[Federal Register Volume 73, Number 92 (Monday, May 12, 2008)]
[Notices]
[Pages 26960-26963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-10516]


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DEPARTMENT OF COMMERCE

International Trade Administration

(C-570-938)


Notice of Initiation of Countervailing Duty Investigation: Citric 
Acid and Certain Citrate Salts from the People's Republic of China

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

EFFECTIVE DATE: May 12, 2008

FOR FURTHER INFORMATION CONTACT: David Neubacher, Scott Holland, and 
Shelly Atkinson, AD/CVD Operations, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230; telephone: 
(202) 482-5823, (202) 482-1279, and (202) 482-0116, respectively.

SUPPLEMENTARY INFORMATION:

The Petition

    On April 14, 2008, the Department of Commerce (the ``Department'') 
received a petition filed in proper form by Archer Daniels Midland 
Company, Cargill, Inc., and Tate and Lyle Americas, Inc. (the 
``petitioners''), domestic producers of citric acid and certain citrate 
salts (``citric acid''). On April 22, 2008, the Department received a 
supplement to the petition alleging several additional subsidy 
programs. In response to the Department's requests, the petitioners 
provided timely information supplementing the petition on April 24, 
2008 and April 28, 2008.
    In accordance with section 702(b)(1) of the Tariff Act of 1930, as 
amended (``the Act''), the petitioners allege that manufacturers, 
producers, or exporters of citric acid in the People's Republic of 
China ( the ``PRC''), receive countervailable subsidies within the 
meaning of section 701 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 petitioners filed the petition on 
behalf of the domestic industry because they are interested parties as 
defined in section 771(9)(C) of the Act and the petitioners have 
demonstrated sufficient industry support with respect to the 
countervailing duty investigation (see ``Determination of Industry 
Support for the Petition'' section below).

Period of Investigation

    The period of investigation is January 1, 2007, through December 
31, 2007.

Scope of the Investigation

    The scope of this investigation includes all grades and granulation 
sizes of citric acid, sodium citrate, and potassium citrate in their 
unblended forms, whether dry or in solution, and regardless of 
packaging type. The scope also includes blends of citric acid, sodium 
citrate, and potassium citrate; as well as blends with other 
ingredients, such as sugar, where the unblended form(s) of citric acid, 
sodium citrate, and potassium citrate constitute 40 percent or more, by 
weight, of the blend. The scope of this investigation also includes all 
forms of unrefined calcium citrate, including dicalcium citrate 
monohydrate, and tricalcium citrate tetrahydrate, which are 
intermediate products in the production of citric acid, sodium citrate, 
and potassium citrate. The scope of this investigation includes the 
hydrous and anhydrous forms of citric acid, the dihydrate and anhydrous 
forms of sodium citrate, otherwise known as citric acid sodium salt, 
and the monohydrate and monopotassium forms of potassium citrate. 
Sodium citrate also 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. 
Potassium citrate and calcium citrate are classifiable under 
2918.15.5000 of the HTSUS. Blends that include citric acid, sodium 
citrate, and potassium citrate are classifiable under 3824.90.9290 of 
the HTSUS. Although the HTSUS subheadings are provided for convenience 
and customs purposes, the written description of the merchandise is 
dispositive.

Comments on Scope of Investigation

    During our review of the petition, we discussed the scope with the 
petitioners 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 1117, U.S. 
Department of Commerce, 14th Street

[[Page 26961]]

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.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Government of the PRC for consultations 
with respect to the countervailing duty petition. The Department held 
these consultations in Beijing, China, with representatives of the 
Government of the PRC on April 28, 2008. See the Memorandum to The 
File, entitled, ``Consultations with Officials from the Government of 
the People's Republic of China'' (April 28, 2008) on file in the CRU of 
the Department of Commerce, Room 1117.

Determination of Industry Support for the Petitions

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(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: (i) at least 
25 percent of the total production of the domestic like product; and 
(ii) 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. Moreover, section 702(c)(4)(D) of 
the Act provides that, if the petition does not establish support of 
domestic producers or workers accounting for more than 50 percent of 
the total production of the domestic like product, the Department 
shall: (i) poll the industry or rely on other information in order to 
determine if there is support for the petition, as required by 
subparagraph (A), or (ii) determine industry support using a 
statistically valid sampling method.
    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 a 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''), 
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 definition regarding the domestic 
like product (section 771(10) of the Act), they do so for different 
purposes and pursuant to a 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 like product, such differences do not render the decision of 
either agency contrary to law. See USEC, Inc. v. United States, 132 F. 
Supp. 2d 1, 8 (CIT 2001), citing Algoma Steel Corp. Ltd. v. United 
States, 688 F. Supp. 639, 644 (CIT 1988), aff'd 865 F.2d 240 (Fed. Cir. 
1989), cert. denied 492 U.S. 919 (1989).
    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 the domestic like product, the petitioners do not 
offer a definition of domestic like product distinct from the scope of 
the investigation. Based on our analysis of the information submitted 
on the record, we have determined that citric acid and certain citrate 
salts (unrefined calcium citrate, sodium citrate, and potassium 
citrate) constitute a single domestic like product and we have analyzed 
industry support in terms of that domestic like product. For a 
discussion of the domestic like product analysis in this case, see the 
Countervailing Duty Investigation Initiation Checklist: Citric Acid and 
Certain Citrate Salts from the People's Republic of China (PRC), 
Industry Support at Attachment II (PRC Initiation Checklist) on file in 
the Central Records Unit (CRU), Room 1117 of the main Department of 
Commerce building.
    Our review of the data provided in the petition, supplemental 
submissions, and other information readily available to the Department 
indicates that the petitioners have established industry support. 
First, the petition established support from domestic producers (or 
workers) accounting for more than 50 percent of the total production of 
the domestic like product and, as such, the Department is not required 
to take further action in order to evaluate industry support (e.g., 
polling). See Section 702(c)(4)(D) of the Act. Second, the domestic 
producers have met the statutory criteria for industry support under 
section 702(c)(4)(A)(i) of the Act because the domestic producers (or 
workers) who support the petition account for at least 25 percent of 
the total production of the domestic like product. Finally, the 
domestic producers have met the statutory criteria for industry support 
under section 702(c)(4)(A)(ii) of the Act because 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. Accordingly, the Department determines that the petition 
was filed on behalf of the domestic industry within the meaning of 
section 702(b)(1) of the Act. See PRC Initiation Checklist at 
Attachment II (Industry Support).
    The Department finds that the petitioners filed the petition on 
behalf of the domestic industry because they are interested parties as 
defined in section 771(9)(C) of the Act and they have demonstrated 
sufficient industry support with respect to the countervailing duty 
investigation that they are requesting the Department initiate. See PRC 
Initiation Checklist at Attachment II (Industry Support).

Injury Test

    Because the PRC, is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) of the Act 
applies to this investigation. Accordingly, the ITC must determine 
whether imports of the subject merchandise from the PRC materially 
injure, or threaten material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

    The petitioners allege that imports of citric acid and certain 
citrate salts from the PRC are benefitting from countervailable 
subsidies and that such imports are causing or threatening to cause, 
material injury to the domestic industry producing citric acid and 
certain citrate salts. The petitioners contend that the industry's 
injured condition is illustrated by the reduced market share, reduced 
production and capacity utilization, reduced employment, underselling 
and price depressing and suppressing effects, lost revenue and sales, a 
decline in financial performance, and an increase in import 
penetration. The Department has assessed the allegations and supporting 
evidence regarding material injury, threat of material injury, and 
causation, and the Department determines that these allegations are 
properly supported by adequate evidence and meet the statutory 
requirements for initiation. See

[[Page 26962]]

PRC Initiation Checklist at Attachment III.
    We are including in our investigation the following programs 
alleged in the petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in the PRC:
    Preferential Lending
    1. Government Policy Lending Program
    2. Funds provided for the rationalization of the citric acid 
industry
    3. Discounted loans for export-oriented industries
    4. Loans provided pursuant to the Northeast Revitalization Program
    Grant Programs
    5. State Key Technology Renovation Program Fund
    6. National level grants to loss-making state-owned enterprises
    7. ``Famous Brands'' Program
    Income Tax Programs
    8. ``Two Free, Three Half'' program
    9. Reduced income tax rates for foreign-investment enterprises 
based on location
    10. Income tax exemption program for export-oriented foreign-
investment enterprises
    11. Tax benefits to foreign-investment enterprises for certain 
reinvestment of profits
    12. Reduced income tax rate for high or new technology enterprises
    13. Reduced income tax rate for technology or knowledge intensive 
foreign-investment enterprises
    14. Preferential income tax rate for research and development at 
foreign-investment enterprises
    15. Preferential tax programs for encouraged industries
    16. Preferential tax policies for township enterprises
    17. Income tax credits on purchases of domestically produced 
equipment
    Indirect Tax Programs and Import Tariff Program
    18. Value added tax rebate for purchases by foreign-investment 
enterprises of domestically produced equipment
    19. Value added tax and duty exemptions on imported equipment
    20. Excessive value added tax rebates on exports
    Provincial/Local Subsidy Programs
    21. Provincial level grants to loss-making state-owned enterprises
    22. Local income tax exemption and reduction program for 
``productive'' foreign-investment enterprises
    Anhui Province:
    23. Reduced income tax rates for encouraged industries in Anhui 
Province
    24. Provision of land for less than adequate remuneration in Anhui 
Province
    Guangdong Province:
    25. Funds for ``outward expansion'' of industries in Guangdong 
Province
    Jiangsu Province:
    26. Income tax exemption for foreign-investment enterprises located 
in Jiangsu Province
    27. Preferential tax programs for enterprises located in the Su 
Qian Economic Development Zone
    28. Provision of land for less than adequate remuneration in the Su 
Qian Economic Development Zone
    29. Provision of electricity for less than adequate remuneration in 
the Su Qian Economic Development Zone
    Liaoning Province:
    30. Loans and interest subsidies pursuant to the Liaoning 
Province's five-year framework
    Shandong Province:
    31. Local and income tax exemptions and reductions for firms 
located in Qilu Chemicals Industry Park
    Shanxi Province:
    32. Preferential tax program for enterprises located in Shanxi 
Province
    33. Funding for enterprises under the Shanxi Province 10th Five-
year Plan
    Shenzhen City:
    34. Export interest subsidy funds for enterprises located in 
Shenzhen City
    Zhejiang Province:
    35. Export interest subsidy funds for enterprises located in 
Zhejiang Province
    36. Exemptions and reductions in taxes and fees for chemical 
research and development institutions located in Zhejiang Province
    37. Provision of land for less than adequate remuneration for 
enterprises located in Hangzhou Bay Fine Chemical Park
    38. Provision of electricity for less than adequate remuneration 
for enterprises located in Hangzhou Bay Fine Chemical Park
    For further information explaining why the Department is 
investigating these programs,
    see China Initiation Checklist.
    We are not including in our investigation the following programs 
alleged to benefit producers and exporters of the subject merchandise 
in the PRC:

Provision of Goods and Services- for Less Than Adequate Remuneration by 
the GOC

    1. Water
    The petitioners allege that through the program of rationalization, 
the GOC has promoted differential water rates to favored citric acid 
producers within the Chinese chemicals industry, despite China's 
limited water resources and the water-intensive nature of the citric 
acid industry. Petitioners have not sufficiently alleged the elements 
necessary for the imposition of a countervailing duty and did not 
support the allegation with reasonably available information. 
Consequently, we do not plan to investigate this program.
    2. Land
    The petitioners allege that the GOC provides citric acid producers 
with land grants and/or reduced land costs. Petitioners have not 
sufficiently alleged the elements necessary for the imposition of a 
countervailing duty and did not support the allegation with reasonably 
available information. Consequently, we do not plan to investigate this 
program.
    3. Electricity and natural gas
    The petitioners allege that Chinese citric acid producers benefit 
from government-provided electricity and natural gas at subsidized 
prices. The GOC controls and sets prices for electricity and natural 
gas. The petitioners note that the GOC acknowledged in its WTO 
accession documents that it provides subsidies on energy inputs to 
``special industry sectors.'' The government has also recently 
identified the citric acid industry as a high polluting industry and 
non-backward producers as ``preferred,'' and has committed to ending 
preferential policies to those companies. Thus, the petitioners allege 
that the remaining citric acid producers will continue to receive 
energy subsidies available to certain sectors. Petitioners have not 
sufficiently alleged the elements necessary for the imposition of a 
countervailing duty and did not support the allegation with reasonably 
available information. Consequently, we do not plan to investigate this 
program.

Income Tax Programs

    4. Preferential tax program for enterprises in Beijing Municipality
    Petitioners allege that the Beijing Municipality provides subsidies 
to develop the fine chemical industry, which includes the citric acid 
industry.

[[Page 26963]]

Petitioners have not sufficiently alleged the elements necessary for 
the imposition of a countervailing duty and did not support the 
allegation with reasonably available information. Consequently, we do 
not plan to investigate this program.
    5. Preferential tax program for enterprises in Chongqing 
Municipality
    In accordance with the West Revitalization Project, the GOC offers 
encouraged industries in the Chongqing Municipality a preferred tax 
rate of 15%. Petitioners allege further that fine chemical companies 
located in the Chongqing Chemical Industrial Park are eligible for 
additional benefits. Petitioners have not sufficiently alleged the 
elements necessary for the imposition of a countervailing duty and did 
not support the allegation with reasonably available information. 
Consequently, we do not plan to investigate this program.
    6. Preferential tax program for enterprises in Shandong Province
    Petitioners allege that municipal governments encourages the 
development of the chemical industry by granting tax reductions and 
exemptions for companies located in chemical parks such as Qilu 
Chemical Industry Park. Petitioners have not sufficiently alleged the 
elements necessary for the imposition of a countervailing duty and did 
not support the allegation with reasonably available information. 
Consequently, we do not plan to investigate this program.

Application of the Countervailing Duty Law to the PRC

    The Department has treated the PRC as a non-market economy 
(``NME'') country in all past AD investigations and administrative 
reviews. In accordance with section 771(18)(C)(i) of the Act, any 
determination that a country is an NME country shall remain in effect 
until revoked by the administering authority. See, e.g., Tapered Roller 
Bearings and Parts Thereof, Finished and 10 Unfinished, (``TRBs'') From 
the People's Republic of China: Preliminary Results of 2001-2002 
Administrative Review and Partial Rescission of Review, 68 FR 7500, 
7500-1 (February 14, 2003), unchanged in TRBs from the People's 
Republic of China: Final Results of 2001-2002 Administrative Review, 68 
FR 70488, 70488-89 (December 18, 2003).
    In the final affirmative CVD determination on coated free sheet 
paper from the PRC, the Department determined that the current nature 
of the PRC economy does not create obstacles to applying the necessary 
criteria in the CVD law. See Coated Free Sheet Paper from the People's 
Republic of China: Final Affirmative Countervailing Duty Determination, 
72 FR 60645 (October 25, 2007), and the accompanying Issues and 
Decision Memorandum at Comment 1. Therefore, because Petitioners have 
provided sufficient allegations and support of their allegations to 
meet the statutory criteria for initiating a CVD investigation of 
citric acid from the PRC, initiation of a CVD investigation is 
warranted in this case. For further information, see CVD Initiation 
Checklist.

Respondent Selection

    For this investigation, the Department expects to select 
respondents based on U.S. Customs and Border Protection data for U.S. 
imports during the POI. We intend to make our decision regarding 
respondent selection within 20 days of publication of this Federal 
Register notice. The Department invites comments regarding the CBP data 
and respondent selection within seven calendar days of publication of 
this Federal Register notice.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act, a copy of 
the public version of the petition has been provided to the Government 
of the PRC. As soon as and to the extent practicable, we will attempt 
to provide a copy of the public version of the petition to each 
exporter named in the petition, consistent with 19 CFR 351.203(c)(2).

ITC Notification

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

Preliminary Determination by the ITC

    The ITC will preliminarily determine, within 25 days after the date 
on which it receives notice of the initiation, whether there is a 
reasonable indication that imports of subsidized citric acid from the 
PRC are causing material injury, or threatening to cause material 
injury, to a U.S. industry. See section 703(a)(2) of the Act. 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 issued and published pursuant to section 777(i) of 
the Act.

    Dated: May 5, 2008.
David M. Spooner,
Assistant Secretaryfor Import Administration.
[FR Doc. E8-10516 Filed 5-9-08; 8:45 am]
BILLING CODE 3510-DS-S