[Federal Register Volume 71, Number 202 (Thursday, October 19, 2006)]
[Notices]
[Pages 61710-61714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-17381]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-357-818/Argentina; A-201-835/Mexico]


Initiation of Antidumping Duty Investigations: Lemon Juice from 
Argentina and Mexico

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

EFFECTIVE DATE: October 19, 2006.

FOR FURTHER INFORMATION CONTACT: Mark Hoadley (Argentina) or Hermes 
Pinilla (Mexico), AD/CVD Operations, Office 6 and Office 5, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230; telephone: (202) 482-3148 or (202) 482-3477, respectively.

SUPPLEMENTARY INFORMATION:

The Petition

    On September 21, 2006, the Department of Commerce (the Department) 
received a petition on imports of lemon juice from Argentina and Mexico 
filed in proper form by Sunkist Growers, Inc. (the petitioner). See 
Petition for the Imposition of Antidumping Duties Against Lemon Juice 
from Argentina and Mexico (September 21, 2006) (petition). On September 
28, 2006, the Department issued a request for additional information 
and clarification of certain areas of the petition. Based on the

[[Page 61711]]

Department's request, the petitioner filed amendments to the petition 
on October 3, 2006. See Supplemental Questionnaire: Petition for the 
Imposition of Antidumping Duties Against Lemon Juice from Argentina and 
Mexico (October 3, 2006). On October 6, October 10, and October 11, 
2006, the Department discussed further concerns with the petitioner by 
phone. See Memorandum to the File: Lemon Juice from Argentina and 
Mexico - Telephone Conversation with counsel to the Petitioner, dated 
October 6, 2006, Memorandum to the File: Lemon Juice from Argentina and 
Mexico - Telephone Conversations with counsel to the Petitioner, dated 
October 10, 2006, and Memorandum to the File: Lemon Juice from 
Argentina and Mexico - Telephone Conversation with counsel to the 
Petitioner, dated October 11, 2006. In response to these concerns, the 
petitioner filed additional petition amendments on October 10, 2006 and 
October 11, 2006.
    In accordance with section 732(b) of the Tariff Act of 1930, as 
amended (the Act), the petitioner alleges that imports of lemon juice 
from Argentina and Mexico 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 are materially injuring, or 
threatening material injury to, an industry in the United States.
    The Department finds that the petitioner filed this petition on 
behalf of the domestic industry because the petitioner is an interested 
party as defined in section 771(9)(C) of the Act, and the petitioner 
has demonstrated sufficient industry support with respect to the 
investigations that the petitioner is requesting the Department to 
initiate (see ``Determination of Industry Support for the Petition'' 
below).

Scope of Investigations

    The merchandise covered by each of these investigations 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[percnt] 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 and Border Patrol 
purposes, our written description of the scope of this investigation is 
dispositive.
    During our review of the petition, we discussed the scope with the 
petitioner to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. Moreover, as 
discussed in the preamble to the regulations (Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)), 
we are setting aside a period for interested parties to raise issues 
regarding product coverage. The Department encourages all interested 
parties to submit such comments within 20 calendar days of the 
publication of this notice. Comments should be addressed to Import 
Administration's Central Records Unit (CRU), Room 1870, U.S. Department 
of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230. The period of scope consultations is intended to provide the 
Department with ample opportunity to consider all comments and to 
consult with parties prior to the issuance of the preliminary 
determinations.

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) 
the domestic producers or workers who support the petition account for 
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 ``industry'' as the 
producers as a whole 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 produce the 
domestic like product. The International Trade Commission (ITC) is 
responsible for determining whether ``the domestic industry'' has been 
injured and must also determine what constitutes a domestic like 
product in order to define the industry. While the Department and the 
ITC must apply the same statutory definition regarding the domestic 
like product, they do so for different purposes and pursuant to 
separate and distinct authority. See section 771(10) of the Act. 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 law.\1\
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    \1\ See USEC, Inc. v. United States, 25 CIT 49, 55-56, 132 F. 
Supp. 2d 1, 7-8 (Jan. 24, 2001) (citing Algoma Steel Corp. v. United 
States, 12 CIT 518, 523, 688 F. Supp. 639, 642-44 (June 8, 1988)).
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    Section 771(10) of the Act defines the 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 subtitle.'' 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.
    With regard to domestic like product, the petitioner does not offer 
a definition of domestic like product distinct from the scope of the 
investigations. Based on our analysis of the information presented by 
the petitioner, we have determined that there is a single domestic like 
product, lemon juice, which is defined in the ``Scope of 
Investigations'' section above, and we have analyzed industry support 
in terms of the domestic like product.
    We received no opposition to this petition. The petitioner accounts 
for a sufficient percentage of the total production of the domestic 
like product, and the requirements of section 732(c)(4)(A) are met. 
Accordingly, the Department determines that the petition was filed on 
behalf of the domestic industry within the meaning of section 732(b)(1) 
of the Act. See ``Office of AD/CVD Operations Initiation Checklist for 
the Antidumping Duty Petition on Lemon Juice from Argentina,'' at 
Attachment II (October 11, 2006) (Argentina Initiation Checklist) and 
``Office of AD/CVD Operations Initiation Checklist for the Antidumping 
Duty Petition on Lemon Juice from Mexico,'' at Attachment II (October 
11, 2006) (Mexico Initiation Checklist), on file in the CRU.

[[Page 61712]]

Allegations and Evidence of Material Injury and Causation

    The petitioner alleges that the U.S. industry producing the 
domestic like product is being materially injured and is threatened 
with material injury by reason of the imports of the subject 
merchandise sold at less than fair value. The petitioner contends that 
the industry's injury is evidenced by reduced market share, increased 
inventories, lost sales, reduced production, lower capacity and 
capacity utilization rates, decline in prices, lost revenue, reduced 
employment, decreased capital expenditures, and a decline in financial 
performance.
    These allegations are supported by relevant evidence including 
import data, evidence of lost sales, and pricing information. We 
assessed the allegations and supporting evidence regarding material 
injury, threat of material injury, and causation, and have determined 
that these allegations are supported by accurate and adequate evidence 
and meet the statutory requirements for initiation. See Argentina 
Initiation Checklist at Attachment III and Mexico Initiation Checklist 
at Attachment III.

Period of Investigation

    In accordance with section 351.204(b) of the Department's 
regulations, because the petition was filed on September 21, 2006, the 
anticipated period of investigation (POI) is July 1, 2005 through June 
30, 2006.

Allegations of Sales at Less Than Fair Value

    The following is a description of the allegations of sales at less 
than fair value upon which the Department has based its decision to 
initiate investigations with respect to Argentina and Mexico. The 
sources of data for the deductions and adjustments relating to U.S. 
price and normal value are discussed in greater detail in the Argentina 
Initiation Checklist and Mexico Initiation Checklist. Should the need 
arise to use any of this information as facts available under section 
776 of the Act, we may reexamine the information and revise the margin 
calculation, if appropriate.

Use of a Third Country Market and Sales Below Cost Allegation

    With respect to normal value (NV), the petitioner stated that home 
market prices are not reasonably available. According to the 
petitioner, the Argentine and Mexican lemon juice industry is geared 
almost exclusively to exports. See, e.g., pages 12 and 22 of the 
October 3, 2006 petition amendment. The petitioner stated that its 
personnel most knowledgeable about international markets inquired about 
the Argentine and Mexican home markets for lemon juice from their 
sources but that they were unable to obtain home market prices in 
Argentina or Mexico. In addition, the petitioner stated that there were 
no indications of domestic prices for lemon juice in these markets in 
the several Department of Agriculture and ITC reports which were 
included in the petition, and which the Department has reviewed.
    The petitioner therefore proposed the Netherlands as a third 
country comparison market for both Argentina and Mexico, and 
demonstrated the viability of the Netherlands as a third country 
market. In the case of Argentina, the petitioner provided Argentine 
figures for exports of lemon juice to the Netherlands and the United 
States. In the case of Mexico, the petitioner provided European Union 
lemon juice import data for exports from Mexico into the Netherlands 
and compared them with U.S. lemon juice import data for imports from 
Mexico. According to these figures, sales to the Netherlands were 
greater than 5 percent of sales by volume to the United States for both 
Argentina and Mexico, and thus the petitioner claims that the 
Netherlands is an appropriate comparison market in accordance with 
section 773(a)(1)(B)(ii)(II) of the Act.
    The petitioner then claimed that sales prices to the Netherlands 
are below cost, for both Argentine and Mexican exports. The petitioner 
provided information demonstrating reasonable grounds to believe or 
suspect that sales of lemon juice in the comparison market (i.e., the 
Netherlands) were made at prices below the fully absorbed cost of 
production (COP), within the meaning of section 773(b) of the Act, and 
requested that the Department conduct country-wide sales-below-cost 
investigations for both Argentina and Mexico. Pursuant to section 
773(b)(3) of the Act, COP consists of the cost of manufacturing (COM), 
selling, general, and administrative (SG&A) expenses, financial 
expenses, and packing expenses (where appropriate). Details regarding 
the calculation of the COP cost elements (i.e., COM, SG&A, and 
financial expenses) are included in our discussion of constructed value 
(CV), in the ``Alleged U.S. Price and Normal Value'' sections below.\2\ 
The petitioner calculated export prices for the Netherlands using 
average unit customs values for imports from Argentina and Mexico. In 
order to calculate a conservative estimate, the petitioner did not make 
any deductions to these average unit customs values.
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    \2\ In this case, the elements of COP and CV are calculated 
identically. The only difference between the COP figure used to 
demonstrate sales below cost and the CV figure used as normal value 
is that CV includes an amount for profit.
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    Based upon a comparison of the gross price of the foreign like 
product in the comparison market to the COP of the product, we find 
reasonable grounds to believe or suspect that sales of the foreign like 
product were made below the COP, within the meaning of section 
773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating 
country-wide cost investigations with regard to both Argentina and 
Mexico. If we determine during the course of these investigations that 
the home markets (i.e., Argentina and Mexico) are viable or that the 
Netherlands is not the appropriate third-country market upon which to 
base normal value, our initiation of country-wide cost investigations 
with respect to sales to the Netherlands will be rendered moot. Because 
it alleged sales below cost, pursuant to sections 773(a)(4), 773(b) and 
773(e) of the Act, the petitioner then based NV for sales in the 
Netherlands on constructed value (CV).

Alleged U.S. Price and Normal Value: Argentina

    The petitioner calculated a single export price (EP) using the 
average unit customs values for import data collected by the U.S. 
Census Bureau. It used a weighted average of all five HTSUS numbers 
under which subject merchandise could be imported: 2009.31.4000, 
2009.31.6020, 2009.31.6040, 2009.39.6020, and 2009.39.6040. The 
petitioner deducted amounts for domestic inland freight, storage and 
other harbor charges, and an export tax to arrive at an EP figure for a 
product at the same concentration level as the product for which CV was 
calculated. The deductions are based on an affidavit of one of the 
petitioner's company officials, and represent the cost of transporting 
subject merchandise to Buenos Aires and preparing it for export as well 
as an estimate for the export tax.
    We analyzed the five HTSUS numbers used by the petitioner in 
calculating EP. Four of the five HTSUS categories were comprised solely 
of subject merchandise; however, one HTSUS number was a basket 
category, and, therefore, could include significant amounts of 
merchandise other than subject merchandise. Accordingly, we 
recalculated EP by removing HTSUS number 2009.31.4000, the basket 
category. In addition, we did not make the deductions to price made by 
the petitioner, as the petitioner could not demonstrate that these 
amounts were

[[Page 61713]]

not in the SG&A expense figure it calculated. Specifically, it is not 
clear based on S.A. San Miguel's (an Argentine lemon juice producer) 
unconsolidated financial statements whether the items which the 
petitioner subtracted from the average unit value (i.e., export tax, 
storage, and movement expenses) were included in the reported SG&A 
expense. Therefore, to avoid possible double counting, we did not make 
these deductions.
    Pursuant to section 773(a)(4) of the Act, the petitioner calculated 
a single CV as the basis for NV. See ``Use of a Third Country Market 
and Sales Below Cost Allegation`` above. The petitioner calculated CV 
based on the price of lemons in Buenos Aires, its own processing and 
packing costs and by-product offsets, and SG&A, interest, and profit 
taken from the public financial statements of an Argentine producer of 
lemon juice. It adjusted its own processing costs for known differences 
between U.S. and Argentine production costs. It also deducted an amount 
from CV for export tax, in order to offset the export tax deduction to 
EP.
    Specifically, to value raw materials, the petitioner used the 
prices quoted on the Mercado Central in Buenos Aires for lemons sold 
during the POI. The added processing costs were based on the 
petitioner's fiscal year 2005 experience adjusted for known differences 
between U.S. and Argentine production costs (electricity rates and 
manufacturing labor wages). See U.S. Department of Energy: Energy 
Statistics - Electricity Prices, and International Labor Organization: 
Labor Statistics - Wages and Manufacturing for Argentina, found in the 
Argentina Initiation Checklist at Attachment VII and Attachment VIII, 
respectively. Additional information, including by-product offsets and 
packing expenses, were provided in affidavits from company officials of 
the petitioner, and reasonably reflect its POI experience. To calculate 
SG&A, financial expenses, and profit, the petitioner relied upon 
amounts reported in the 2005 fiscal year financial statements of S.A. 
San Miguel. See Argentina Initiation Checklist.
    In making fair value calculations for Argentina, we used the CV 
calculated by the petitioner, except that we did not make a deduction 
for export tax from CV, which the petitioner had suggested as a means 
of offsetting its export tax deduction from EP, as we did not make such 
a deduction from EP.

Alleged U.S. Price and Normal Value: Mexico

    The petitioner calculated a single Mexican EP using the average 
unit customs values for import data collected by the U.S. Census 
Bureau. It used a weighted average of all five HTSUS numbers under 
which subject merchandise could be imported: 2009.31.4000, 
2009.31.6020, 2009.31.6040, 2009.39.6020, and 2009.39.6040. The 
petitioner did not make any adjustments to U.S. price. We recalculated 
EP by removing the same basket category as we did for Argentina.
    Pursuant to section 773(a)(4) of the Act, the petitioner calculated 
a single CV as the basis for normal value (NV). See ``Use of a Third 
Country Market and Sales Below Cost Allegation`` above. The petitioner 
calculated CV using its own data for some values, published data for 
other cost values, and costs values from a Mexican lemon juice 
manufacturer's publicly available financial statement for other 
factors. It adjusted its own processing costs for known differences 
between U.S. and Mexican production costs.
    Specifically, to value raw materials, the petitioner used the 2005 
average Mexican cost of production for lemons (excluding packing costs) 
from an ITC publication. See ITC publication on Conditions for Certain 
Oranges and Lemons in the U.S. Fresh Market, Table 9-16, p. 9-17. The 
added processing costs were based on the petitioner's fiscal year 2005 
experience adjusted for known differences between U.S. and Mexican 
production costs (electricity rates and manufacturing labor wages). See 
Mexico Initiation Checklist at Attachments VII and VIII. The petitioner 
did not adjust for storage, packing and transportation costs in its 
calculation of processing cost. The petitioner based the SG&A and 
financial expenses on the most recently available fiscal year 2003 
financial statements (the most current statements available) of UniMark 
Group, a Mexican lemon juice producer. The petitioner assumed a packing 
cost of zero because there were no packing cost data available to the 
petitioner. To calculate an amount for profit consistent with section 
773(e)(2) of the Act, the petitioner relied upon amounts reported in 
UniMark Group's income statement for the most recently available fiscal 
year 2003. Because UniMark Group's income statement for fiscal year 
2003 showed a loss, the petitioner assumed a zero profit in the 
calculation of the constructed value. See Mexican Initiation Checklist.
    The petitioner did not claim any other adjustments to either EP or 
CV and we found that no other adjustments were warranted.

Fair Value Comparisons

    Based on a comparison of the revised EP to CV, the dumping margin 
is 102.46 percent with respect to Argentina and 134.22 percent with 
respect to Mexico. Therefore, in accordance with section 773(a) of the 
Act, there is reason to believe that imports of lemon juice from 
Argentina and Mexico are being, or are likely to be, sold in the United 
States at less than fair value.

Initiation of Antidumping Investigations

    Based upon the examination of the petition on lemon juice from 
Argentina and Mexico and other information reasonably available to the 
Department, the Department finds that the petition meets the 
requirements of section 732 of the Act. Therefore, we are initiating 
antidumping duty investigations to determine whether imports of lemon 
juice from Argentina and Mexico are being, or are likely to be, sold in 
the United States at less than fair value. In accordance with section 
733(b)(1)(A) of the Act, unless postponed, we will make our preliminary 
determinations no later than 140 days after the date of this 
initiation.

Distribution of Copies of the Petition

    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 Governments of Argentina and Mexico. We will attempt to provide 
a copy of the public version of the petition to the foreign producers/
exporters named in the petition.

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 International Trade Commission

    The ITC will preliminarily determine, no later than November 6, 
2006, whether there is a reasonable indication that imports of lemon 
juice from Argentina and Mexico are materially injuring, or threatening 
material injury to, a U.S. industry. A negative ITC determination will 
result in the investigations being terminated; otherwise, these 
investigations will proceed according to statutory and regulatory time 
limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.


[[Page 61714]]


    Dated: October 11, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-17381 Filed 10-18-06; 8:45 am]
BILLING CODE 3510-DS-S