[Federal Register Volume 72, Number 183 (Friday, September 21, 2007)]
[Notices]
[Pages 53995-54000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18298]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-835]


Suspension of Antidumping Duty Investigation: Lemon Juice From 
Mexico

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 Mexico. 
The basis for this action is an agreement between the Department and 
The Coca-Cola Company and The Coca-Cola Export Corporation, Mexico 
Branch (collectively ``Coca-Cola'') 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: 

[[Page 53996]]

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 Mexico 
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 (Notice of 
Preliminary Determinations of Sales at Less than Fair Value and of 
Critical Circumstances in Part: Lemon Juice from Mexico, 72 FR 20830 
(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 and Coca-Cola 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 petitioner Sunkist Growers Inc. and respondent 
Coca-Cola. We received further comments from petitioner and respondent 
on September 6, 2007, and again from petitioner on September 7 and 10, 
2007. We have taken these comments into consideration for the final 
version of the suspension agreement.
    The Department and Coca-Cola 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 
Mexico, 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 Mexico 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 Mexico 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 Mexico

    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 Mexico (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 Mexico, 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 Mexico 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 Mexico 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 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 Appendices B and C.
    (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

[[Page 53997]]

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 June 30, 2008 (``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 final NVs for a signatory producer/exporter 
during this Interim Period shall be issued within 14 days after the 
preliminary NVs are issued pursuant to Section E(2) of this 
Agreement.\1\
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    \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.
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    (3) For all sales occurring after the 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 June 1 of each year. These 
NVs shall apply to sales occurring during the annual period (i.e., 
July through June) beginning 30 days following the date on which the 
Department provides the NVs, as stated in this paragraph.
    (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.\2\
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    \2\ 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 June 30, 2008 (Interim Period).
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    (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, 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 July 1, 2006, through June 30, 2007. Subsequent 
reports of sales data shall be submitted to the Department not later 
than October 1 of each year, and each report shall contain the 
specified sales information for the annual period ending on June 30 
of that year, 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.
    (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, 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 July 1, 2006, through June 30, 2007. Each subsequent 
report shall be submitted to the Department not later than October 
15 of each year, and each report shall contain the specified 
information for the annual period ending on June 30 of that year.
    (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 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.\3\ At that

[[Page 53998]]

time, the Department may also make available such information to the 
interested parties to the proceeding in accordance with this 
section.
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    \3\ The Department will endeavor to issue the preliminary NVs 
for the Interim Period within five days after the effective date of 
this Agreement, subject to the possible constraints noted in 
footnote 1 of Section C(2) of this Agreement.
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    (3) Not later than May 2 of 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. 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 7 days after the dates of disclosure under 
Sections E(2) and E(3), 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) and C(3), 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:
    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 Mexican Producers/Exporters:
Dated: September 10, 2007.

Mark P. Lunn,
The Coca-Cola Company and The Coca-Cola Export Corporation, Mexico 
Branch.

For U.S. Department of Commerce:
Dated: September 10, 2007.

Michelle O'Neill,
Deputy Under Secretary for Import Administration.

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: \4\
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    \4\ See footnote  1 in Section C(2) of this Agreement.
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     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; and
     Reflective of appropriately allocated common costs so 
that the costs necessary for the manufacturing of the product are 
not absorbed by other products.
    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

[[Page 53999]]

overhead, and fixed manufacturing overhead (i.e. COM) plus SG&A 
expenses in the home market (HM).
    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.


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                          For CEP transactions
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+ 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 Expense (if any).\1\
+ CEP Profit.
- HM Direct Selling Expense.
- HM Commission Expense.\2\
- HM Credit Expense.
= NV for CEP Sales.
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\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.

Appendix C: Cost Allocation and NV Methodology

    The following provides clarification regarding the methodologies 
the Department will use in calculating normal values under this 
Agreement:
    (A) For The Coca-Cola Company and The Coca-Cola Export 
Corporation, Mexico Branch (collectively, ``Coexport''):
    (1) Cost Allocation for Life of Agreement:
    Throughout the life of this Agreement, to allocate common costs, 
the Department will allocate 8.5 percent of the reported lemon fruit 
costs and common lemon processing costs to lemon juice and 91.5 
percent of these same costs to lemon oil for purposes of calculating 
Coexport's NVs, as detailed in Appendix B to this Agreement.
    (2) All Other Costs and Sales Expenses for Interim Period NVs:
    For the Interim Period only of this Agreement, the Department 
will use all other reported costs and sales expenses, as adjusted by 
the Department, where appropriate, for the preliminary determination 
in the underlying antidumping duty investigation, for purposes of 
calculating Coexport's NVs, as detailed in Appendix B to this 
Agreement.
    (3) Monitoring of Value-Added Products after the Interim Period:
    In addition to the stipulations noted in footnote 1 to 
the calculation for CEP transactions in Appendix B to this 
Agreement, the Department shall normally choose between two to three 
products with significant value added, as reported by Coexport 
pursuant to Section D(1) during each NV cycle, for examination and 
monitoring of the related costs and sales expenses. For such value-
added products, the Department shall set CEP profit to equal CV 
profit for purposes of the NV calculation.
    (4) Invoice Offsets:

[[Page 54000]]

    The Department and signatory producers/exporters agree that an 
arrangement wherein Coexport bases its lemon oil sales price on its 
cost which includes an offset for the sales value of lemon juice, 
and later issues a credit or additional invoice to its customer to 
take into account the final cost of lemon oil, as offset by the 
lemon juice revenue, is a normal business practice which would not 
normally be considered in circumvention of this Agreement as defined 
in Section D(5) of this Agreement. However, such an arrangement will 
be subject to the reporting and verification requirements of this 
Agreement and to consideration by the Department during each NV 
cycle.
    (B) For All Other Signatories to the Agreement:
    Throughout the life of this Agreement, the Department will use 
the signatories' reported costs and sales expenses, as adjusted by 
the Department, where appropriate, for purposes of calculating the 
signatories' NVs, as detailed in Appendix B to this Agreement.

[FR Doc. E7-18298 Filed 9-20-07; 8:45 am]
BILLING CODE 3510-DS-P