[Federal Register Volume 85, Number 14 (Wednesday, January 22, 2020)]
[Notices]
[Pages 3613-3616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00972]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-201-846]


Sugar From Mexico: Amendment to the Agreement Suspending the 
Countervailing Duty Investigation

AGENCY: Enforcement and Compliance, International Trade Administration, 
Department of Commerce.

DATES: Applicable January 15, 2020.

SUMMARY: The Department of Commerce (Commerce) and a representative of 
the Government of Mexico (GOM) have signed an amendment to the 
Agreement Suspending the Countervailing Duty Investigation on Sugar 
from Mexico (CVD Agreement). The amendment to the CVD Agreement 
modifies the definitions for sugar from Mexico, modifies the 
restrictions of the volume of direct or indirect exports to the United 
States of sugar from all Mexican producers/exporters, and provides for 
enhanced monitoring and enforcement mechanisms.

FOR FURTHER INFORMATION CONTACT: Sally C. Gannon or David Cordell at 
(202) 482-0162 or (202) 482-0408, respectively; Bilateral Agreements 
Unit, Office of Policy, Enforcement and Compliance, International Trade 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION: 

Background

    On April 17, 2014, Commerce initiated a countervailing duty 
investigation under section 702 of the Tariff Act of 1930, as amended 
(the Act), to determine whether manufacturers, producers, or exporters 
of sugar from Mexico receive subsidies.\1\ On August 25, 2014, Commerce 
preliminarily determined that countervailable subsidies are being 
provided to producers and exporters of sugar from Mexico and aligned 
the final countervailing duty determination with the final antidumping 
duty determination.\2\
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    \1\ See Sugar from Mexico: Initiation of Countervailing Duty 
Investigation, 79 FR 22790 (April 24, 2014).
    \2\ See Sugar from Mexico: Preliminary Affirmative 
Countervailing Determination and Alignment of Final Countervailing 
Determination with Final Antidumping Duty Determination, 79 FR 51956 
(September 2, 2014).
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    Commerce and the GOM signed the CVD Agreement on December 19, 
2014.\3\
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    \3\ See Sugar From Mexico: Suspension of Countervailing 
Investigation, 79 FR 78044 (December 29, 2014) (CVD Agreement).
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    On January 8, 2015, Imperial Sugar Company (Imperial) and AmCane 
Sugar LLC (AmCane) each notified Commerce that they had petitioned the 
International Trade Commission (ITC) to conduct a review of the CVD 
Agreement under section 704(h) of the Act to determine whether the 
injurious effects of the imports of the subject merchandise are 
eliminated completely by the CVD Agreement. On March 24, 2015, in a 
unanimous vote, the ITC found that the CVD Agreement eliminated 
completely the injurious effects of imports of sugar from Mexico.\4\ As 
a result of the ITC's determination, the CVD Agreement remained in 
effect, and on March 27, 2015, Commerce, in accordance with section 
704(h)(3) of the Act, instructed U.S. Customs and Border Protection 
(CBP) to terminate the suspension of liquidation of all entries of 
sugar from Mexico and refund all cash deposits.
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    \4\ See Sugar from Mexico: Determinations, 80 FR 16426 (March 
27, 2015).
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    Notwithstanding issuance of the CVD Agreement, pursuant to requests 
by domestic interested parties, Commerce continued its investigation 
and made an affirmative final determination that countervailable 
subsidies were being provided to exporters and producers of sugar from 
Mexico.\5\ In its Final Determination, Commerce calculated 
countervailable subsidy rates of 43.93 percent for Fondo de Empresas 
Expropiadas del Sector Azucarero (FEESA), 5.78 percent for Ingenio Tala 
S.A. de C.V. and certain affiliated sugar mills of Grupo Azucarero 
Mexico S.A. de C.V. (collectively, the GAM Group), and 38.11 percent 
for producers and exporters that were not individually investigated. 
Commerce stated in its Final Determination that it would ``not instruct 
CBP to suspend liquidation or collect cash deposits calculated herein 
unless the {CVD{time}  Suspension Agreement is terminated.'' \6\ The 
ITC subsequently made an affirmative determination of material injury 
to an industry in the United States by reason of imports of sugar from 
Mexico.\7\
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    \5\ See Sugar From Mexico: Continuation of Antidumping and 
Countervailing Duty Investigations, 80 FR 25278 (May 4, 2015); Sugar 
From Mexico: Final Affirmative Countervailing Duty Determination, 80 
FR 57337 (September 23, 2015) (Final Determination).
    \6\ Final Determination, 80 FR at 57338.
    \7\ See Sugar From Mexico, 80 FR 70833 (November 16, 2015) 
(Final ITC Determination).
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    In June 2016, Commerce and GOM began consultations regarding the 
CVD Agreement to address concerns raised by the domestic industry and 
to ensure that the CVD Agreement continued to meet all of the statutory 
requirements for a suspension agreement, e.g., that suspension of the 
investigation is in the public interest, including the availability of 
supplies of sugar in the U.S. market, and that effective monitoring is 
practicable. The consultations resulted in Commerce and the GOM 
initialing a draft amendment to the CVD Agreement on June 14, 2017, and 
subsequently signing a finalized amendment on June 30, 2017.\8\
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    \8\ See Sugar From Mexico: Amendment to the Agreement Suspending 
the Countervailing Duty Investigation, 82 FR 31942 (July 11, 2017) 
(2017 CVD Amendment).
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    CSC Sugar LLC (CSC Sugar) challenged Commerce's determination to 
amend the CVD Agreement by contending that Commerce did not meet its 
obligation to file a complete administrative record.\9\ Specifically, 
CSC Sugar argued that Commerce failed to memorialize and include in the 
record ex parte communications between Commerce officials and 
interested parties (including the domestic sugar industry and 
representatives of Mexico), as required by section 777(a)(3) of the 
Act.\10\ The CIT agreed with CSC Sugar and ordered Commerce to 
supplement the administrative record with any ex parte communications 
regarding the 2017 CVD Amendment.\11\
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    \9\ See CSC Sugar LLC v. United States, Ct. No. 17-00214, Slip 
Op. 19-131 (CIT October 18, 2019) (CSC Sugar II) at 4.
    \10\ Id.
    \11\ Id. (citing CSC Sugar LLC v. United States, 317 F. Supp. 3d 
1322, 1326 (CIT 2018)).
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    Ultimately, the CIT found that Commerce's failure to follow the 
recordkeeping requirements of Section 777 of the Act cannot be 
described as ``harmless.'' \12\ The CIT found that this recordkeeping 
failure substantially prejudiced CSC Sugar.\13\ On that basis, the CIT 
stated that the 2017 CVD Amendment must be vacated.\14\ Consistent with 
CIT's ruling in CSC Sugar II, on December 6, 2019, Commerce terminated 
the 2017 CVD Amendment prospectively--and accordingly, as of December 
7, 2019, the unamended CVD Agreement has been in force and effective, 
and the 2017 CVD Amendment has had no force or effect.\15\
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    \12\ Id. at 11-12.
    \13\ Id. at 12.
    \14\ See Sugar From Mexico: Notice of Court Decision Regarding 
Amendment to the Agreement Suspending the Countervailing Duty 
Investigation, 84 FR 58136 (October 30, 2019).
    \15\ See Sugar From Mexico: Notice of Termination of Amendment 
to the Agreement Suspending the Countervailing Duty Investigation, 
84 FR 67718, 67719 (December 11, 2019).

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[[Page 3614]]

    On November 4, 2019, Commerce formally opened consultations to 
renegotiate an amendment to the CVD Agreement.\16\ On November 6, 2019, 
Commerce released a proposed amendment to the CVD Agreement and invited 
parties to provide written comments on the proposed amendment by 
November 12, 2019.\17\ On December 4, 2019, Commerce and the GOM 
initialed a draft amendment to the CVD Agreement, and Commerce released 
a corresponding draft statutory memorandum.\18\ Interested parties were 
invited to provide comments on the draft amendment and draft memorandum 
by December 16, 2019.
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    \16\ See Letter to the Government of Mexico from P. Lee Smith, 
Deputy Assistant Secretary for Policy & Negotiations, 
``Consultations on Potential Amendment to the Agreement Suspending 
the Countervailing Duty Investigation on Sugar from Mexico'' 
(November 4, 2019).
    \17\ See Letter to All Interested Parties from P. Lee Smith, 
Deputy Assistant Secretary for Policy & Negotiations, ``Release of 
Draft Amendment to the Agreement Suspending the Countervailing Duty 
Investigation on Sugar from Mexico'' (November 6, 2019).
    \18\ See Letter to All Interested Parties from Sally C. Gannon, 
Director for Bilateral Agreements, ``Draft Amendment to the 
Agreement Suspending the Countervailing Duty Investigation on Sugar 
from Mexico and Draft Statutory Memorandum'' (December 4, 2019).
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Scope of Agreement

    See Section I, Product Coverage, of the CVD Agreement.

Analysis of Comments Received

    We received comments on the draft amendment and draft statutory 
memorandum from CSC Sugar; the petitioners, American Sugar Coalition 
and its members; \19\ Imperial Sugar Company; the Government of Mexico; 
the Sugar Users Association; the International Sugar Trade Coalition, 
Inc.; and the Corn Refiners Association. In reaching a final amendment 
to the CVD Agreement, Commerce has taken into account all comments 
submitted on the record of the suspension agreement proceeding and has 
made changes, where warranted, to the December 4, 2019 draft CVD 
amendment based upon those comments.
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    \19\ Petitioners are the American Sugar Coalition and its 
individual members: American Sugar Cane League, American Sugar 
Refining, Inc., American Sugarbeet Growers Association, Florida 
Sugar Cane League, Rio Grande Valley Sugar Growers, Inc., Sugar Cane 
Growers Cooperative of Florida, and United States Beet Sugar 
Association.
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Amendment to CVD Agreement

    Commerce consulted with the GOM and domestic interested parties and 
has considered the comments submitted by interested parties with 
respect to the draft amendment to the CVD Agreement. On January 15, 
2020, after consideration of the interested party comments received, 
Commerce and the GOM signed a finalized amendment to the CVD Agreement. 
The 2020 Amendment, as integrated with the CVD Agreement (the amended 
CVD Agreement), allows for exports of Mexican sugar to the United 
States in accordance with the collective terms therein.
    In accordance with section 704(c) of the Act, we have determined 
that extraordinary circumstances, as defined by section 704(c)(4) of 
the Act, exist with respect to the amended CVD Agreement. We have also 
determined that the amended CVD Agreement is in the public interest and 
can be monitored effectively, as required under section 704(d) of the 
Act.
    For the reasons outlined above, we find that the amended CVD 
Agreement meets the criteria of section 704(c) and (d) of the Act.
    The terms and conditions of the amended CVD Agreement, signed on 
January 15, 2020, are set forth in the 2020 Amendment to the CVD 
Agreement, which is attached in Annex 1 to this notice.

Administrative Protective Order Access

    The administrative protective order (APO) Commerce granted in the 
suspension agreement segment of this proceeding remains in place and 
effective for the amended CVD Agreement. All new parties requesting 
access under the APO currently in effect to business proprietary 
information submitted during the administration of the amended CVD 
Agreement must submit an APO application in accordance with Commerce's 
regulations currently in effect.\20\
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    \20\ See section 777(c)(1) of the Act; 19 CFR 351.103, 351.304, 
351.305, and 351.306.
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    We are issuing and publishing this notice in accordance with 
section 704(f)(1)(A) of the Act and 19 CFR 351.208(g)(2).

    Dated: January 15, 2020.
Jeffrey I. Kessler,
Assistant Secretary for Enforcement and Compliance.

Annex 1: Amendment to the Agreement Suspending the Countervailing Duty 
Investigation on Sugar From Mexico

    The Agreement Suspending the Countervailing Duty Investigation 
on Sugar from Mexico (Agreement) signed by the United States 
Department of Commerce (Commerce) and the Government of Mexico (GOM) 
on December 19, 2014, is amended, as set forth below (Amendment).
    If a provision of the Agreement conflicts with a provision of 
this Amendment, the provision of the Amendment shall supersede the 
provision of the Agreement to the extent of the conflict. All other 
provisions of the Agreement and their applicability continue with 
full force.
    Commerce and the GOM hereby agree as follows:
    Section II (``Definitions'') is amended as follows:
    Section II.D is replaced with:
    ``Effective Date of the Agreement'' means the date on which 
Commerce and the GOM signed the Agreement. Additionally, the 
``Effective Date of the Amendment'' means the date on which Commerce 
and the GOM sign the Amendment.
    Section II.G.1 is replaced with:
    1. ``Initial Export Limit Period'' covers entries of Sugar 
entered, or withdrawn from warehouse for consumption, between 
October 1, 2019 and September 30, 2020.
    Section II.K is replaced with:
    ``Other Sugar'' means
    a. Sugar at a polarity of less than 99.2, as produced and 
measured on a dry basis;
    b. Where such Sugar is Additional U.S. Needs Sugar, as defined 
in Section II.U, Sugar at a polarity of less than 99.5, as produced 
and measured on a dry basis; and,
    c. In the event that Section V.B.4.d is exercised, Sugar at a 
polarity specified by USDA that is below 99.5, as produced and 
measured on a dry basis.
    Such Other Sugar must be exported to the United States loaded in 
bulk and freely flowing (i.e., not in a container, tote, bag or 
otherwise packaged) into the hold(s) of an ocean-going vessel. To be 
considered as Other Sugar, if Sugar leaves the Mexican mill in a 
container, tote, bag or other package (i.e., is not freely flowing), 
it must be emptied from the container, tote, bag or other package 
into the hold of the ocean-going vessel for exportation. All other 
exports of Sugar from Mexico that are not transported in bulk and 
freely flowing in the hold(s) of an ocean-going vessel will be 
considered to be Refined Sugar for purposes of the Export Limit or 
Additional U.S. Needs Sugar, regardless of the polarity of that 
Sugar.
    Section II.L is replaced with:
    ``Refined Sugar'' means
    a. Sugar at a polarity of 99.2 and above, as produced and 
measured on a dry basis;
    b. Sugar considered to be Refined Sugar under Section II.K;
    c. Where such Sugar is Additional U.S. Needs Sugar as defined in 
Section II.U, Sugar at a polarity of 99.5 and above, as produced and 
measured on a dry basis; and
    d. In the event that Section V.B.4.d is exercised, Sugar at a 
polarity specified by USDA that is 99.5 or above, as produced and 
measured on a dry basis.
    New Section II.U is added as follows:
    ``Additional U.S. Needs Sugar'' means the quantity of Sugar 
allowed to be exported, over and above the Export Limit calculated 
under Section V.B.3, to fill a need identified by USDA in the U.S. 
market for a particular type and quantity of Sugar, and offered to 
Mexico pursuant to Section V.B.4.c.
    Section V (``Export Limits'') is amended as follows:

[[Page 3615]]

    Section V.A is replaced with the following:
    A. The Export Limit for the Initial Export Limit Period shall be 
1,461,420 short tons raw value. Effective January 1, 2020, no more 
than 1,004,726 short tons raw value of sugar from Mexico, may be 
exported to the United States during the period October 1, 2019, 
through March 31, 2020. The restriction in Section V.C.3, as set 
forth below, shall apply to only an amount of 1,361,420 short tons 
raw value. The Export Limit for the Initial Export Limit Period 
shall be re-calculated in March 2020 in accordance with Section 
V.B.3. The restriction in V.C.3 below shall apply to only the Export 
Limit calculated in March 2020 less 100,000 short tons raw value.
    Section V.B--the first sentence of the first paragraph is 
amended as follows (changes in italics):
    The Export Limit for each Subsequent Export Limit Period will be 
fifty (50) percent of the Target Quantity of U.S. Needs as 
calculated based on the July WASDE preceding the beginning of the 
Export Limit Period.
    Section V.B.4 is replaced with the following:
    4. Increases to the Export Limit
    a. Prior to April 1 of any Export Limit Period, if USDA notifies 
Commerce, in writing, of any additional need for Sugar, Commerce 
shall, consistent with 704(c) of the Act, increase the Export Limit 
to address potential shortages in the U.S. market based on USDA's 
request.
    b. Starting in March, within 10 days following the publication 
of each WASDE report during a given Export Limit Period, Commerce 
agrees that it shall consult with USDA and the GOM regarding any 
potential increase in the Export Limit on or after April 1. 
Following each consultation with the GOM, the GOM will notify 
Commerce within 10 days of (1) the extent to which the GOM has 
issued export licenses for Other Sugar and Refined Sugar to fulfill 
100 percent of the Target Quantity of U.S. Needs; (2) the quantity 
of Other Sugar and Refined Sugar that has been exported under such 
licenses, and (3) the nature and quantity of the Sugar that Mexico 
can supply, with supporting documentation for the foregoing, and 
Commerce shall notify USDA.
    c. Pursuant to such consultations, and upon receiving notice 
from USDA in writing of a need in the U.S. market for a particular 
type and quantity of additional Sugar that Mexico has indicated it 
can supply, Commerce shall: (1) Request written confirmation from 
the GOM that Mexico can and will supply 100 percent of the Target 
Quantity of U.S. Needs (as calculated pursuant to Section V.B.3 
based on the March WASDE); and (2) upon receiving such confirmation, 
increase the Export Limit, consistent with 704(c) of the Act, by an 
amount equal to 100 percent of such particular type and quantity of 
sugar identified by USDA (hereinafter ``Additional U.S. Needs 
Sugar''). When such Additional U.S. Needs Sugar is requested by 
USDA, and in turn offered to Mexico by Commerce, the definitions for 
Other Sugar and Refined Sugar in Section II.K.a and Section II.L.a, 
respectively, shall apply prior to May 1 of any Export Limit Period, 
and, on or after such date, the definition in Section II.K.b and 
Section II.L.c, respectively, shall apply. Such Additional U.S. 
Needs Sugar shall comply with the applicable definitions and 
requirements in the Agreement, for Other Sugar and Refined Sugar, 
respectively.
    d. In the event of an extraordinary and unforeseen circumstance 
that seriously threatens the economic viability of the U.S. sugar 
refining industry, USDA may specify the polarity of the amount of 
additional Sugar specifically needed to rectify such extraordinary 
and unforeseen circumstance. To the extent possible under the 
circumstances, USDA will consult with the GOM and other interested 
parties. When such additional Sugar is requested by USDA under this 
Section V.B.4.d, and in turn offered to Mexico by Commerce, the 
definitions for Other Sugar and Refined Sugar in Section II.K.c and 
Section II.L.d, respectively, shall apply.
    e. If Commerce has imposed penalties for polarity non-compliance 
under Section VIII.B.4 in a given Export Limit Period, Mexico may 
not be eligible for Additional Needs U.S. Sugar.
    f. Any additional Sugar may be limited to Other Sugar or Refined 
Sugar, or any combination thereof, as specified by USDA. For greater 
certainty, Section V.C does not apply to any additional Sugar 
exported by Mexico pursuant to this Section V.B.4.
    Section V.C is amended as follows:
    Section V.C.2 is amended as follows (changes in italics):
    No more than 55 percent of U.S. Needs calculated in each 
September and effective January 1 may be exported to the United 
States during the period October 1 through March 31, unless that 
amount is less than or equal to the amount calculated under Section 
V.C.1, in which case the amount calculated under Section V.C.1 will 
continue to apply until March 31.
    Section V.C.3 is amended as follows (changes in italics):
    Refined Sugar may account for no more than 30 percent of the 
exports during any given Export Limit Period.
    Section VI (``Implementation'') is amended as follows:
    Section VI.A--the following sentences are added at the end of 
the paragraph:
    On the Effective Date of the Amendment, presentation of an 
Export License is required as a condition for entry of Sugar from 
Mexico into the United States. The GOM will issue amended 
regulations to implement the Amendment, as necessary.
    Section VI.B--the first sentence is amended as follows (changes 
in italics) and a new sentence is inserted after the first sentence 
(in italics):
    Export Licenses will be contract-specific and must contain the 
information identified in Appendix I. Export Licenses issued by the 
GOM must, in addition to specifying whether or not exported Other 
Sugar is for further-processing, also specify the identity of the 
entity that is further processing the Other Sugar, if known.
    Section VIII.B (``Compliance Monitoring'') is amended as 
follows:
    Section VIII.B.4 is added as follows:
    4. Penalties for Polarity Non-Compliance of this Agreement and/
or Price Non-Compliance of the Agreement Suspending the Antidumping 
Duty Investigation on Sugar from Mexico (AD Agreement): Commerce 
will review documentation regarding polarity testing that is placed 
on the record of this Agreement, in accordance with Section VII.C.6 
of the AD Agreement, to determine whether there have been imports 
that are inconsistent with the provisions of this Agreement and 
Sections II.F, II.H, VII.C.6 and Appendix I of the AD Agreement. 
Where Commerce finds that polarity test results of an entry of Sugar 
are not compliant with the Agreement's or AD Agreement's applicable 
definition of Other Sugar or Sugar was sold at prices that are less 
than the Reference Prices established in Appendix I of the AD 
Agreement: (1) Commerce shall deduct two (2) times the quantity of 
that entry from Mexico's Export Limit, and (2) the GOM will, in 
turn, deduct that same quantity from the specific producer's/
exporter's Export Limit allocation.
    a. The penalty will be applied on the date Commerce notifies the 
GOM in writing of such non-compliance.
    b. If Other Sugar that enters during the period from October 1 
through the day before the publication of the July WASDE tests at or 
above 99.2 polarity (or at or above 99.5 or other polarity in the 
case of Additional U.S. Needs Sugar), then Commerce will reduce 
Mexico's current Export Limit by two (2) times the quantity of that 
entry. The Export Limit determined under Section V.B.2 and V.B.3 
will be correspondingly reduced by the same amount. At the time of 
the March WASDE when the Target Quantity of U.S. Needs is 
determined, and up to the day before the publication of the July 
WASDE, USDA may exercise its authority to seek to fill from other 
countries the particular type and quantity of sugar needed in the 
U.S. market to address the penalty amount by which Mexico's current-
year Export Limit was reduced.
    c. If Other Sugar that enters during the period from the day of 
the publication of the July WASDE through September 30 tests at or 
above 99.2 polarity (or at or above 99.5 or other polarity in the 
case of Additional U.S. Needs Sugar), then Commerce will reduce the 
Export Limit for the next Export Limit Period by two (2) times the 
quantity of that entry. That reduction will be applied to each 
revision of the Export Limit under Section V.B.1, V.B.2 and V.B.3. 
If Mexico's next fiscal year Export Limit is reduced, USDA may 
exercise its authority to seek to fill from other countries the 
particular type and quantity of sugar needed in the U.S. market to 
address the penalty amount by which Mexico's Export Limit was 
reduced.
    d. If Commerce finds that issues with meeting the polarity, 
testing, or compliance requirements of this Agreement continue to 
arise, Commerce can at any time terminate the Agreement under 
Section XI.B. Apart from termination, Commerce may take additional 
steps to ensure compliance with the terms of this Agreement and the 
AD Agreement as appropriate, including reducing the Export Limit up 
to three (3) times the quantity of entries that do not

[[Page 3616]]

comply with this Agreement or the AD Agreement.
    Appendix I is amended as follows (changes in italics):
    The GOM will issue contract-specific Export Licenses to Mexican 
entities that shall contain the following fields:
    At Appendix I, the following will be added to the Export 
License:
    12. Contract Identification Information: Indicate the contract 
identification information with which the license is associated.
    At Appendix II, the following will be added to the information 
reported to Commerce:
    12. Contract Identification Information: Indicate the contract 
identification information with which the license is associated.
    13. Date of Export: Indicate the date of export of the Sugar 
from Mexico to the United States.
    It is acknowledged that reported information may need to be 
updated from time to time to reflect corrected information from 
customs authorities.
    For the U.S. Department of Commerce:

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Jeffrey I. Kessler,
Assistant Secretary for Enforcement and Compliance, U.S. Department 
of Commerce.
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Date

    For the Government of Mexico:
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Luz Mar[iacute]a de la Mora S[aacute]nchez,
Subsecretaria de Comercio Exterior, Secretar[iacute]a de 
Econom[iacute]a.
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Date

[FR Doc. 2020-00972 Filed 1-21-20; 8:45 am]
 BILLING CODE 3510-DS-P