[Federal Register Volume 75, Number 208 (Thursday, October 28, 2010)]
[Notices]
[Pages 66352-66356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27294]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-836]


Glycine From the People's Republic of China: Initiation of 
Antidumping Anti-circumvention Inquiry

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request from GEO Specialty Chemicals, Inc. 
and Chattem Chemicals, Inc., domestic interested parties in the above-
referenced proceeding (``domestic interested parties''), the Department 
of Commerce (``the Department'') is initiating an antidumping anti-
circumvention inquiry pursuant to section 781(b) of the Tariff Act of 
1930, as amended (``the Act''). This inquiry will examine whether the 
activities of three Indian companies, Salvi Chemical Industries 
(allegedly affiliated with Nutracare International) (collectively, 
``Salvi''), Paras Intermediates Pvt. Ltd. (``Paras''), and AICO 
Laboratories India Ltd. (``AICO'') are circumventing the antidumping 
duty order on glycine from the People's Republic of China (PRC). See 
Antidumping Duty Order: Glycine from People's Republic of China, 60 FR 
16116 (March 29, 1995) (``PRC Glycine Order '').

DATES: Effective Date: October 28, 2010.

FOR FURTHER INFORMATION CONTACT: David Cordell or Olga Carter, AD/CVD 
Operations, Office 7, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
0408 or (202) 482-8221, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On December 18, 2009, the domestic interested parties filed a 
request for initiation of an anti-circumvention inquiry, alleging two 
companies (AICO and Paras) were circumventing the order covering 
glycine from the PRC under section 781(b) of the Act and 19 CFR

[[Page 66353]]

351.225(h), through completion and assembly in India of the same class 
or kind of merchandise that is subject to the PRC Glycine Order and by 
labeling the merchandise as Indian origin. See domestic interested 
parties request ``Antidumping Duty Order on Glycine from the People's 
Republic of China--Circumvention of Antidumping Duty Order,'' dated 
December 18, 2009 (``Circumvention Allegation'').
    On January 15, 2010, the Department requested that domestic 
interested parties resubmit legible copies of AICO financial statements 
and of the Port Import Export Reporting Service (``PIERS'') report 
regarding AICO's shipments to the United States, provided in their 
original Circumvention Allegation, at Exhibits B and A, respectively. 
The legible copies of the requested documents were submitted by the 
domestic interested parties on January 22, 2010. See letter from the 
domestic interested parties to the Department, dated January 22, 2010. 
On February 18, 2010, the domestic interested parties met with the 
Department to discuss their December 18, 2009, and January 22, 2010, 
submissions, in which they requested the Department initiate an anti-
circumvention inquiry for glycine from the PRC. See Memorandum to the 
File, from Olga Carter, analyst, titled ``Scope Determination Request 
Based on Circumvention Inquiry: Meeting with Counsel and Executive Vice 
President and CFO of Domestic Interested Party GEO Specialty Chemicals, 
Inc.,'' dated February 22, 2010. On February 22, 2010, the Department 
requested additional information from the domestic interested parties 
in the form of a supplemental questionnaire.
    In response to a request from the domestic interested parties, on 
July 29, 2010, the Department held a meeting to further discuss the 
December 18, 2009, and January 22, 2010, submissions, as well as the 
Department's February 22, 2010, deficiency questionnaire. See 
Memorandum to the File, titled ``Scope Determination Request Based on 
Circumvention Inquiry: Meeting with Counsel of Domestic Interested 
Party GEO Specialty Chemicals, Inc.,'' dated August 2, 2010.
    On August 19, 2010, the domestic interested parties filed 
additional information and data, supplementing their Circumvention 
Allegation, titled ``Antidumping Duty Order on Glycine from the 
People's Republic of China--Circumvention of Antidumping Duty Order'' 
(``August 19, 2010 submission''), in which the domestic interested 
parties also included an anti-circumvention allegation against a third 
company, Salvi, and its export arm, Nutracare International. In their 
Circumvention Allegation, as supplemented, the domestic interested 
parties allege that all three Indian companies are importing technical-
grade glycine from companies in the PRC, processing \1\ and/or 
repackaging the PRC-origin glycine, then exporting the finished product 
to the United States, marked as Indian-origin glycine.
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    \1\ The domestic interested parties used a variety of terms 
(e.g. refining, purifying, processing, sieving) in their submissions 
to describe the processing activities that are allegedly taking 
place in India. We have used the term ``processing'' to encompass 
all of them for purposes of this initiation notice.
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    On August 31, 2010, the Department requested the domestic 
interested parties to provide additional information to justify their 
claim that there is a clear and compelling need to withhold certain 
double bracketed information in their August 19, 2010, submission from 
disclosure under an administrative protective order (``APO''). On 
September 7, 2010, the domestic interested parties provided such 
justification in a response to the Department's request, thus 
satisfying the basic requirements for filing a request for an anti-
circumvention inquiry. See Letter from the Domestic Interested Parties 
to the Department, entitled ``Antidumping Duty Order on Glycine from 
the People's Republic of China (``PRC'') Scope Determination Request 
Based on Circumvention Inquiry: Response of Domestic Glycine Industry 
to Department's August 31, 2010 Letter.'' In response to this 
submission, on September 8, 2010, the Department established an APO and 
a Public Service List for this segment of the proceeding. See the 
Memorandum to the File ``Scope Request Based on Circumvention Inquiry: 
Glycine from the PRC,'' dated September 8, 2010.
    On September 23, 2010, the Department conducted a telephone 
interview with the foreign market researcher to corroborate the 
information in the market report that the domestic interested parties 
filed on the record as support for their allegations and to clarify the 
details of the research process. See the Memorandum to the File 
entitled ``Antidumping Circumvention Inquiry: Telephone Interview with 
the Foreign Market Researcher,'' dated October 5, 2010 (``Telephone 
Interview Memo'').
    On October 6, 2010, the domestic interested parties amended their 
request for the initiation of an anti-circumvention inquiry with 
respect to AICO, citing to the Telephone Interview Memo. See domestic 
interested parties' submission, titled ``Antidumping Duty Order on 
Glycine from the People's Republic of China (PRC): Antidumping 
Circumvention Inquiry--Amendment to Domestic Industry's Circumvention 
Allegation based on Department's Memorandum to File'' (``Amendment 
Letter''), dated October 6, 2010, at 2. Therein, the domestic 
interested parties allege that, based on the telephone interview, AICO 
is both repackaging and refining the glycine. Id.

Scope of Order

    The product covered by this order is glycine, which is a free-
flowing crystalline material, like salt or sugar. Glycine is produced 
at varying levels of purity and is used as a sweetener/taste enhancer, 
a buffering agent, re-absorbable amino acid, chemical intermediate, and 
a metal complexing agent. Glycine is currently classified under 
subheading 2922.49.4020 of the Harmonized Tariff Schedule of the United 
States (``HTSUS''). The scope of this order includes glycine of all 
purity levels. Although the HTSUS subheadings are provided for 
convenience and customs purposes, our written description of the scope 
of this proceeding is dispositive.
Initiation of Antidumping Anti-Circumvention Inquiry
    Section 781(b)(1) of the Act provides that the Department may find 
circumvention of an antidumping duty order when merchandise of the same 
class or kind subject to the order is completed or assembled in a 
foreign country other than the country to which the order applies. In 
conducting anti-circumvention inquiries, under section 781(b)(1) of the 
Act, the Department will also evaluate whether: (1) The process of 
assembly or completion in the other foreign country is minor or 
insignificant; (2) the value of the merchandise produced in the foreign 
country to which the antidumping duty order applies is a significant 
portion of the total value of the merchandise exported to the United 
States; and (3) action is appropriate to prevent evasion of such an 
order or finding. As discussed below, the domestic interested parties 
supported their claims with information available to them with respect 
to these criteria.

A. Merchandise of the Same Class or Kind

    Domestic interested parties state that the PRC Glycine Order covers 
all grades and purity levels of glycine and that both the Department 
and U.S. Customs and Border Protection (``CBP'') have determined that 
purifying or refining

[[Page 66354]]

glycine does not result in a substantial transformation necessary to 
change its country of origin. See Circumvention Allegation at 5. 
Therefore, the domestic interested parties argue that the merchandise 
being imported into the United States from India from Salvi, Paras and 
Aico is of the same class or kind as that subject to the PRC Glycine 
Order, pursuant to section 781(b)(1)(A)(i) of the Act. To further 
support this allegation, domestic interested parties cite to the 
investigation of glycine from India,\2\ where Paras stated that it was 
further processing PRC-origin glycine into higher grades and the 
Department found that ``the further processing incurred in India with 
respect to imported technical grade glycine is not substantial enough 
to change the country of origin.'' \3\ Therefore, domestic interested 
parties contend that the PRC-origin glycine processed by Paras, Salvi, 
and AICO in India continues to be PRC glycine, and therefore is the 
merchandise of the same class or kind as that subject to the PRC 
Glycine Order.
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    \2\ See Notice of Final Determination of Sales at Less Than Fair 
Value: Glycine From India, 73 FR 16640 (March 28, 2008) (Indian 
Glycine), and the accompanying Issues and Decision Memorandum at 
Comment 5 (Issues and Decision Memorandum).
    \3\ Id.
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B. Completion of Merchandise in a Foreign Country

    Domestic interested parties allege that, based on the face-to-face 
interviews with the market researchers, in the case of Paras, Salvi and 
AICO, all three companies acknowledge that they have imported 
technical-grade PRC glycine into India, refined it and shipped it to 
the United States. See August 19, 2010, submission at 4, footnote 7. In 
addition, the domestic interested parties again cite to Indian Glycine, 
in which Paras acknowledged it had further-processed PRC glycine in 
India. See August 19, 2010, submission at 4. With respect to Salvi, the 
domestic interested parties cite to the foreign market research report, 
titled ``Market Survey to Assess the Dynamics of the Glycine Market in 
India'' (Market Research Report), which identifies Salvi as an exporter 
of PRC glycine to the United States, which it allegedly refined in 
India,. See August 19, 2010, submission at Exhibit 12. With respect to 
AICO, the domestic interested parties contend that AICO both repackages 
and refines glycine originating in the PRC. See Amendment Letter at 3.

C. Minor or Insignificant Process

    Domestic interested parties allege that for the purposes of section 
781(b)(1)(C) of the Act, the process of refining or purifying 
technical-grade PRC glycine into purified glycine is ``minor or 
insignificant,'' as defined by the Act. To demonstrate that the 
processing is ``minor or insignificant,'' the domestic interested 
parties calculate a cost to process the PRC glycine that is imported 
into India, and allegedly performed by Paras and Salvi, based on the 
domestic industry's cost of production. See August 19, 2010, submission 
at Exhibit 2. They allege that the refining of lower-grade glycine in 
India does not include ``the reactor, washing and centrifuge steps,'' 
which are critical to the production process. Id. Domestic interested 
parties conclude that refinement costs that do not include production-
related processes (i.e., the reactor, washing and centrifuge steps) are 
insignificant or minor when measured against the value of glycine 
exported to the United States. Further, the domestic interested parties 
argue that based on their own estimates, the cost to refine PRC glycine 
ranges from 2.28 percent for AICO to 2.85 percent for Paras and Salvi 
of the average value of Indian glycine imported into the United States 
during the period from April 1, 2008, through March 31, 2009. See 
August 19, 2010, submission at 5 and 6.

D. Value of Merchandise Produced in the PRC is a Significant Portion of 
the Total Value of the Merchandise Exported to the United States

    Domestic interested parties allege that the production process for 
glycine that takes place in the PRC prior to processing in India and 
subsequent shipment to the United States accounts for the significant 
portion of the total value of the final product. See August 19, 2010, 
submission at 5 and 6.
    Domestic interested parties argue that an analysis of the relevant 
statutory factors of section 781(b)(2) of the Act further supports the 
conclusion that the Indian processing is ``minor or insignificant.'' 
These factors include: (1) Level of investment in the foreign country; 
(2) level of research and development in the foreign country; (3) 
nature of the production process in the foreign country; (4) extent of 
production facilities in the foreign country; and (5) whether the value 
of the processing performed in the foreign country represents a small 
proportion of the value of the merchandise imported into the United 
States. The domestic interested parties' analysis of these factors, 
including citations as appropriate, is as follows.

(1) Level of Investment

    Domestic interested parties state that manufacturing of glycine 
requires a significant level of investment. See August 19, 2010, 
submission at 8. Domestic interested parties further contend that 
unlike the manufacturing of glycine, the processing of a lower-grade, 
PRC-origin glycine into a more refined grade does not require a 
significant level of investment, since Indian companies are allegedly 
re-processing the PRC-origin glycine by refining it, and then 
repackaging the PRC-origin glycine. See August 19, 2010, submission at 
6 through 8 and 19.

(2) Level of Research and Development

    Domestic interested parties state that the purification, refining, 
and repackaging of glycine are technically mature processes and, 
therefore, believe no research and development is required to refine, 
purify and repackage PRC-origin glycine as performed by Paras, Salvi, 
and AICO. See August 19, 2010, submission at 9.

(3) Nature of the Production Process

    Domestic interested parties state that they were not able to 
acquire definitive information regarding the production processes used 
by Paras, Salvi, and AICO. See August 19, 2010 submission at 9. 
However, the domestic interested parties describe a possible scenario 
where Paras and Salvi refine PRC glycine by placing it in a sieve and 
then repackage the processed PRC-origin glycine for export as Indian 
glycine. Id at 9-10. Further, the domestic interested parties state 
that the Department has previously determined that Paras' further 
processing of imported glycine into higher-purity grades was not 
significant enough to substantially transform the glycine into Indian-
origin glycine. See August 19, 2010, submission at 4, citing to Indian 
Glycine and the accompanying Issues and Decision Memorandum at Comment 
5. Domestic interested parties' allegations that AICO's production 
process involves processing in addition to repackaging PRC-origin 
glycine, are based on the Market Research Report and foreign market 
researcher's statement during the telephone interview with the 
Department. See Market Research Report at 25; see also Amendment Letter 
at 2. Thus, the domestic interested parties claim that the production 
processes of the named Indian companies are limited to refining and 
repackaging of technical-grade PRC glycine. See August 19, 2010, 
submission at 5.

[[Page 66355]]

(4) Extent of Production Facilities

    The domestic interested parties allege that AICO does not 
manufacture glycine. See August 19, 2010, submission at 6. Further, the 
domestic interested parties allege that the extent of AICO's production 
facilities is limited to the facilities required for processing and 
repackaging. See Telephone Interview Memo at 4. See also August 19, 
2010, submission at 6.
    With respect to Paras, the domestic interested parties described 
Paras's production facilities, as it pertained to the processing of 
PRC-origin glycine, as consisting of a refining line, in which PRC 
glycine bypasses the reactor, washing and centrifuge steps. See August 
19, 2009, submission at 4.
    With respect to Salvi, the domestic interested parties claim that 
Salvi's operation is similar to Paras's operation. See August 19, 2010, 
submission at 2.

(5) Value of Processing Performed in India Represents a Small 
Proportion of the Value of the Merchandise Imported into the United 
States

    Domestic interested parties allege that the production process for 
glycine that takes place in the PRC prior to refining in India and 
subsequent shipment to the United States accounts for the vast majority 
of the total value of the final product. See August 19, 2010, 
submission, Exhibits 2 and 3. See also Market Research Report at 25. 
Domestic interested parties claim that the value of processing 
performed in India represents a small portion of the value, compared to 
either the cost of production or import value. See August 19, 2010, 
submission at 5 and at Exhibit 2. In support of their claim, domestic 
interested parties submit the domestic industry's estimated cost of 
Paras's and Salvi's processing of PRC glycine. According to their 
calculations, both companies' estimated cost of processing (i.e., 
``repackaging and refining cost'') amounts to $0.0784 per pound, 
representing 2.85 percent of the average value of Indian glycine 
imported into the United States. Id. In addition, based on the analysis 
of AICO's financial statements, the domestic interested parties contend 
that AICO's purchases of imported goods were the dominant components of 
its 2007 and 2009 costs of goods sold. See August 19, 2010, submission 
at 18. According to the domestic interested parties' calculations of 
AICO's estimated processing cost of PRC glycine, its value amounts to 
$0.0628 per pound, or 2.28 percent of the average value of Indian 
glycine imported to the United States. See August 19, 2010, submission 
at 6 and at Exhibit 3. Therefore, the domestic interested parties 
contend that the value of glycine processing that is performed in India 
represents a small portion of the value of the glycine imported to the 
United States. Id.

Factors to Consider in Determining Whether Action is Necessary

    Domestic interested parties argue that the additional factors 
contained in section 781(b)(3) of the Act must also be considered in 
the Department's decision whether to issue a finding of anti-
circumvention regarding importation of Indian glycine.

Pattern of Trade

    Domestic interested parties state that section 781(b)(3)(C) of the 
Act directs the Department to take into account the pattern of trade, 
including sourcing patterns, when making a decision whether to include 
merchandise assembled or completed in India within the scope of the PRC 
Glycine Order. Domestic interested parties allege that from 2008 to 
2009, glycine imports from the PRC to the United States decreased by 
96.5 percent and imports of glycine from India rose by 13.8 percent and 
India's share of the U.S. glycine imports rose from 27 percent to 50 
percent over the same time period. See August 19, 2010, submission at 
12 and at Exhibit 5. Domestic interested parties also point out that 
the market share of total U.S. imports of glycine from the PRC dropped 
from 38 percent to 2 percent over the same time period. Id.

Affiliation

    None of the companies alleged to be circumventing the order are 
alleged to be affiliated with PRC producers. However, the domestic 
interested parties claim a buyer/seller relationship exists between 
AICO and Chiyuen International Trading Ltd., a manufacturer in the PRC 
of amino acetic acid (i.e., glycine). See August 19, 2010, submission 
at 18.

Subsequent Import Volume

    Domestic interested parties cite to section 781(b)(3)(C) of the 
Act, which directs the Department to take into account whether imports 
of the merchandise into the foreign country have increased after the 
initiation of the investigation which resulted in the issuance of such 
an order or finding when making a decision on anti-circumvention 
rulings. Domestic interested parties allege that from 2003-2004 to 
2008-2009, imports into India of PRC glycine rose more than 246 
percent. See August 19, 2010, submission at 13.

Analysis

    Based on our analysis of the domestic interested parties' anti-
circumvention inquiry request, as supplemented, and our September 23, 
2010, phone call with the foreign market researcher, the Department 
determines that the domestic interested parties have satisfied the 
criteria under section 781(b)(1) of the Act to warrant the Department's 
initiation of an anti-circumvention inquiry. In accordance with 19 CFR 
351.225(e), if the Department finds that the issue of whether a product 
is included within the scope of an order cannot be determined based 
solely upon the application and the descriptions of the merchandise 
contained in the petition, the investigation and other determinations, 
the Department will notify by mail all parties on the Department's 
scope service list of the initiation of a scope inquiry, including an 
anti-circumvention inquiry. In addition, in accordance with 19 CFR 
351.225(f)(1)(ii), a notice of the initiation of an anti-circumvention 
inquiry issued under paragraph (e) of this section will include a 
description of the product that is the subject of the anti-
circumvention inquiry, i.e., glycine from the PRC that is processed 
and/or repackaged in India, as provided in the scope of the PRC Glycine 
Order, and an explanation of the reasons for the Department's decision 
to initiate the anti-circumvention inquiry, as provided below.
    With regard to whether the merchandise from India is of the same 
class or kind as the merchandise produced in the PRC, the domestic 
interested parties have presented information to the Department which 
appears to indicate that, pursuant to section 781(b)(1)(A) of the Act, 
the merchandise being produced in and/or exported from India by AICO, 
Paras and Salvi may be of the same class or kind as glycine produced in 
the PRC and subject to the PRC Glycine Order. Consequently, the 
Department finds that the domestic interested parties provided 
sufficient information in its request, as supplemented regarding the 
class or kind of merchandise to warrant initiation of an anti-
circumvention inquiry.
    With regard to completion or assembly of merchandise in a foreign 
country, pursuant to section 781(b)(1)(B) of the Act, the domestic 
interested parties have also presented information to the Department 
which appears to indicate that certain glycine exported from India to 
the United States is being further processed by AICO, Paras and

[[Page 66356]]

Salvi using glycine imported into India from the PRC. We find that the 
information presented by the domestic interested parties regarding this 
criterion supports their request to initiate an anti-circumvention 
inquiry.
    The Department believes that the domestic interested parties 
sufficiently addressed the factors described by sections 781(b)(1)(C) 
and 781(b)(2) of the Act regarding whether the processing of glycine in 
India is minor or insignificant. Specifically, in support of its 
argument, the domestic interested parties relied on information from 
Indian Glycine, on the domestic interested parties' calculations based 
on their estimated cost of production and cost of processing and 
repackaging of PRC-origin glycine, allegedly performed by Paras, Salvi, 
and AICO, and information in the Market Research Report as described 
above. Thus, we find that the information presented by the domestic 
interested parties supports their request, as supplemented, to initiate 
an anti-circumvention inquiry. In particular, for the purposes of 
initiation, we find that the domestic interested parties have 
sufficiently supported their allegations that: (1) Little investment 
has been made by either Paras, Salvi, or AICO in their respective 
processing of PRC glycine; (2) Paras, Salvi, and AICO perform 
processing and repackaging of the lower-grade PRC glycine, which are 
technologically mature processes that do not require research and 
development by these companies; (3) the mere processing of the lower-
grade glycine through refinement, purification, and repackaging does 
not alter the fundamental characteristics of the glycine, or whether it 
is subject to the scope of the PRC Glycine Order; (4) Paras's, Salvi's, 
and AICO's facilities for processing and repackaging PRC glycine do not 
require the typically capital-intensive production facilities needed to 
manufacture glycine; and (5) refining and repackaging of PRC glycine 
represents a small proportion of the value of the merchandise exported 
to the United States.
    Our analysis will focus on Paras's, Salvi's, and AICO's processing 
operations in India and, in the context of this proceeding, we will 
closely examine the extent of processing done in India, as well as 
Paras's, Salvi's, and AICO's relationships with glycine suppliers in 
the PRC. With respect to the value of the merchandise produced in the 
PRC, pursuant to section 781(b)(1)(D) of the Act, the domestic 
interested parties relied on their information and arguments presented 
in the ``minor or insignificant'' portion of their anti-circumvention 
request, as supplemented, to indicate that the value of PRC glycine may 
be significant relative to the total value of the glycine processed and 
repackaged in India and then exported to the United States. We find 
that the information provided adequately addresses this factor, as 
discussed above, for the purposes of initiating an anti-circumvention 
inquiry.
    Finally, the domestic interested parties argue that, pursuant to 
section 781(b)(3) of the Act, the Department should also consider the 
pattern of trade, affiliation, and subsequent import volumes as factors 
in determining whether to initiate an anti-circumvention inquiry. The 
export and import data submitted by the domestic interested parties 
suggests that imports of glycine from the PRC into India rose 
significantly in recent years. Accordingly, based on the domestic 
interested parties' allegations, as supplemented, we have determined 
that domestic interested parties have provided a sufficient basis to 
initiate an anti-circumvention inquiry concerning the PRC Glycine 
Order, pursuant to section 781(b) of the Act. These anti-circumvention 
inquiries pertain solely to Paras, Salvi, and AICO.
    If, within sufficient time, the Department receives a formal 
request from an interested party regarding potential anti-circumvention 
of the PRC Glycine Order by other Indian companies, we will consider 
conducting additional inquiries concurrently.
    In accordance with 19 CFR 351.225(l)(2), if the Department issues a 
preliminary affirmative determination, we will then instruct CBP to 
suspend liquidation and require a cash deposit of estimated duties on 
the merchandise.
    The Department will, following consultation with interested 
parties, establish a schedule for questionnaires and comments on the 
issues. The Department intends to issue its final determination within 
300 days of the date of publication of this initiation. See section 
781(f) of the Act.
    This notice is published in accordance with section 777(i)(1) of 
the Act.

    Dated: October 22, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-27294 Filed 10-27-10; 8:45 am]
BILLING CODE 3510-DS-P