[Federal Register Volume 77, Number 120 (Thursday, June 21, 2012)]
[Notices]
[Pages 37378-37384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-15219]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-863]


Honey From the People's Republic of China: Affirmative 
Preliminary Determination of Circumvention of the Antidumping Duty 
Order

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

ACTION: Notice of Affirmative Preliminary Determination of 
Circumvention of Antidumping Duty Order.

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SUMMARY: In response to a request from the American Honey Producers 
Association and the Sioux Honey Association (collectively 
``Petitioners''), the Department of Commerce (``Department'') initiated 
an anticircumvention inquiry pursuant to section 781(d) of the Tariff 
Act of 1930, as amended (``the Act'') to determine whether blends of 
honey and rice syrup should be considered subject to the antidumping 
duty order on honey from the People's Republic of China (``PRC'') \1\ 
under the later-developed merchandise provision.
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    \1\ See Notice of Amended Final Determination of Sales at Less 
Than Fair Value and Antidumping Duty Order; Honey From the People's 
Republic of China, 66 FR 63670 (December 10, 2001) (``Order'').

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DATES: Effective Date: June 21, 2012.

FOR FURTHER INFORMATION CONTACT: Catherine Bertrand, telephone: (202) 
482-3207, or Josh Startup, telephone: (202) 482-5260; AD/CVD 
Operations, Office 9, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On December 7, 2011, the Department initiated this 
anticircumvention inquiry regarding blends of honey and rice syrup from 
the PRC.\2\ On February 3, 2012, the Department issued a questionnaire 
to all parties on the comprehensive service list for this Order, and 
Anhui Hundred Health Foods Co., Ltd. (``Anhui Hundred'').\3\ On March 
9, 2012, Petitioners submitted a timely response. No other parties 
submitted questionnaire responses. On May 4, 2012, Petitioners filed a 
submission arguing that the Department does not need to notify the 
International Trade Commission (``ITC'') regarding this inquiry.
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    \2\ See Honey From the People's Republic of China: Initiation of 
Anticircumvention Inquiry, 76 FR 239 (December 13, 2011) 
(``Initiation Notice'').
    \3\ Anhui Hundred, a PRC producer of blends of honey and rice 
syrup, was not on the comprehensive scope service list, but filed a 
submission opposing the initiation of this inquiry on November 1, 
2011 (``Anhui Hundred Opposition''). Previously, Anhui Hundred filed 
a scope ruling request on its blend of honey and rice syrup on April 
4, 2011, which was placed on the record of this inquiry by the 
Department on August 8, 2011 (``Anhui Scope Request''). The 
Department declined to initiate Anhui Hundred's scope inquiry on 
June 27, 2011.

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[[Page 37379]]

Scope of the Order

    The products covered by the order are natural honey, artificial 
honey containing more than 50 percent natural honey by weight, 
preparations of natural honey containing more than 50 percent natural 
honey by weight and flavored honey. The subject merchandise includes 
all grades and colors of honey whether in liquid, creamed, comb, cut 
comb, or chunk form, and whether packaged for retail or in bulk form.
    The merchandise subject to the order is currently classifiable 
under subheadings 0409.00.00, 1702.90.90, 2106.90.99, 0409.00.0010, 
0409.00.0035, 0409.00.0005, 0409.00.0045, 0409.00.0056, and 
0409.00.0065 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). Although the HTSUS subheadings are provided for 
convenience and customs purposes, the Department's written description 
of the merchandise under order is dispositive.

Merchandise Subject to the Anticircumvention Request

    The merchandise subject to the anticircumvention request is blends 
of honey and rice syrup, regardless of the percentage of honey they 
contain, from the PRC.

Preliminary Determination

    We preliminarily determine that blends of honey and rice syrup, 
regardless of the percentage of honey contained, are therein 
circumventing the antidumping duty order on honey from the PRC, as 
provided in section 781(d) of the Act. In determining whether blends of 
honey and rice syrup are appropriately considered a later-developed 
product under section 781(d) of the Act, the Department evaluated the 
arguments raised by the interested parties in light of the statute, 
regulations, and the applicable legislative history.

Legal Framework

    Section 781(d) of the Act provides that the Department may find 
circumvention of an antidumping duty order when merchandise is 
developed after a less-than-fair-value (``LTFV'') investigation is 
initiated (``later-developed merchandise''). In conducting 
anticircumvention inquiries under section 781(d)(1) of the Act, the 
Department shall consider the following criteria: (A) Whether the 
later-developed merchandise has the same general physical 
characteristics as the merchandise with respect to which the order was 
originally issued (``earlier product''); (B) whether the expectations 
of the ultimate purchasers of the later-developed merchandise are the 
same as for the earlier product; (C) whether the ultimate use of the 
earlier product and the later-developed merchandise is the same; (D) 
whether the later-developed merchandise is sold through the same 
channels of trade as the earlier product; and (E) whether the later-
developed merchandise is advertised and displayed in a manner similar 
to the earlier product.
    In addition, section 781(d)(2) of the Act also states that the 
administering authority may not exclude later-developed merchandise 
from a countervailing or antidumping duty order merely because the 
merchandise (A) is classified under a tariff classification other than 
that identified in the petition or the administering authority's prior 
notices during the proceeding, or (B) permits the purchaser to perform 
additional functions, unless such additional functions constitute the 
primary use of the merchandise, and the cost of the additional 
functions constitute more than a significant proportion of the total 
cost of production of the merchandise.
    The statute does not provide further guidance in defining the 
meaning of later development. The only other source of guidance 
available is the brief discussion of later-developed products in the 
legislative history for section 781(e) of the Act, which, although 
addressing later-developed products with respect to the ITC's injury 
analysis, we find is also relevant to the Department's analysis. The 
Conference Report on H.R. 3, Omnibus Trade and Competitiveness Act of 
1988 suggests that a later-developed product may be one which has been 
produced as a result of a ``significant technological advancement or a 
significant alteration of the merchandise involving commercially 
significant changes.'' \4\ While this provision of the legislative 
history does not exclusively limit the meaning of later developed to 
only those instances involving a significant technological advancement 
or significant alteration of subject merchandise, it provides guidance 
by defining certain types of later-developed merchandise. In addition, 
in the first section 781(d) determination involving portable electric 
typewriters, the Department also cited a U.S. Senate report: 
``{s{time} ection 781(d) was designed to prevent circumvention of an 
existing order through the sale of later developed products or of 
products with minor alterations that contain features or technologies 
not in use in the class or kind of merchandise imported into the United 
States at the time of the original investigation.'' \5\
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    \4\ The legislative history for this provision provides that, 
``With respect to later-developed products, a significant injury 
issue can arise if there is a significant technological development 
or a significant alteration of the merchandise involving 
commercially significant changes in the characteristics and uses of 
the product * * * Thus, a later-developed product incorporating a 
new technology that provides additional capability, speed, or 
functions would be covered by the order as long as it has the same 
basic characteristics and uses.'' See H.R. Conf. Rep No. 576, 100th 
Cong., 2d Sess., at 603 (1988), reprinted in 1988 U.S.C.C.A.A.N. 
1547, 1636. The CIT has subsequently held that neither the 
legislative history nor the ITC consultation provision at 781(e) 
``define or limit the meaning of later-developed merchandise.'' 
Target Corp. v. United States, 32 C.I.T. 1016, 1025 (Ct. Int'l Trade 
2008).
    \5\ See S. Rep No. 40., 100th Cong., 1st Sess. 101 (1987).
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    In addition to the statute, prior later-developed merchandise cases 
also provide further guidance, foremost of which is that the Department 
has considered ``commercial availability'' in some form in its prior 
later-developed merchandise anticircumvention inquiries.\6\ In each 
case, the Department addressed the ``commercial availability'' of the 
later-developed merchandise in some capacity, such as the product's 
presence in the commercial market or whether the product was fully 
``developed,'' i.e., tested and ready for commercial production. The 
Court of International Trade and the Court of Appeals for the Federal 
Circuit have affirmed this test holding that a ``product's actual 
presence in the market at the time of the {antidumping{time}  
investigation is a necessary predicate of its inclusion or exclusion 
from the scope of an antidumping order.'' \7\ Additionally, in Candles, 
the Department considered whether the merchandise at issue in that 
inquiry was later developed as a result of a significant technological 
development or a significant alteration of the merchandise involving 
commercially significant changes.\8\
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    \6\ See PET Final; EMD Final; and EPROMs Final. See Portable 
Electric Typewriters from Japan: Final Scope Ruling, 55 FR 47358 
(November 13, 1990) (``PET Final''); Electrolytic Manganese Dioxide 
from Japan: Final Scope Ruling, 57 FR 395 (January 6, 1992) (``EMD 
Final''); and Erasable Programmable Read Only Memories from Japan: 
Final Scope Ruling, 57 FR 11599 (April 6, 1992) (``EPROMS Final''); 
Later-Developed Merchandise Anticircumvention Inquiry of the 
Antidumping Duty Order on Petroleum Wax Candles from the People's 
Republic of China: Affirmative Final Determination of Circumvention 
of the Antidumping Duty Order 71 FR 59075 (October 6, 2006) 
(``Candles'').
    \7\ See Target Corp. v. United States, 578 F. Supp. 2d 1369, 
1375-1376 (Ct. Int'l Trade 2008) (citations omitted); Target Corp. 
v. United States, 609 F.3d 1352, 1360 (Fed. Cir. 2010).
    \8\ See Candles, 71 FR at 59,077.
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    Based upon the legislative history of the anticircumvention 
provision and prior later-developed merchandise

[[Page 37380]]

inquiries, the Department continues to include a ``commercial 
availability'' standard in its analysis of this proceeding, as was 
indicated in the Initiation Notice. As noted above, both the 
legislative history and prior later-developed merchandise inquiries 
place emphasis on evaluating the ``commercial availability'' of the 
specific product to determine whether that product is later-developed, 
pursuant to section 781(d) of the Act. Accordingly, the Department will 
evaluate whether blends of honey and rice syrup were not ``commercially 
available'' at the time of the LTFV investigation in order to be 
properly considered later-developed merchandise. Additionally, similar 
to the Department's analysis in Candles,\9\ the Department will examine 
whether blends of honey and rice syrup are materially different from 
those under consideration at the time of the investigation, while 
allowing them to have ``the same basic characteristics and uses.'' \10\ 
Through this analysis, the Department ensures that the merchandise 
which is the subject of this scope inquiry is not the same as the 
merchandise explicitly excluded under the scope of the Order.
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    \9\ As discussed in the immediately preceding paragraph, in 
Candles, the Department considered whether the merchandise at issue 
was materially different from the merchandise contemplated by the 
order in so far as the later-developed merchandise was the result of 
a significant technological development or a significant alteration 
of the merchandise involving commercially significant changes.
    \10\ See H.R. Conf. Rep No. 576, 100th Cong., 2d Sess., at 603 
(1988), reprinted in 1988 U.S.C.C.A.A.N. 1547, 1636.
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    We have analyzed the information and comments of interested parties 
in this anticircumvention inquiry. Based on all of the information on 
the record, the Department considered whether the merchandise subject 
to this anticircumvention inquiry constitutes ``later-developed 
merchandise'' within the meaning of section 781(d) of the Act.

Whether Blends of Honey and Rice Syrup Are Later-Developed Merchandise

Commercial Availability

    First, we address whether blends of honey and rice syrup constitute 
later-developed merchandise by determining whether this merchandise was 
commercially available at the time of the LTFV investigation. As 
evidence that blends of honey and rice syrup were not commercially 
available at the time of the investigation, Petitioners note that the 
ITC Report \11\ specifically identifies ``refined sugar, high-fructose 
corn syrup, and the like'' \12\ as being used to make artificial honey. 
They note that rice syrup was not included in this illustrative list, 
because only refined sugar and high-fructose corn syrup were readily 
available in the U.S. market, with corn syrup being the most common 
sweetener mixed with honey.\13\ Further, according to Petitioners, at 
the time of the original investigation honey blended with any other 
non-honey sweeteners was rare in the U.S. market due to economic 
adulteration.\14\ The Department specifically requested from the 
parties any evidence that blends of honey and rice syrup were 
commercially available prior to November 2, 2000, when the 
investigation was initiated.\15\ No parties submitted any evidence to 
the Department demonstrating that blends of honey and rice syrup were 
available prior to the initiation of the investigation. Additionally, 
evidence on the record shows that the first imports of blends of honey 
and rice syrup to the United States from the PRC did not occur until 
August 2004.\16\
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    \11\ See Honey from Argentina and China, Inv. Nos. 701-TA-402 
and 731-TA-892-893 (Final), USITC Pub. 3470 (``ITC Report'') at I-6.
    \12\ See id.
    \13\ See Petitioners' Supplemental Questionnaire Response dated, 
November 21, 2011, (``Petitioners' Supp. QR'') at 6, and Exhibit 4.
    \14\ Economic adulteration is the practice of dishonestly 
diluting pure honey with a less expensive substitute and then 
reselling the blend to unknowing consumers as pure honey. See 
Petitioners' Questionnaire Response dated March 9, 2012, 
(``Petitioners' QR'') at 18-20, explaining the history of the honey 
market and economic adulteration. See also Petitioners' Request for 
Scope/Circumvention Inquiry on Honey Syrup from China and Opposition 
to Anhui Hundred Scope Request on Honey Syrup from China submitted 
June 8, 2011, at 7-8, stating that ``it is illegal under federal and 
most states' law to sell, as ``honey,'' honey that has been blended 
with any other type of sweetener,'' and citing 21 U.S.C. section 
381(a).
    \15\ See Questionnaire from the Department To ALL PARTIES, RE: 
Anti-Circumvention Inquiry of Honey-Rice Syrup Blends from the 
People's Republic of China (``PRC''), dated February 3, 2012, at 4.
    \16\ See Petitioners' Supp. Response at 11-12.
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    Petitioners argue that blends of honey and rice syrup were neither 
commercially developed nor commercially available when the antidumping 
investigation was initiated on November 2, 2000.\17\ As discussed in 
the Initiation FR, Petitioners note that none of the three U.S. trade 
investigations between 1993 and 2001 discussed blends of honey and rice 
syrup,\18\ and therefore they provide no evidence of blends of honey 
and rice syrup being available at the time the investigation was 
initiated.\19\ Petitioners also point to the Port Import Export 
Reporting Service (``PIERS'') ship manifest summaries which show that 
the first shipments of blends of honey and rice syrup from the PRC did 
not enter the United States until almost four years after the 
investigation was initiated.\20\ Petitioners also submitted an 
affidavit from an industry expert stating that prior to the 
investigation the domestic industry did not produce blends of honey and 
rice syrup, and had no knowledge of any imports of such a product.\21\ 
Petitioners also note that several studies on honey adulteration 
published from 1991 through 2002 do not mention rice syrup as an 
adulterant, including the National Honey Board's (which is overseen by 
the U.S. Department of Agriculture and conducts market research) 2002 
Honey Attitude and Usage Study, which does not refer to any blend of 
honey with any non-honey sweeteners being available at the time of the 
investigation.\22\
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    \17\ See id. at 5.
    \18\ See ITC Report, the ITC's 1993-94 ``safeguard'' 
investigation, Honey from China, Inv. No. TA-406-13, USITC Pub. 2715 
(Jan. 1994) (``1994 ITC Report''), and the 1994-95 AD investigation, 
Honey from the People's Republic of China, Inv. No. 731-TA-722 
(Preliminary), USITC Pub. 2832 (Nov. 1994) (``ITC AD Report'').
    \19\ See Petitioners' QR at 6-7, and Initiation FR at 77482-3.
    \20\ See Petitioners' QR at 8.
    \21\ See id. at 8, citing Petitioners' Supp. QR at Exhibit 3.
    \22\ See Petitioners' QR at 8-9, and Initiation FR at 77483.
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    Anhui Hundred argues that ``honey syrup'' (blends of honey and rice 
syrup) is not a newly developed product designed to circumvent the 
Order as demonstrated by the fact that both honey and honey 
preparations existed before the investigation and that both the 
Petitioners and the Department knew of their existence.\23\ Further, 
Anhui Hundred contends that despite this knowledge, Petitioners chose 
to include in the scope only preparations containing over 50 percent 
honey.\24\ However, as discussed above, there is no evidence on the 
record that honey and rice syrup was blended together or commercially 
available at the time of the investigation, and as discussed further 
below, the blends of honey and rice syrup under consideration in this 
inquiry are a materially different product than other honey blends.
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    \23\ See Anhui Hundred Opposition at 2-3.
    \24\ See id. at 3.
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    Anhui Hundred also notes that Petitioners did not bring an 
anticircumvention request prior to this proceeding in 2011, even 
though, according to PIERS data, blends of honey and rice syrup have 
been imported since as early as 2003.\25\ Similarly, Anhui Hundred 
argues that two rulings by Customs and Border Protection (``CBP'') 
demonstrate that

[[Page 37381]]

blends of honey and rice syrup were identified as early as 2005, and, 
therefore, cannot be considered a newly-developed product.\26\ However, 
there is no prescribed time limit for a party to bring a later-
developed merchandise claim. Additionally, as explained above, the 
relevant question is whether the product in question was developed 
after the start of the investigation, not at what time the product was 
developed in relation to the anticircumvention inquiry itself.
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    \25\ See id.
    \26\ See id. at 4, and Exhibit 1.
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    Petitioners argue that the evidence highlighted by Anhui Hundred 
(e.g. the PIERS data) in fact shows that blends of honey and rice syrup 
did not arrive on the U.S. market until four years after the initiation 
of the investigation.\27\ Additionally, Petitioners contend that the 
CBP challenges made in 2005 and 2009 placed on the record by Anhui 
Hundred only show that blends of honey and rice syrup were present in 
those years, but do not show that they were commercially available when 
the investigation initiated.\28\
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    \27\ See id.
    \28\ See id. at 10.
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    Based on the three U.S. trade investigations,\29\ several honey 
adulteration studies which do not mention the existence of blends of 
honey and rice syrup at all,\30\ a National Honey Board Survey,\31\ 
PIERS data,\32\ and the affidavit of an industry expert,\33\ the 
Department determines that blends of honey and rice syrup were not 
commercially available at the time the investigation was initiated. 
Instead, the PIERS data demonstrates blends of honey and rice syrup 
first became commercially available in the United States in August of 
2004.\34\
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    \29\ See the ITC Report, 1994 ITC Report, and the ITC AD Report.
    \30\ See Petitioners' Supp. QR. at 14-16, and Exhibits 5-9.
    \31\ See Petitioners' QR at 8-9.
    \32\ See Anhui Hundred Opposition at 2-3.
    \33\ See Petitioners QR at Exhibit 3.
    \34\ See Petitioners' Supp. Response at 11-12.
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Materially Different Merchandise

    Next, the Department analyzed whether blends of honey and rice 
syrup are materially different from those under consideration at the 
time of the investigation. We begin our analysis by noting that the 
scope specifically addresses ``artificial honey,'' and includes 
artificial honeys ``containing more than 50 percent natural honey by 
weight.'' According to the ITC Report, artificial honeys are ``mixtures 
based on sucrose, glucose, or invert sugar, generally flavored or 
colored and prepared to imitate natural honey.'' \35\ Based on this 
description, blends of honey and rice syrup comprised of over 50 
percent honey qualify as artificial honey because they are composed of 
sucrose, glucose and water, and imitate honey as discussed below in the 
Physical Characteristics section, and therefore fall within the scope 
of this Order.
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    \35\ See ITC Report at I-6.
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    However, Petitioners argue that the Department's analysis should 
not end there because blends of honey and rice syrup did not exist at 
the time of the Order, and they are materially different from the 
artificial honey contemplated by the scope because they are not 
susceptible to current testing methods, as are other honey blends.\36\ 
Petitioners explain that at the time the Order was written, scientific 
testing existed which could detect the amount of cane or corn syrup in 
a honey blend, because honey is a C-3 sugar which is different from 
corn syrup and cane syrup which are C-4 sugars, and this difference was 
detectable via testing.\37\ These tests were developed to prevent pure 
honey from being diluted by cheaper non-honey sweeteners (e.g. cane and 
corn syrup) which existed prior to the initiation of the investigation, 
and being resold as pure honey to unwitting consumers (a process known 
as honey adulteration).\38\ However, these testing methods, according 
to Petitioners, cannot distinguish the amount of rice syrup in a honey 
and rice syrup blend, because rice syrup and honey are both C-3 
sugars.\39\ As a result, Petitioners' argue this evidence demonstrates 
that neither the ITC nor Petitioners considered excluding blends of 
honey and C-3 sugars containing 50 percent or less by weight when there 
was no way to determine if such products fall within the scope's 50 
percent threshold.\40\
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    \36\ Petitioners' Supp. Response at 11.
    \37\ See id. at 7-8.
    \38\ See Petitioners' QR at 18-9.
    \39\ See id.
    \40\ See Petitioners' Supp. Response at 11.
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    The Department preliminarily determines that, while honey blends 
are contemplated by the Order, blends of honey and rice syrup are 
materially different from those blends because they are not made of C-4 
sugars. This difference is important because the percentages present in 
the Order are premised on honey-sugar blends for which the percentage 
of honey and sugar are determinate. However, as demonstrated by 
Petitioners, the percentage of sugar in blends of honey and rice syrup 
is not determinate because one cannot identify the percentage of C-3 
sugars blended with honey.\41\ Put differently, without the ability to 
test for the relative amount of honey present in a blend of rice-syrup 
and honey, the ``50 percent natural honey by weight'' threshold in the 
scope is without meaning for blends of honey and rice syrup.
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    \41\ See Petitioners' QR at 18-23.
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    In conclusion, the Department finds that honey and rice syrup 
blends constitute later-developed merchandise, that is, merchandise 
developed after the honey investigation and this merchandise is 
materially different from the merchandise under consideration at the 
time of the investigation and, in particular, different from the honey 
blends specifically excluded under the Order.

Whether Blends of Honey and Rice Syrup Should Be Included Within the 
Scope of the Order

    As noted above, section 781(d)(1) provides that in determining 
whether merchandise developed after an investigation is within the 
scope of an antidumping duty order, the Department shall consider 
whether blends of honey and rice syrup, regardless of the percentage of 
honey they contain, have the same general physical characteristics, 
same ultimate user expectations, same ultimate use, uses the same 
channels of trade, and same advertisement and display as the products 
covered by the scope.

(1) Physical Characteristics

    With regard to whether blends of honey and rice syrup comprised of 
any percentage of honey share the same physical characteristics as 
honey products covered by the language of the Order, Petitioners have 
presented information indicating that there is no substantial 
difference in physical characteristics. Petitioners argue that the test 
report submitted by Anhui Hundred shows that blends of honey and rice 
syrup are indistinguishable from in-scope blends of honey and rice 
syrup in terms of sugar and water content.\42\ Additionally, in 
appearance, Anhui Hundred's test report describes the 90 percent rice 
syrup, ten percent honey blend as ``a translucent, straw colored, thick 
liquid with no visible foreign substances,'' which according to 
Petitioners is a description which applies equally to in-scope blends 
of honey and rice syrup and pure natural honey.\43\
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    \42\ See id. at 13.
    \43\ See id. at 14-15.
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    Secondly, Petitioners note that Anhui Hundred (doing business as 
``Anhui

[[Page 37382]]

Freedom Foods'') uses the same six descriptions to market blends of 
honey and rice syrup regardless of whether the blends are in-scope or 
out-of-scope, meaning the products must have the same physical 
characteristics.\44\ Additionally, Petitioners provided evidence from 
the Web sites of other PRC producers of blends of honey and rice syrup, 
showing that they too market blends of honey and rice syrup using the 
identical descriptions, for their blends of honey and rice syrup 
ranging from ten percent honey to 90 percent honey.\45\
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    \44\ See id. at Exhibit 17. Petitioners explain that Anhui 
markets both in-scope and out of scope blends of rice syrup using 
the same six descriptions: ``Appearance: white~yellow, no visible 
impurities by naked eyes''; ``Smell: mildly sweet, with the flavor 
of honey''; ``Taste'' similar to honey very much;'' ``Moisture 18.5% 
max.''; ``Fructose/reducing sugar 48% min.''; and Color is 
``30min.''
    \45\ See id. at 16-18. For example, Wuhu Tongli Foods markets 
both its 90 percent honey to rice syrup blend and its 10 percent 
honey to rice syrup blend the same, stating ``regardless of the 
honey-to-rice syrup ratio selected for the blend, ``it taste similar 
to honey very much.'' See id. at Exhibit 20.
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    Thirdly, Petitioners state no scientific test exists to effectively 
distinguish between in-scope and out-of-scope blends of honey and rice 
syrup based on differences in those products' physical 
characteristics.\46\ Therefore, Petitioners argue, because all blends 
of honey and rice syrup produce the same test results, where a tester 
can determine a mixture of honey and rice syrup is present, but not in 
what ratio, for purposes of the analysis above, the Department must 
find that blends of honey and rice syrup have identical physical 
characteristics to in-scope blends and honey.\47\ Based on all of the 
above evidence, the Department finds Petitioners have demonstrated 
honey and rice syrup blends, regardless of the percentage of honey they 
contain, have the same physical characteristics as honey.
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    \46\ See id. at 18-25.
    \47\ See id. at 23.
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(2) Expectations of the Ultimate Users

    Petitioners argue that the ultimate users of blends of honey and 
rice syrup have the same expectations as users of honey. Based on the 
affidavit of an industry expert, Petitioners argue that because blends 
of honey and rice syrup contain the word ``honey,'' the ultimate 
consumers expect ``a honey based sweetener that looks, smells, and 
tastes like honey'' regardless of the relative percentage of honey they 
contain.\48\ Petitioners also placed evidence on the record from 
various producers of blends of honey and rice syrup, showing that they 
advertise and market blends of honey and rice syrup as having the same 
physical characteristics, therefore, consumers cannot have any 
differing expectations for these products, other than price.\49\ 
Additionally, Petitioners put National Honey Board surveys on the 
record showing consumers often mistake honey blends with honey, and 
there is no evidence in the reports to suggest consumers can 
distinguish between in-scope and out-of scope blends.\50\ Based on this 
evidence, the Department finds that the Petitioners have demonstrated 
through National Honey Board surveys and advertising language on 
multiple PRC exporter Web sites, and an affidavit by an industry expert 
that consumers have similar expectations for blends of honey and rice 
syrup regardless of the percentage of honey they contain, as well as 
for pure honey.
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    \48\ See id. at 26.
    \49\ See id. at 31.
    \50\ See Petitioners' Supp. Response at 18-19, and Exhibits 13-
15.
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(3) Ultimate Use of Merchandise

    Petitioners state that all blends of honey and rice syrup have the 
same ultimate uses as in-scope honey, and cite to a National Honey 
Board survey which shows that all blends of honey and rice syrup are 
consumed for baking, and on/in breads, pancakes and cereal.\51\ 
Petitioners also placed a series of advertisements on the record, 
showing both in-scope and out-of-scope blends having identical uses 
(e.g. toppings for pancakes, bread, etc.).\52\
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    \51\ See id. at 32.
    \52\ See id. at 32-34.
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    Anhui Hundred argues that blends of honey and rice syrup are not 
substitutes for pure honey, because blends of honey and rice are only 
sold to commercial bakeries and manufacturers, and are not for retail 
sale.\53\ However, the Department notes that the Order is not limited 
to pure honey. Furthermore, commercial bakeries and manufacturers also 
use pure honey,\54\ other in-scope artificial honey blends,\55\ and 
both in-scope and out-of-scope blends of honey and rice syrup.\56\ 
Additionally, as discussed below in the Channels of Trade and 
Advertising sections, there is evidence on the record that blends of 
honey and rice syrup are in fact sold for retail uses, in contrast to 
Anhui Hundred's contention that such blends are not for retail 
sale.\57\ Further, the Department finds that even if blends of honey 
and rice syrup were not sold for retail use that would not mean that 
they do not have similar uses, since they both are used for commercial 
baking. Based on this evidence, the Department finds that blends of 
honey and rice syrup have the same ultimate uses as honey.
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    \53\ See Anhui Hundred Opposition at 5.
    \54\ See, e.g., ITC Report at I-5 stating, ``honey appears in a 
variety of products such as bread and other baked goods, cereal, 
condiments, candy, medicine, and even shampoo.''
    \55\ See id. at I-6, stating in-scope artificial honey is used 
as a ``direct substitute for natural honey.''
    \56\ See Anhui Scope Request at 3, stating ``the vast majority 
of honey syrup consumed world-wide is used by bakeries and 
commercial food processors as a sweetener * * *''; see also 
Petitioners' Supp. QR, at Exhibit 14, the National Honey Board 2006 
Survey indicating honey and rice syrup blends would be used for 
baking and as spreads for bread and pancakes.
    \57\ See, e.g., Petitioners' Supp. QR at Exhibits 17, 20-22, 
showing Web sites selling blends of honey and rice syrup from PRC 
producers in jars and traditional honey bears for individual use and 
sale.
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(4) Channels of Trade

    Petitioners contend that blends of honey and rice syrup, regardless 
of the honey content, are used by industrial bakers, or sold in health 
food stores, or grocery stores in honey bear bottles.\58\ Anhui Hundred 
similarly contends that blends of honey and rice syrup are sold to 
``bakeries, and commercial food processors as a sweetener, while small 
quantities may be repackaged for retail sale to individual consumers.'' 
\59\ Petitioners state that producers of blends of honey and rice 
syrup, including Anhui Hundred, market blends of honey and rice syrup 
in honey bear bottles and other retail containers on Internet Web 
sites, as well as steel drums.\60\ Further, Petitioners argue, even if 
blends of honey and rice syrup were only sold to commercial bakeries 
and processed food manufacturers, both less than- and greater than-50 
percent blends still travel through the same channels of trade to reach 
those consumers because they are marketed the same on Web sites and in 
the same containers.\61\ Finally, Petitioners note that Anhui Freedom 
Foods sells all of its blends of honey and rice syrup, regardless of 
honey content, in any packaging the consumer wishes, from squeeze 
bottles, to steel drums.\62\ Based on the evidence on the record, 
including multiple Web sites showing blends of honey and rice syrup 
being sold in the same containers regardless of the percentage of honey 
they contain,\63\ and Anhui Hundred's own submission stating that 
blends of honey and rice syrup are consumed by bakeries and commercial 
food processors,\64\ the

[[Page 37383]]

Department finds that the channels of trade for all ratios of blends of 
honey and rice syrup are also similar to those used for honey.
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    \58\ See Petitioners' QR at 34-5.
    \59\ See Anhui Scope Request at 3.
    \60\ See Petitioners' QR at 35-6, and Exhibit 17.
    \61\ See id.
    \62\ See id. at 36.
    \63\ See Petitioners' Supp. QR at Exhibits 19-23, and 
Petitioners' Supp. Response at 28-30, and Attachments A, B, D.1, 
D.2, and E.
    \64\ See Anhui Scope Request at 3.
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(5) Advertising

    Petitioners argue that blends of honey and rice syrup, regardless 
of the percentage of honey they contain, are advertised and displayed 
in the same manner as in-scope honey. For example, Petitioners observe 
that Anhui Freedom Foods sells ``syrup honey'' and ``honey blended 
syrup'' in blends ranging from ten percent honey to at least 70 percent 
honey in containers which are identical in terms of size, listed 
applications and uses, advertising used, and channels of trade.\65\ 
Petitioners note that the same is true for other PRC producers of 
blends of honey and rice syrup, which use identical labeling and 
advertising for both less than- and greater than-50 percent blends.\66\ 
Petitioners also note that the packaging almost always prominently 
displays the word ``honey'' on the front, and is often in bear bottles 
so consumers associate it with pure honey.\67\ Based on this evidence 
on the record, the Department finds that honey and rice syrup blends 
are advertised in the same or similar manner as honey.
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    \65\ See id. at 37.
    \66\ See id.
    \67\ See id.
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Other Arguments by Anhui Hundred

    Anhui Hundred also contends that Petitioners have not put any 
evidence on the record to support their claim that blends of honey and 
rice syrup have been sold as pure honey. The Department notes that it 
is not basing its circumvention finding on the contention that blends 
of honey and rice syrup are being fraudulently sold as pure honey, nor 
is that an element of the Department's later-developed merchandise 
analysis.
    Finally, prior to the initiation, Anhui Hundred argued that 
initiation of an anticircumvention inquiry based on the lack of an 
enforceable test would set a bad precedent for future cases.\68\ Anhui 
Hundred argues that including blends of honey and rice syrup would 
cause uncertainty about what products are included in the scope of the 
Order and which products are likely to be included in the future.\69\ 
The Department does not find these arguments persuasive. First, Anhui 
has not provided any legal basis for these arguments. The Department 
has analyzed the statutorily mandated criteria and this is the correct 
focus of this anticircumvention inquiry. In addition, if the Department 
affirms this preliminary determination and finds all blends of honey 
and rice syrup are later-developed merchandise, it will amend the scope 
language to that affect in an unambiguous manner. Further, a revised 
scope would clear up some of the current uncertainty around the Order, 
as demonstrated by the CBP challenges cited above.
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    \68\ See Anhui Hundred Opposition at 5-9.
    \69\ See id. at 6.
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    Anhui Hundred also argues that a lack of a test does not 
necessarily make an order unenforceable because the composition of the 
merchandise could be verified through manufacturing and shipping 
documentation, as well as on-site verifications.\70\ Once again, there 
is no legal basis for the Anhui Hundred's argument. The Statute does 
not require the Department to make a determination of unenforceability 
before making an affirmative circumvention determination. In any event, 
the evidence does not support Anhui Hundred's argument because in the 
case of the honey Order, CBP's ability to test the composition of the 
merchandise has been a tool in the enforcement of the Order.\71\ In 
this regard, Petitioners stated that they specifically agreed to the 50 
percent threshold in the scope because they thought it would be 
enforceable.\72\ CBP's ability to continue to enforce the Order has now 
been called into question because of the development of blends of honey 
and rice syrup which are not susceptible to current testing methods.
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    \70\ See id. at 7.
    \71\ See Petitioners' Supp. QR at Exhibit 26.
    \72\ See id. at 11.
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Conclusion

    Based on the above information, the Department finds that the 
blends of honey and rice syrup are later-developed merchandise. The 
evidence on the record demonstrates that blends of honey and rice syrup 
were not commercially available at the time that the investigation was 
initiated and these blends are materially different from the blends 
contemplated by the Order. Additionally, all honey rice syrup blends, 
regardless of the percentage of honey they contain, meet the criteria 
under sections 781(d)(1)(A-E) of the Act.
    The evidence on the record of this inquiry, taken as a whole, leads 
to our preliminary determination that U.S. imports of blends of honey 
and rice syrup are later-developed products of the subject merchandise, 
within the meaning of section 781(d) of the Act, and are within the 
scope of the Order.

Suspension of Liquidation

    Section 351.225(l)(2) of the Department's regulations states: ``If 
liquidation has not been suspended, the Secretary will instruct CBP to 
suspend liquidation and to require a cash deposit of estimated duties, 
at the applicable rate, for each unliquidated entry of the product 
entered, or withdrawn from warehouse, for consumption on or after the 
date of initiation of the scope inquiry.'' In accordance with section 
351.225(l)(2) of the Department's regulations, we will instruct CBP to 
suspend liquidation of all entries of blends of honey and rice syrup, 
from the PRC that were entered, or withdrawn from warehouse, for 
consumption on or after December 7, 2011, the date of initiation of 
this anticircumvention inquiry.
    The merchandise subject to suspension of liquidation based on this 
determination is all blends of honey and rice syrup regardless of the 
percentage of honey contained in the blend. In accordance with sections 
735(c) and 781(b) of the Act and 19 CFR 225(i)(3), we will direct CBP 
to suspend liquidation and require cash deposits of estimated duties, 
at the rate applicable to the exporter, on all unliquidated entries of 
all honey and rice syrup blends regardless of the percentage of honey 
they contain, that were entered, or withdrawn from warehouse, for 
consumption on or after December 7, 2011, the date of initiation of the 
circumvention inquiry. This suspension of liquidation will remain in 
effect until further notice.

International Trade Commission Notification

    In accordance with section 781(d) of the Act, we have notified the 
ITC of the proposed inclusion of blends of honey and rice syrup in the 
antidumping duty order on honey from the PRC.\73\ The ITC has not yet 
determined if consultations are not necessary.
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    \73\ See the Department's letter to the ITC dated May 14, 2012, 
Re: Anticircumvention Inquiry of the Antidumping Duty Order on Honey 
from the People's Republic of China.
---------------------------------------------------------------------------

Public Comment

    Case briefs from interested parties may be submitted no later than 
30 days from the publication of this notice. Rebuttal briefs must be 
limited to issues raised in such briefs and may be filed no later than 
five days after the deadline for filing case briefs.
    Additionally, pursuant to 19 CFR 351.310(c), interested parties who 
wish to request a hearing, or to participate if one is requested, must 
submit a written

[[Page 37384]]

request to the Assistant Secretary for Import Administration, Room 
1117, within 30 days of the date of publication of this notice. 
Requests should contain: (1) The party's name, address and telephone 
number; (2) the number of participants; and (3) a list of issues to be 
discussed.\74\ Issues raised in the hearing will be limited to those 
raised in the respective case and rebuttal briefs.
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    \74\ See Id.
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Final Determination

    The Department intends to issue the final determination no later 
than October 2, 2012. This determination is issued and published in 
accordance with section 781(d) of the Act and section 351.225(j) of the 
Department's regulations.

    Dated: June 13, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2012-15219 Filed 6-20-12; 8:45 am]
BILLING CODE 3510-DS-P