Antidumping: Orange juice from Brazil,
[Federal Register: February 11, 2005 (Volume 70, Number 28)]
[Notices]
[Page 7233-7237]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11fe05-34]
DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-840]
Notice of Initiation of Antidumping Duty Investigation: Certain Orange Juice From Brazil
AGENCY: Import Administration, International Trade Administration, Department of Commerce.
ACTION: Initiation of Antidumping Duty Investigation.
EFFECTIVE DATE: February 11, 2005.
FOR FURTHER INFORMATION CONTACT: Elizabeth Eastwood or Jill Pollack at (202) 482-3874 or (202) 482-4593, respectively; Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.
Initiation of Investigation: The Petition
On December 27, 2004, the Department of Commerce (the Department) received a petition filed in proper form by Florida Citrus Mutual, A. Duda & Sons, Inc. (doing business as Citrus Belle), Citrus World, Inc., Peace River Citrus Products, Inc.,\1\ and Southern Garden Citrus Processing Corporation (doing business as Southern Gardens) (collectively, ``the petitioners''). The petitioners filed amendments to the petition on December 29, 2004, January 6, 7, 11, 12, 14, 31, and February 2, 3, and 7, 2005. In order to evaluate further the issue of industry support, on January 25, 2005, the Department published a notice in the Federal Register extending the 20-day initiation determination deadline and requesting information from domestic growers of round oranges for processing and producers of certain orange juice. See Notice of Request for Information and Extension of Time: Certain Orange Juice From Brazil, 70 FR 3510 (Jan. 25, 2005) (Extension Notice).
\1\ Peace River Citrus Products, Inc. withdrew as a petitioner in this proceeding on January 31, 2005.
In accordance with section 732(b)(1) of the Tariff Act of 1930, as amended (the Act), the petitioners allege that imports of certain orange juice from Brazil are, or are likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Act, and that imports from Brazil are materially injuring, or are threatening to materially injure, an industry in the United States.
The Department finds that the petitioners filed this petition on behalf of the domestic industry because they are interested parties as defined in section 771(9)(G) of the Act and they have demonstrated sufficient industry support with respect to the antidumping investigation that they are requesting the Department to initiate. See infra, ``Determination of Industry Support for the Petition.''
Scope of Investigation
The scope of this investigation includes certain orange juice for
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transport and/or further manufacturing, produced in two different forms: (1) Frozen orange juice in a highly concentrated form, sometimes referred to as frozen concentrated orange juice for further manufacturing (FCOJM); and (2) pasteurized single-strength orange juice which has not been concentrated, referred to as Not-From-Concentrate (NFC).
There is an existing antidumping duty order on frozen concentrated orange juice (FCOJ) from Brazil. See Antidumping Duty Order; Frozen Concentrated Orange Juice from Brazil, 52 FR 16426 (May 5, 1987). Therefore, the scope with regard to FCOJM covers only FCOJM produced and/or exported by those companies who were excluded or revoked from the existing antidumping order on FCOJ from Brazil as of December 27, 2004. Those companies are Cargill Citrus Limitada, Citrosuco Paulista S.A., Frutropic S.A., Montecitrus Industria e Comercio Limitada, and Sucocitrico Cutrale SA (Cutrale).
The Department also revoked the existing antidumping duty order on FCOJ with regard to two additional companies, Coopercitrus Industrial Frutesp (Frutesp) and Frutropic S.A. (Frutropic). See Frozen Concentrated Orange Juice; Final Results and Termination in Part of Antidumping Duty Administrative Review; Revocation in Part of the Antidumping Duty Order, 56 FR 52510 (Oct. 21, 1991) and Frozen Concentrated Orange Juice; Final Results of Antidumping Duty Administrative Review and Revocation of Order in Part, 59 FR 53137 (Oct. 21, 1994). In a supplemental submission to the petition, the petitioners cite the changed circumstances review request by Louis Dreyfus Citrus Ltda. (Louis Dreyfus) and note that Frutropic and Frutesp were purchased by Louis Dreyfus. The petitioners assert that Louis Dreyfus is the successor-in-interest to these revoked companies. The Department has initiated a changed circumstances review in the context of the original order as requested by Louis Dreyfus Citrus in order to determine whether COINBRA-Frutesp (the company created after the ownership change of Frutesp) is the successor-in-interest to Frutesp. Nonetheless, the Department will also examine the successor- in-interest issues for both Frutesp and Fruitropic in the context of this proceeding, and we intend to make a finding no later than the preliminary determination in this case. We note that, should the Department find Louis Dreyfus or COINBRA-Frutesp to be the successor- in-interest to these companies, the successor company will be included as part of this proceeding. We invite comments from all parties on this issue.
Excluded from the scope of the investigation are reconstituted orange juice and frozen orange juice for retail (FCOJR). Reconstituted orange juice is produced through further manufacture of FCOJM, by adding water, oils and essences to the orange juice concentrate. FCOJR is concentrated orange juice, typically at 42[deg] Brix, in a frozen state, packed in retail sized containers ready for sale to consumers. FCOJR, a finished consumer product, is produced through further manufacture of FCOJM, a bulk manufacturer's product.
The subject merchandise is currently classifiable under items 2009.11.00, 2009.12.25, 2009.12.45, and 2009.19.00 of the Harmonized Tariff Schedule of the United States (HTSUS). These HTSUS subheadings are provided for convenience and for customs purposes only and are not dispositive, but rather the written description of the scope of this investigation is dispositive.
As discussed in the preamble to the Department's regulations (Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)), we are setting aside a period for parties to raise issues regarding product coverage and/or product issues such as the scope of the investigation. As noted above, there is an existing order on FCOJ from Brazil that differs in certain respects from the scope of this case. The Department is also soliciting comments related to the definition of the class or kind of merchandise under consideration. The Department encourages comments on these issues, as well as on any other issues involving product coverage, no later than April 1, 2005. Comments should be addressed to Import Administration's Central Records Unit, Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. The period of scope consultations is intended to provide the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of the preliminary determination.
Determination of Industry Support for the Petition
Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) of the Act provides that the Department's industry support determination, which is to be made before the initiation of the investigation, be based on whether a minimum percentage of the relevant industry supports the petition. A petition meets this requirement if the domestic producers or workers who support the petition account for: (1) At least 25 percent of the total production of the domestic like product; and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act provides that, if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the Department shall: (i) Poll the industry or rely on other information in order to determine if there is support for the petition, as required by subparagraph (A), or (ii) determine industry support using a statistically valid sampling method.
Section 771(4)(A) of the Act defines the ``industry'' as the producers of a domestic like product. In investigations involving processed agricultural products, the statute allows the Department also to include growers or producers of the raw agricultural product within the definition of the industry. See section 771(4)(E) of the Act. For a full discussion, see the February 7, 2005, Memorandum to Barbara E. Tillman, Acting Deputy Assistant Secretary for Import Administration, from Mildred Steward, Attorney, and Vicki Schepker, Senior Policy Analyst, entitled, ``Antidumping Duty Petition on Certain Orange Juice from Brazil: Domestic Like Product Analysis and Calculation of Industry Support'' (``Like Product/Industry Support Memo''). For the determination of industry support, the Department must identify the domestic like product. The International Trade Commission (ITC), which is responsible for determining whether the domestic industry has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to a separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to the law.\2\
\2\ See Algoma Steel Corp. Ltd. v. United States, 688 F. Supp. 639, 642-44 (CIT 1988) (``the ITC does not look behind ITA's determination, but accepts ITA's determination as to which merchandise is in the class of merchandise sold at LTFV``).
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Section 771(10) of the Act defines the domestic like product as ``a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.'' Thus, the reference point from which the domestic like product analysis begins is ``the article subject to an investigation,'' i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition.
In this case, the domestic like product referred to in the petition is the single domestic like product defined in the ``Scope of Investigation'' section, above. At this time, the Department has no basis on the record to find the petition's definition of the domestic like product to be inaccurate. The Department, therefore, has adopted the domestic like product definition set forth in the petition. For a discussion of the domestic like product analysis in this case, see the ``Like Product/Industry Support Memo.''
On December 30, 2004, and January 5, 2005,\3\ we received challenges to industry support from certain U.S. producers. Because we required additional time to determine the production quantities and levels of imports of U.S. producers, as well as the relationships between U.S. and foreign producers, we solicited additional information from the U.S. industry, in accordance with section 732(c)(4)(D) of the Act. See Extension Notice, 70 FR at 3511. On January 19, 2005, we issued industry support questionnaires to all known orange growers (via regional grower associations) and producers of certain orange juice. The questionnaire is on file in the Central Records Unit, room B-099 of the main Department of Commerce building, and also available on the Import Administration Web site (see http://ia.ita.doc.gov/ia-highlights-and-news.html ).
\3\ On February 3, 2005, we received an additional challenge to industry support.
Based on an analysis of the data collected, we determine that the petitioners have demonstrated industry support representing over 50 percent of the total production of the domestic like product. Therefore, the domestic producers or workers who support the petition account for at least 25 percent of the total production of the domestic like product, and the requirements of section 732(c)(4)(A)(i) of the Act are met. Furthermore, given that the petitioners represent more than 50 percent of the total production of the domestic like product, the requirements of section 732(c)(4)(A)(ii) of the Act are also met. Accordingly, we determine that this petition is filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act. For further discussion, see the ``Like Product/Industry Support Memo.''
Export Price and Normal Value
The following are descriptions of the allegations of sales at less than fair value upon which the Department based its decision to initiate this investigation. The sources of data for the deductions and adjustments relating to U.S. and foreign market prices, cost of production (COP), and constructed value (CV) are discussed in greater detail in the business proprietary version of the petition and in the ``Initiation Checklist.'' We corrected certain information contained in the petition's margin calculations. These corrections are set forth in detail in the ``Initiation Checklist.'' Should the need arise to use any of this information as facts available under section 776 of the Act in our preliminary or final determination, we may re-examine this information and revise the margin calculations, if appropriate.
Export Price
The anticipated period of investigation (POI) is October 1, 2003, through September 30, 2004. The petitioners requested that the Department adopt an alternate POI of July 1, 2003, through June 30, 2004, asserting that this period corresponds to the Brazilian harvest/ marketing year. According to the petitioners, this period is appropriate because: (1) Both prices and costs in the industry are affected by the juice yield of a particular harvest season and thus the orange juice industry is seasonal; and (2) oranges for processing have a limited shelf life and are therefore perishable. See the petition at pages 18 through 22 and the January 6, 2005, petition supplement at pages 1 and 2. The petitioners assert that the Department has taken seasonality and perishability into account in setting the POI in other cases. See Final Determination of Sales at Less Than Fair Value: Fresh Kiwifruit from New Zealand, 57 FR 13695 (Apr. 17, 1992) (Kiwifruit from New Zealand). We have not departed from our standard methodology for determining the POI, as set forth in 19 CFR 351.204(b)(1), because the petitioners have not demonstrated that the margins calculated using the normal POI are unrepresentative of the current level of dumping activity (and thus that seasonality is a concern here). This decision is consistent with the Department's treatment of price and cost data in administrative reviews of the existing order on FCOJ from Brazil (i.e., the Department has developed a practice of relying on pricing and cost data for the period under consideration, rather than for the Brazilian marketing year). Regarding perishability, we disagree that the Department's findings in Kiwifruit from New Zealand apply in this case. In Kiwifruit from New Zealand, perishability may have affected price trends. Here, however, the perishability at issue is certain orange juice, not oranges for processing. By the petitioners' own admission, the shelf life of certain orange juice ranges from one to two years. See the January 6 petition supplement at page 2. Consequently, we find the petitioners' reliance on this case to be misplaced.
The petitioners based export price (EP) on average unit values (AUVs) for subject merchandise derived from official U.S. import statistics for the POI. For one of these calculations, the petitioners used the AUV of imports that entered through the port of New York only. We adjusted this weighted-average AUV to include entries made through all ports in the United States, in accordance with our practice. Additionally, we deducted amounts for foreign inland freight and insurance, brokerage, handling, and port charges from the AUVs used to derive U.S. prices. See the ``Initiation Checklist.''
As part of their allegation, the petitioners provided an AUV for all imports of FCOJM during the POI. Because this import data potentially included merchandise exported by Brazilian companies subject to the existing order on FCOJ, we compared this information to company-specific FCOJM price information provided by the petitioners, as described below, for the specific companies covered by this petition. Based on this comparison, we find that the petitioners' AUV data is conservative. Therefore we have relied on it for purposes of initiation.
In addition to AUV information, the petitioners also provided company-specific FCOJM price data for each of the companies covered by this petition. However, we have not relied on additional futures data from the New York Board of Trade for one of these companies because the petitioners provided an inadequate link between the Brazilian exporter and the country of origin of the merchandise shipped from the exporter's U.S. storage facility. Similarly, we have not relied on the information provided for the remaining companies because the origin of the orange juice for which the pricing data was submitted was unclear (i.e., the
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product consisted of a blend of orange juice from numerous countries other than Brazil). For further discussion, see the ``Initiation Checklist.''
Finally, the petitioners also provided company-specific NFC price data for one Brazilian company. The price information was provided in an affidavit from an official with direct knowledge of the prices charged by Brazilian processors. Thus, we have accepted this data for purposes of initiation. For further discussion, see the ``Initiation Checklist.''
Normal Value
With respect to normal value (NV), the petitioners stated that home market prices were not reasonably available. To substantiate their argument, the petitioners state that the information reasonably available to them suggests that sales of the foreign like product in the home market are negligible. See the petition at page 63. According to the petitioners, Brazil's orange juice industry is geared almost exclusively to exports. Consequently, the petitioners used statistics on Brazil's third-country exports published by the U.S. Department of Agriculture (USDA) as the basis for determining NV. In selecting the third-country market, the petitioners chose Belgium because: (1) It is the largest third-country market for scope merchandise during the POI; (2) the aggregate quantity of scope merchandise sold by Brazilian exporters to Belgium accounted for more than five percent of the aggregate quantity of the scope merchandise sold in the United States; and (3) the product sold to the Belgian market is comparable to the product which served as the basis for EP. After examining this evidence, we found the petitioners' selection of Belgium as the comparison market to be reasonable.
The petitioners calculated third-country price using quantities and FOB values from the official Brazilian export statistics as published by the USDA with adjustments for Brazilian inland freight and insurance, brokerage, handling, and port charges.
Pursuant to section 773(b) of the Act, the petitioners provided information demonstrating reasonable grounds to believe or suspect that sales by Brazilian producers in the relevant foreign market were made at prices below the cost of production (COP) and, accordingly, requested that the Department conduct a country-wide sales-below-COP investigation in connection with this investigation. See the February 7, 2005, petition supplement. The Statement of Administrative Action (SAA), submitted to the Congress in connection with the interpretation and application of the URAA, states that an allegation of sales below COP need not be specific to individual exporters or producers. See SAA, H.R. Doc. No. 103-316 at 833 (1994). The SAA, at 833, states that ``Commerce will consider allegations of below-cost sales in the aggregate for a foreign country, just as Commerce currently considers allegations of sales at less than fair value on a country-wide basis for purposes of initiating an antidumping investigation.''
Further, the SAA provides that section 773(b)(2)(A) of the Act retains the requirement that the Department have ``reasonable grounds to believe or suspect'' that below-cost sales have occurred before initiating such an investigation. Reasonable grounds exist when an interested party provides specific factual information on costs and prices, observed or constructed, indicating that sales in the foreign market in question are at below-cost prices. Id.
Pursuant to section 773(b)(3) of the Act, COP consists of the cost of manufacturing (COM), selling, general, and administrative (SG&A) expenses, and packing. The petitioners calculated COM based on publicly available information for certain input costs in Brazil, where such information was available. Where such information was not available, the petitioners relied upon input costs provided by U.S. producers, adjusted for known differences between costs incurred to produce certain orange juice in the United States and Brazil. The petitioners did not add packing costs to the COP because certain orange juice is generally transported in tanks, bins, and drums, which are reusable capital.
To calculate SG&A, the petitioners relied on U.S. processor estimates. However, for purposes of initiation, we have recalculated SG&A to be based on the 1998-1999 financial statements for Louis Dreyfus, a Brazilian producer of orange juice, provided by the petitioners in their February 3, 2005, petition supplement because the SG&A reflected in these statements more closely reflect the experience of Brazilian orange juice producers.
Based on a comparison of the Belgian market prices for certain orange juice to the COPs calculated in the petition, we find reasonable grounds to believe or suspect that sales of the foreign like product were made at prices below the COP within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation relating to third-country sales to Belgium. We note, however, that if we determine during the course of this investigation that the home market (i.e., Brazil) is viable or that Belgium is not the appropriate third-country market upon which to base normal value, our initiation of a country-wide cost investigation with respect to sales to Belgium will be rendered moot.
Because third-country price fell below cost, pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the petitioners based NV for sales in the United States on CV. The petitioners calculated CV using the same COM and SG&A figures used to compute the Belgian third-country market costs. As noted above, however, we based SG&A on the financial statements of Louis Dreyfus. Consistent with section 773(e)(2) of the Act, the petitioners included in CV an amount for profit. For profit, the petitioners initially relied on U.S. processor estimates. In addition, the petitioners also submitted a profit rate based on the 2003 financial statements of a Brazilian beverage producer that does not produce subject merchandise or juice products, in further support of the profit reported in the petition. Also, as noted above, the petitioners provided the 1999 financial statements of Louis Dreyfus. For purposes of initiation, we have relied on the profit data from Louis Dreyfus because it more closely reflects the experience of the Brazilian orange juice industry.
Based on the changes noted above, the recalculated dumping margins for certain orange juice from Brazil range from 24.12 percent to 60.29 percent.
Fair Value Comparisons
Based on the data provided by the petitioners, there is reason to believe that imports of certain orange juice from Brazil are being, or are likely to be, sold at less than fair value.
Allegation and Evidence of Material Injury and Causation
With regard to Brazil, the petitioners allege that the U.S. industry producing the domestic like product is being materially injured, or is threatened with material injury, by reason of the individual and cumulated imports of the subject merchandise sold at less than NV.
The petitioners contend that the industry's injured condition is evident in the declining trends in market share, sales value and revenue, production volume, shipments, and employment. These factors apply to both the firms that produce certain orange juice, and the growers of the raw agricultural product, i.e., oranges for processing. The allegations of injury and causation are
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supported by relevant evidence including information from U.S. import statistics, the New York Board of Trade, industry studies and reports, the USDA, and press reports from a variety of sources. We have assessed the allegations and supporting evidence regarding material injury and causation, and we have determined that these allegations are properly supported by adequate evidence and meet the statutory requirements for initiation. See the ``Initiation Checklist'' at Attachment III.
Regarding the existing antidumping order on FCOJ from Brazil, the petitioners stated in their January 6, 2005, petition supplement that the existing order has had a very limited effect in preventing the dumping alleged in the petition. According to the petitioners, the FCOJ pricing evident in the marketplace (both before and after the hurricane damage in the fall of 2004) confirms that the current order has ceased to have any corrective impact. In addition, the petitioners point out that, because the existing order only covers FCOJ, not NFC, it has no impact in preventing damage inflicted by dumped NFC from Brazil.
Initiation of Antidumping Investigation
Based upon our examination of the petition on certain orange juice, we have found that it meets the requirements of section 732 of the Act. Therefore, we are initiating an antidumping duty investigation to determine whether imports of certain orange juice from Brazil are being, or are likely to be, sold in the United States at less than fair value. Unless this deadline is extended pursuant to section 733(b)(1)(A) of the Act, we will make our preliminary determination no later than 140 days after the date of this initiation.
Distribution of Copies of the Petition
In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of the petition has been provided to the representatives of the government of Brazil. We will attempt to provide a copy of the public version of the petition to each exporter named in the petition, as provided for under 19 CFR 351.203(c)(2).
ITC Notification
We have notified the ITC of our initiation as required by section 732(d) of the Act.
Preliminary Determination by the ITC
The ITC will preliminarily determine no later than March 7, 2005, whether there is a reasonable indication that imports of certain orange juice from Brazil are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination will result in the investigation being terminated; otherwise, this investigation will proceed according to statutory and regulatory time limits.
This notice is issued and published pursuant to section 777(i) of the Act.
Dated: February 7, 2005. Joseph A. Spetrini, Acting Assistant Secretary for Import Administration. [FR Doc. E5-587 Filed 2-10-05; 8:45 am]
