, the petitioners used publicly available 
financial statements of Indian metal and chemical producers as 
published by the Reserve Bank of India in 1997.
    Based on comparisons of EP to NV, as adjusted by the Department, 
the petitioners estimate dumping margins ranging from 211.58 to 307.79 
percent.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of citric acid and sodium citrate from the PRC are 
being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

    The petitioners allege that the U.S. industry producing the 
domestic like product is threatened with material injury by reason of 
imports of the subject merchandise sold at less than NV. The 
allegations of threat of injury and causation are supported by relevant 
evidence including business proprietary data from the petitioners and 
U.S. Customs import data. The Department assessed the allegations and 
supporting evidence regarding the threat of material injury and 
causation and determined that these allegations are sufficiently 
supported by accurate and adequate evidence and meet the statutory 
requirements for initiation. See Initiation Checklist (public version 
on file in the Central Records Unit of the Department of Commerce, Room 
B-099).

Initiation of Antidumping Investigation

    We have examined the petition on citric acid and sodium citrate 
from the PRC and have found that it meets the requirements of section 
732 of the Act. Therefore, we are initiating an antidumping duty 
investigation to determine whether imports of citric acid and sodium 
citrate from the PRC are being, or are likely to be, sold in the United 
States at less than fair value. Unless postponed, we will make our 
preliminary determination for the antidumping duty investigation by May 
23, 2000.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the petition has been provided to the representatives 
of the government of the PRC. We will attempt to provide a copy of the 
public version of the petition to each exporter named in the petition 
(as appropriate).

International Trade Commission Notification

    We have notified the ITC of our initiation, as required by section 
732(d) of the Act.

Preliminary Determination by the ITC

    The ITC will determine by January 31, 2000, whether there is a 
reasonable indication that imports of citric acid and sodium citrate 
from the PRC are threatening to cause material injury to a U.S. 
industry. A negative ITC determination will result in the investigation 
being terminated; otherwise, the investigation will proceed according 
to statutory and regulatory time limits.
    This notice is published in accordance with section 777(i)(1) of 
the Act.

    Dated: January 4, 2000.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 00-638 Filed 1-10-00; 8:45 am]
BILLING CODE 3510-DS-P