[Federal Register: May 12, 2008 (Volume 73, Number 92)]
[Notices]
[Page 26960-26963]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12my08-11]
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DEPARTMENT OF COMMERCE
International Trade Administration
(C-570-938)
Notice of Initiation of Countervailing Duty Investigation: Citric
Acid and Certain Citrate Salts from the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: May 12, 2008
FOR FURTHER INFORMATION CONTACT: David Neubacher, Scott Holland, and
Shelly Atkinson, AD/CVD Operations, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW, Washington, DC 20230; telephone:
(202) 482-5823, (202) 482-1279, and (202) 482-0116, respectively.
SUPPLEMENTARY INFORMATION:
The Petition
On April 14, 2008, the Department of Commerce (the ``Department'')
received a petition filed in proper form by Archer Daniels Midland
Company, Cargill, Inc., and Tate and Lyle Americas, Inc. (the
``petitioners''), domestic producers of citric acid and certain citrate
salts (``citric acid''). On April 22, 2008, the Department received a
supplement to the petition alleging several additional subsidy
programs. In response to the Department's requests, the petitioners
provided timely information supplementing the petition on April 24,
2008 and April 28, 2008.
In accordance with section 702(b)(1) of the Tariff Act of 1930, as
amended (``the Act''), the petitioners allege that manufacturers,
producers, or exporters of citric acid in the People's Republic of
China ( the ``PRC''), receive countervailable subsidies within the
meaning of section 701 of the Act and that such imports are materially
injuring, or threatening material injury to, an industry in the United
States.
The Department finds that the petitioners filed the petition on
behalf of the domestic industry because they are interested parties as
defined in section 771(9)(C) of the Act and the petitioners have
demonstrated sufficient industry support with respect to the
countervailing duty investigation (see ``Determination of Industry
Support for the Petition'' section below).
Period of Investigation
The period of investigation is January 1, 2007, through December
31, 2007.
Scope of the Investigation
The scope of this investigation includes all grades and granulation
sizes of citric acid, sodium citrate, and potassium citrate in their
unblended forms, whether dry or in solution, and regardless of
packaging type. The scope also includes blends of citric acid, sodium
citrate, and potassium citrate; as well as blends with other
ingredients, such as sugar, where the unblended form(s) of citric acid,
sodium citrate, and potassium citrate constitute 40 percent or more, by
weight, of the blend. The scope of this investigation also includes all
forms of unrefined calcium citrate, including dicalcium citrate
monohydrate, and tricalcium citrate tetrahydrate, which are
intermediate products in the production of citric acid, sodium citrate,
and potassium citrate. The scope of this investigation includes the
hydrous and anhydrous forms of citric acid, the dihydrate and anhydrous
forms of sodium citrate, otherwise known as citric acid sodium salt,
and the monohydrate and monopotassium forms of potassium citrate.
Sodium citrate also includes both trisodium citrate and monosodium
citrate, which are also known as citric acid trisodium salt and citric
acid monosodium salt, respectively. Citric acid and sodium citrate are
classifiable under 2918.14.0000 and 2918.15.1000 of the Harmonized
Tariff Schedule of the United States (``HTSUS''), respectively.
Potassium citrate and calcium citrate are classifiable under
2918.15.5000 of the HTSUS. Blends that include citric acid, sodium
citrate, and potassium citrate are classifiable under 3824.90.9290 of
the HTSUS. Although the HTSUS subheadings are provided for convenience
and customs purposes, the written description of the merchandise is
dispositive.
Comments on Scope of Investigation
During our review of the petition, we discussed the scope with the
petitioners to ensure that it is an accurate reflection of the products
for which the domestic industry is seeking relief. Moreover, as
discussed in the preamble to the regulations (Antidumping Duties;
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)),
we are setting aside a period for interested parties to raise issues
regarding product coverage. The Department encourages all interested
parties to submit such comments within 20 calendar days of the
publication of this notice. Comments should be addressed to Import
Administration's Central Records Unit (``CRU''), Room 1117, U.S.
Department of Commerce, 14th Street
[[Page 26961]]
and Constitution Avenue, NW, Washington, DC 20230. The period of scope
consultations is intended to provide the Department with ample
opportunity to consider all comments and to consult with parties prior
to the issuance of the preliminary determinations.
Consultations
Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department
invited representatives of the Government of the PRC for consultations
with respect to the countervailing duty petition. The Department held
these consultations in Beijing, China, with representatives of the
Government of the PRC on April 28, 2008. See the Memorandum to The
File, entitled, ``Consultations with Officials from the Government of
the People's Republic of China'' (April 28, 2008) on file in the CRU of
the Department of Commerce, Room 1117.
Determination of Industry Support for the Petitions
Section 702(b)(1) of the Act requires that a petition be filed on
behalf of the domestic industry. Section 702(c)(4)(A) of the Act
provides that a petition meets this requirement if the domestic
producers or workers who support the petition account for: (i) at least
25 percent of the total production of the domestic like product; and
(ii) more than 50 percent of the production of the domestic like
product produced by that portion of the industry expressing support
for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of
the Act provides that, if the petition does not establish support of
domestic producers or workers accounting for more than 50 percent of
the total production of the domestic like product, the Department
shall: (i) poll the industry or rely on other information in order to
determine if there is support for the petition, as required by
subparagraph (A), or (ii) determine industry support using a
statistically valid sampling method.
Section 771(4)(A) of the Act defines the ``industry'' as the
producers as a whole of a domestic like product. Thus, to determine
whether a petition has the requisite industry support, the statute
directs the Department to look to producers and workers who produce the
domestic like product. The International Trade Commission (``ITC''),
which is responsible for determining whether ``the domestic industry''
has been injured, must also determine what constitutes a domestic like
product in order to define the industry. While both the Department and
the ITC must apply the same statutory definition regarding the domestic
like product (section 771(10) of the Act), they do so for different
purposes and pursuant to a separate and distinct authority. In
addition, the Department's determination is subject to limitations of
time and information. Although this may result in different definitions
of the like product, such differences do not render the decision of
either agency contrary to law. See USEC, Inc. v. United States, 132 F.
Supp. 2d 1, 8 (CIT 2001), citing Algoma Steel Corp. Ltd. v. United
States, 688 F. Supp. 639, 644 (CIT 1988), aff'd 865 F.2d 240 (Fed. Cir.
1989), cert. denied 492 U.S. 919 (1989).
Section 771(10) of the Act defines the domestic like product as ``a
product which is like, or in the absence of like, most similar in
characteristics and uses with, the article subject to an investigation
under this subtitle.'' Thus, the reference point from which the
domestic like product analysis begins is ``the article subject to an
investigation,'' (i.e., the class or kind of merchandise to be
investigated, which normally will be the scope as defined in the
petition).
With regard to the domestic like product, the petitioners do not
offer a definition of domestic like product distinct from the scope of
the investigation. Based on our analysis of the information submitted
on the record, we have determined that citric acid and certain citrate
salts (unrefined calcium citrate, sodium citrate, and potassium
citrate) constitute a single domestic like product and we have analyzed
industry support in terms of that domestic like product. For a
discussion of the domestic like product analysis in this case, see the
Countervailing Duty Investigation Initiation Checklist: Citric Acid and
Certain Citrate Salts from the People's Republic of China (PRC),
Industry Support at Attachment II (PRC Initiation Checklist) on file in
the Central Records Unit (CRU), Room 1117 of the main Department of
Commerce building.
Our review of the data provided in the petition, supplemental
submissions, and other information readily available to the Department
indicates that the petitioners have established industry support.
First, the petition established support from domestic producers (or
workers) accounting for more than 50 percent of the total production of
the domestic like product and, as such, the Department is not required
to take further action in order to evaluate industry support (e.g.,
polling). See Section 702(c)(4)(D) of the Act. Second, the domestic
producers have met the statutory criteria for industry support under
section 702(c)(4)(A)(i) of the Act because the domestic producers (or
workers) who support the petition account for at least 25 percent of
the total production of the domestic like product. Finally, the
domestic producers have met the statutory criteria for industry support
under section 702(c)(4)(A)(ii) of the Act because the domestic
producers (or workers) who support the petition account for more than
50 percent of the production of the domestic like product produced by
that portion of the industry expressing support for, or opposition to,
the petition. Accordingly, the Department determines that the petition
was filed on behalf of the domestic industry within the meaning of
section 702(b)(1) of the Act. See PRC Initiation Checklist at
Attachment II (Industry Support).
The Department finds that the petitioners filed the petition on
behalf of the domestic industry because they are interested parties as
defined in section 771(9)(C) of the Act and they have demonstrated
sufficient industry support with respect to the countervailing duty
investigation that they are requesting the Department initiate. See PRC
Initiation Checklist at Attachment II (Industry Support).
Injury Test
Because the PRC, is a ``Subsidies Agreement Country'' within the
meaning of section 701(b) of the Act, section 701(a)(2) of the Act
applies to this investigation. Accordingly, the ITC must determine
whether imports of the subject merchandise from the PRC materially
injure, or threaten material injury to, a U.S. industry.
Allegations and Evidence of Material Injury and Causation
The petitioners allege that imports of citric acid and certain
citrate salts from the PRC are benefitting from countervailable
subsidies and that such imports are causing or threatening to cause,
material injury to the domestic industry producing citric acid and
certain citrate salts. The petitioners contend that the industry's
injured condition is illustrated by the reduced market share, reduced
production and capacity utilization, reduced employment, underselling
and price depressing and suppressing effects, lost revenue and sales, a
decline in financial performance, and an increase in import
penetration. The Department has assessed the allegations and supporting
evidence regarding material injury, threat of material injury, and
causation, and the Department determines that these allegations are
properly supported by adequate evidence and meet the statutory
requirements for initiation. See
[[Page 26962]]
PRC Initiation Checklist at Attachment III.
We are including in our investigation the following programs
alleged in the petition to have provided countervailable subsidies to
producers and exporters of the subject merchandise in the PRC:
Preferential Lending
1. Government Policy Lending Program
2. Funds provided for the rationalization of the citric acid
industry
3. Discounted loans for export-oriented industries
4. Loans provided pursuant to the Northeast Revitalization Program
Grant Programs
5. State Key Technology Renovation Program Fund
6. National level grants to loss-making state-owned enterprises
7. ``Famous Brands'' Program
Income Tax Programs
8. ``Two Free, Three Half'' program
9. Reduced income tax rates for foreign-investment enterprises
based on location
10. Income tax exemption program for export-oriented foreign-
investment enterprises
11. Tax benefits to foreign-investment enterprises for certain
reinvestment of profits
12. Reduced income tax rate for high or new technology enterprises
13. Reduced income tax rate for technology or knowledge intensive
foreign-investment enterprises
14. Preferential income tax rate for research and development at
foreign-investment enterprises
15. Preferential tax programs for encouraged industries
16. Preferential tax policies for township enterprises
17. Income tax credits on purchases of domestically produced
equipment
Indirect Tax Programs and Import Tariff Program
18. Value added tax rebate for purchases by foreign-investment
enterprises of domestically produced equipment
19. Value added tax and duty exemptions on imported equipment
20. Excessive value added tax rebates on exports
Provincial/Local Subsidy Programs
21. Provincial level grants to loss-making state-owned enterprises
22. Local income tax exemption and reduction program for
``productive'' foreign-investment enterprises
Anhui Province:
23. Reduced income tax rates for encouraged industries in Anhui
Province
24. Provision of land for less than adequate remuneration in Anhui
Province
Guangdong Province:
25. Funds for ``outward expansion'' of industries in Guangdong
Province
Jiangsu Province:
26. Income tax exemption for foreign-investment enterprises located
in Jiangsu Province
27. Preferential tax programs for enterprises located in the Su
Qian Economic Development Zone
28. Provision of land for less than adequate remuneration in the Su
Qian Economic Development Zone
29. Provision of electricity for less than adequate remuneration in
the Su Qian Economic Development Zone
Liaoning Province:
30. Loans and interest subsidies pursuant to the Liaoning
Province's five-year framework
Shandong Province:
31. Local and income tax exemptions and reductions for firms
located in Qilu Chemicals Industry Park
Shanxi Province:
32. Preferential tax program for enterprises located in Shanxi
Province
33. Funding for enterprises under the Shanxi Province 10th Five-
year Plan
Shenzhen City:
34. Export interest subsidy funds for enterprises located in
Shenzhen City
Zhejiang Province:
35. Export interest subsidy funds for enterprises located in
Zhejiang Province
36. Exemptions and reductions in taxes and fees for chemical
research and development institutions located in Zhejiang Province
37. Provision of land for less than adequate remuneration for
enterprises located in Hangzhou Bay Fine Chemical Park
38. Provision of electricity for less than adequate remuneration
for enterprises located in Hangzhou Bay Fine Chemical Park
For further information explaining why the Department is
investigating these programs,
see China Initiation Checklist.
We are not including in our investigation the following programs
alleged to benefit producers and exporters of the subject merchandise
in the PRC:
Provision of Goods and Services- for Less Than Adequate Remuneration by
the GOC
1. Water
The petitioners allege that through the program of rationalization,
the GOC has promoted differential water rates to favored citric acid
producers within the Chinese chemicals industry, despite China's
limited water resources and the water-intensive nature of the citric
acid industry. Petitioners have not sufficiently alleged the elements
necessary for the imposition of a countervailing duty and did not
support the allegation with reasonably available information.
Consequently, we do not plan to investigate this program.
2. Land
The petitioners allege that the GOC provides citric acid producers
with land grants and/or reduced land costs. Petitioners have not
sufficiently alleged the elements necessary for the imposition of a
countervailing duty and did not support the allegation with reasonably
available information. Consequently, we do not plan to investigate this
program.
3. Electricity and natural gas
The petitioners allege that Chinese citric acid producers benefit
from government-provided electricity and natural gas at subsidized
prices. The GOC controls and sets prices for electricity and natural
gas. The petitioners note that the GOC acknowledged in its WTO
accession documents that it provides subsidies on energy inputs to
``special industry sectors.'' The government has also recently
identified the citric acid industry as a high polluting industry and
non-backward producers as ``preferred,'' and has committed to ending
preferential policies to those companies. Thus, the petitioners allege
that the remaining citric acid producers will continue to receive
energy subsidies available to certain sectors. Petitioners have not
sufficiently alleged the elements necessary for the imposition of a
countervailing duty and did not support the allegation with reasonably
available information. Consequently, we do not plan to investigate this
program.
Income Tax Programs
4. Preferential tax program for enterprises in Beijing Municipality
Petitioners allege that the Beijing Municipality provides subsidies
to develop the fine chemical industry, which includes the citric acid
industry.
[[Page 26963]]
Petitioners have not sufficiently alleged the elements necessary for
the imposition of a countervailing duty and did not support the
allegation with reasonably available information. Consequently, we do
not plan to investigate this program.
5. Preferential tax program for enterprises in Chongqing
Municipality
In accordance with the West Revitalization Project, the GOC offers
encouraged industries in the Chongqing Municipality a preferred tax
rate of 15%. Petitioners allege further that fine chemical companies
located in the Chongqing Chemical Industrial Park are eligible for
additional benefits. Petitioners have not sufficiently alleged the
elements necessary for the imposition of a countervailing duty and did
not support the allegation with reasonably available information.
Consequently, we do not plan to investigate this program.
6. Preferential tax program for enterprises in Shandong Province
Petitioners allege that municipal governments encourages the
development of the chemical industry by granting tax reductions and
exemptions for companies located in chemical parks such as Qilu
Chemical Industry Park. Petitioners have not sufficiently alleged the
elements necessary for the imposition of a countervailing duty and did
not support the allegation with reasonably available information.
Consequently, we do not plan to investigate this program.
Application of the Countervailing Duty Law to the PRC
The Department has treated the PRC as a non-market economy
(``NME'') country in all past AD investigations and administrative
reviews. In accordance with section 771(18)(C)(i) of the Act, any
determination that a country is an NME country shall remain in effect
until revoked by the administering authority. See, e.g., Tapered Roller
Bearings and Parts Thereof, Finished and 10 Unfinished, (``TRBs'') From
the People's Republic of China: Preliminary Results of 2001-2002
Administrative Review and Partial Rescission of Review, 68 FR 7500,
7500-1 (February 14, 2003), unchanged in TRBs from the People's
Republic of China: Final Results of 2001-2002 Administrative Review, 68
FR 70488, 70488-89 (December 18, 2003).
In the final affirmative CVD determination on coated free sheet
paper from the PRC, the Department determined that the current nature
of the PRC economy does not create obstacles to applying the necessary
criteria in the CVD law. See Coated Free Sheet Paper from the People's
Republic of China: Final Affirmative Countervailing Duty Determination,
72 FR 60645 (October 25, 2007), and the accompanying Issues and
Decision Memorandum at Comment 1. Therefore, because Petitioners have
provided sufficient allegations and support of their allegations to
meet the statutory criteria for initiating a CVD investigation of
citric acid from the PRC, initiation of a CVD investigation is
warranted in this case. For further information, see CVD Initiation
Checklist.
Respondent Selection
For this investigation, the Department expects to select
respondents based on U.S. Customs and Border Protection data for U.S.
imports during the POI. We intend to make our decision regarding
respondent selection within 20 days of publication of this Federal
Register notice. The Department invites comments regarding the CBP data
and respondent selection within seven calendar days of publication of
this Federal Register notice.
Distribution of Copies of the Petition
In accordance with section 702(b)(4)(A)(i) of the Act, a copy of
the public version of the petition has been provided to the Government
of the PRC. As soon as and to the extent practicable, we will attempt
to provide a copy of the public version of the petition to each
exporter named in the petition, consistent with 19 CFR 351.203(c)(2).
ITC Notification
We have notified the ITC of our initiation, as required by section
702(d) of the Act.
Preliminary Determination by the ITC
The ITC will preliminarily determine, within 25 days after the date
on which it receives notice of the initiation, whether there is a
reasonable indication that imports of subsidized citric acid from the
PRC are causing material injury, or threatening to cause material
injury, to a U.S. industry. See section 703(a)(2) of the Act. A
negative ITC determination will result in the investigation being
terminated; otherwise, the investigation will proceed according to
statutory and regulatory time limits.
This notice is issued and published pursuant to section 777(i) of
the Act.
Dated: May 5, 2008.
David M. Spooner,
Assistant Secretaryfor Import Administration.
[FR Doc. E8-10516 Filed 5-9-08; 8:45 am]
BILLING CODE 3510-DS-S