Enforcement and Compliance, International Trade Administration, Department of Commerce.
Effective Date: April 24, 2014.
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FOR FURTHER INFORMATION CONTACT:
David Lindgren at (202) 482-3870 or Kaitlin Wojnar (202) 482-3857, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230.
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Start Supplemental Information
On March 28, 2014, the Department of Commerce (the Department) received an antidumping duty (AD) petition 
concerning imports of sugar from Mexico filed in proper form on behalf of the American Sugar Coalition (ASC) and its individual members (collectively, Petitioners).
Petitioners are domestic processors, millers, and refiners of sugar and growers of sugar cane and Start Printed Page 22796sugarbeets. On April 2, April 8, and April 9, 2014, the Department requested additional information and clarification of certain areas of the Petition.
Petitioners filed responses to these requests on April 7, April 10, and April 14, 2014.
In accordance with section 732(b) of the Tariff Act of 1930, as amended (the Act), Petitioners allege that imports of sugar from Mexico are being, 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 such imports are materially injuring, or threatening material injury to, an industry in the United States. Also, consistent with section 732(b)(1) of the Act, the Petition is accompanied by information reasonably available to Petitioners supporting their allegations.
The Department finds that Petitioners filed the Petition on behalf of the domestic industry because Petitioners are interested parties as defined in sections 771(9)(C), (E), (F) and (G) of the Act. The Department also finds that Petitioners demonstrated sufficient industry support with respect to the initiation of the AD investigation that Petitioners are requesting. See the “Determination of Industry Support for the Petition” section below.
Period of Investigation
Because the Petition was filed on March 28, 2014, the period of investigation (POI) is January 1, 2013 through December 31, 2013.
Scope of the Investigation
The product covered by this investigation is sugar from Mexico. For a full description of the scope of the investigation, see the “Scope of the Investigation,” in the Appendix of this notice.
Comments on Scope of Investigation
During our review of the Petition, the Department issued questions to, and received responses from, Petitioners pertaining to the proposed scope in order to ensure that the scope language in the Petition would be an accurate reflection of the products for which the domestic industry is seeking relief.
As discussed in the Preamble to the regulations,
we are setting aside a period for interested parties to raise issues regarding product coverage. The period of scope comments 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. All comments must be filed by 5:00 p.m. Eastern Daylight Time (EDT) on May 7, 2014, which is twenty calendar days from the signature date of this notice. Any rebuttal comments must be filed by 5:00 p.m. EDT on May 14, 2014. All such comments must be filed on the records of the AD investigation, as well as the concurrent CVD investigation.
All submissions to the Department must be filed electronically using Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (IA ACCESS).
An electronically filed document must be received successfully in its entirety by the time and date noted above. Documents excepted from the electronic submission requirements must be filed manually (i.e., in paper form) with Enforcement and Compliance's APO/Dockets United, Room 1870, Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230, and stamped with the date and time of receipt by the established deadline.
Comments on Product Characteristics for Antidumping Questionnaires
The Department requests comments from interested parties regarding the appropriate physical characteristics of sugar to be reported in response to the Department's AD questionnaires. This information will be used to identify the key physical characteristics of the subject merchandise in order to report the relevant factors and costs of production accurately as well as to develop appropriate product-comparison criteria.
Interested parties may provide any information or comments that they feel are relevant to the development of an accurate list of physical characteristics. Specifically, they may provide comments as to which characteristics are appropriate to use as: (1) General product characteristics and (2) product-comparison criteria. We note that it is not always appropriate to use all product characteristics as product-comparison criteria. We base product-comparison criteria on meaningful commercial differences among products. In other words, while there may be some physical product characteristics utilized by manufacturers to describe sugar, it may be that only a select few product characteristics take into account commercially meaningful physical characteristics. In addition, interested parties may comment on the order in which the physical characteristics should be used in matching products. Generally, the Department attempts to list the most important physical characteristics first and the least important characteristics last.
In order to consider the suggestions of interested parties in developing and issuing the AD questionnaires, we must receive comments on product characteristics by May 8, 2014. Rebuttal comments must be received by May 19, 2014.
All comments and submissions to the Department must be filed electronically using IA ACCESS, as referenced above.
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 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 Start Printed Page 22797domestic 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) if there is a large number of producers in the industry, the Department may determine industry support using a statistically valid sampling method to poll the industry.
Section 771(4)(A) of the Act defines the “industry” as the producers as a whole 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.
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 U.S. 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,
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.
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).
With regard to the domestic like product, 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 determined that sugar, as defined in the scope of the investigation, constitutes a single domestic like product and we analyzed industry support in terms of that domestic like product.
In determining whether Petitioners have standing under section 732(c)(4)(A) of the Act, we considered the industry support data contained in the Petition with reference to the domestic like product as defined in the “Scope of Investigation” section above. To establish industry support, Petitioners provided their production of the domestic like product in crop year 2012/2013,
and compared this to the total production of the domestic like product for the entire domestic industry.
We relied upon data Petitioners provided for purposes of measuring industry support.
On April 10, 2014, we received comments on industry support from the Grocery Manufacturers Association (GMA).
We also received comments on industry support from Archer Daniels Midland Company (ADM) 
and Camara Nacional de Las Industrias Azucarera Y Al Alcoholera (Camara) on April 11, 2014.
Petitioners responded to the letters from GMA, ADM, and Camara on April 15, 2014.
In consultations with the Department held with respect to the companion CVD case on imports of sugar from Mexico, the Government of Mexico raised the issue of industry support.
On April 15, 2014, we received additional comments on industry support from the GMA.
For further discussion of these comments, see the AD Initiation Checklist, at Attachment II.
Based on information provided in the Petition, supplemental submissions, and other information readily available to the Department, we determine that Petitioners met the statutory criteria for industry support under section 732(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.
Based on information provided in the Petition, the domestic producers (or workers) met the statutory criteria for industry support under section 732(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 732(b)(1) of the Act.
The Department finds that Petitioners filed the Petition on behalf of the domestic industry because they are interested parties as defined in sections 771(9)(C), (E), (F), or (G) of the Act and they demonstrated sufficient industry support with respect to the AD investigation that they are requesting the Department initiate.
Allegations and Evidence of Material Injury and Causation
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 imports of the subject merchandise sold at less than normal Start Printed Page 22798value (NV). In addition, Petitioners allege that subject imports exceed the negligibility threshold provided for under section 771(24)(A) of the Act.
Petitioners contend that the industry's injured condition is illustrated by reduced market share, underselling and price depression or suppression, lost sales and revenues, forfeitures and USDA purchases that remove surpluses of domestically produced sugar from the market to stabilize prices, decline in payments to growers and farmers, and decline in financial performance.
We have assessed the allegations and supporting evidence regarding material injury, threat of material injury, and causation, and we have determined that these allegations are properly supported by adequate evidence and meet the statutory requirements for initiation.
Allegations of Sales at Less Than Fair Value
The following is a description of the allegations of sales at less than fair value upon which the Department based its decision to initiate an investigation of imports of sugar from Mexico. The sources of data for the deductions and adjustments relating to U.S. price and NV are discussed in greater detail in the AD Initiation Checklist.
Petitioners calculated export prices (EP) for estandar (a semi-refined form of sugar) and fully refined sugar based on Mexican export statistics, which, unlike U.S. import statistics, distinguish between these two forms of sugar shipped to the United States.
The ability to segregate estandar import data from the import data relating to fully-refined sugar is significant because imports of semi-refined sugar compete directly with U.S. raw sugar sales to refiners, whereas imports of refined sugar compete with U.S. refined sugar.
To derive the ex-factory prices, Petitioners made deductions to the Mexican export prices for inland freight and handling costs between the mills and the trading companies that export to the United States.
Petitioners provided monthly average home market prices for both estandar and refined sugar in Mexico for the months of the POI. Petitioners obtained the home market price data from the Government of Mexico's Sistema Nacional de Información e Integración de Mercados (SNIIM).
To derive the ex-factory price, Petitioners deducted delivery costs for shipment from the mill to the wholesale market from the SNIIM wholesale market prices.
Petitioners provided information demonstrating reasonable grounds to believe or suspect that sales of sugar in the Mexican market were made at prices below the fully-absorbed cost of production (COP), within the meaning of section 773(b) of the Act, and requested that the Department conduct a country-wide sales-below-cost investigation. The Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act, states that an allegation of sales below COP need not be specific to individual exporters or producers.
The SAA 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 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.
Cost of Production
Pursuant to section 773(b)(3) of the Act, COP consists of the cost of manufacturing (COM); selling, general and administrative (SG&A) expenses; financial expenses; and packing expenses. Petitioners calculated the COM for estandar and refined sugar based on publicly-available data on sugar cane costs specific to Mexico and the production experience of five U.S. producers of raw and refined sugar, adjusted for known differences between the Mexico and U.S. industries during the prospective POI. We revised the calculation of the raw material cost to incorporate an offset for by-product income. To calculate the by-product offset rate, we relied on the fiscal year ended December 31, 2013 (FY 2013) financial data for four U.S. producers of raw sugar. The resulting by-product offset was used to reduce the raw material costs.
To determine the SG&A rate, Petitioners relied on the FY 2013 financial data for four U.S. producers of raw sugar. We note that it is the Department's preference to rely upon financial information from a producer in the country under investigation (i.e., Mexico) when calculating the SG&A rate. The SG&A rate used in the Petition was comparable with that expected from sugar producers in Mexico based on information contained in an article published in the Business Intelligence Journal. As such, we do not consider the SG&A rate calculated using the U.S. producers' financial data to be unreasonable. Petitioners conservatively did not add an amount for financial expenses or for packing expenses.
To determine the COP of estandar sugar, Petitioners added together the COM and SG&A expenses calculated above. We revised the calculation of the COP of estandar sugar to incorporate the revised raw material costs calculated above.
To determine the COP of refined sugar, Petitioners relied on the production experience of a U.S. producer of refined sugar. Petitioners added the additional cost of processing estandar sugar into refined sugar to the COP of estandar sugar calculated above. We revised the calculation of the COP of refined sugar to incorporate the revised raw material costs for estandar sugar calculated above.
Based upon a comparison of the prices of the foreign like product in the home market to the calculated COP of the most comparable product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP, within the Start Printed Page 22799meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation.
Normal Value Based on Above-Cost Home Market Prices
Because some home market prices for refined sugar fell below COP, pursuant to section 773(b)(1) of the Act, Petitioners based NV of refined sugar on the average of above-cost home market prices obtained from SNIIM and adjusted for delivery costs from the mill to the wholesale market.
Normal Value Based on Constructed Value
Because all home market prices for estandar sugar fell below COP, pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, Petitioners calculated the NV of estandar sugar based on constructed value (CV). Petitioners calculated CV using the same COM and SG&A used to compute the COP of estandar sugar. To calculate the CV profit rate, Petitioners relied on the 2013 above-cost home market sales of refined sugar from the sales below cost allegation in the Petition. The rate was computed using the average profit (i.e., sales price minus COP) of the above-cost home market sales of refined sugar, divided by the COP of refined sugar. We revised the CV profit rate to incorporate the revised COP of refined sugar. This revised rate was then applied to the revised COP of estandar sugar as calculated above.
Fair Value Comparisons
Based on the data provided by Petitioners, there is reason to believe that imports of sugar from Mexico are being, or are likely to be, sold in the United States at less than fair value. Based on comparisons of EP to NV and EP to CV for Mexico, in accordance with section 773(a)(4) of the Act, the estimated dumping margins for sugar from Mexico range from 30.00 to 64.31 percent.
Initiation of Antidumping Investigation
Based upon the examination of the AD Petition on sugar from Mexico, we find that the Petition meets the requirements of section 732 of the Act. Therefore, we are initiating an AD investigation to determine whether imports of sugar from Mexico are being, or are likely to be, sold in the United States at less than fair value. In accordance with section 733(b)(1)(A) of the Act and 19 CFR 351.205(b)(1), unless postponed, we will make our preliminary determination no later than 140 days after the date of this initiation.
Following standard practice in AD investigations involving market economy countries, in the event the Department determines that the number of known exporters or producers for this investigation is large, the Department may select respondents based on U.S. Customs and Border Protection (CBP) data for U.S. imports of sugar from Mexico under all Harmonized Tariff Schedule of the United States (HTSUS) subheadings identified in Scope of the Investigation.
We intend to release the CBP data under Administrative Protective Order (APO) to all parties with access to information protected by APO within five days of publication of this Federal Register notice.
The Petition identified 55 producers and/or exporters of sugar in Mexico.
We intend to make our decision regarding respondent selection within 20 days of publication of this notice. The Department invites comments regarding the CBP data and respondent selection within seven days of publication of this Federal Register.
Distribution of Copies of the Petition
In accordance with section 732(b)(3)(A) of the Act and 19 CFR 351.202(f), copies of the public version of the Petition have been provided to the Government of Mexico via IA ACCESS. 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, as provided under 19 CFR 351.203(c)(2).
We 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 May 12, 2014, whether there is a reasonable indication that imports of sugar from Mexico are materially injuring, or threatening material injury to, a U.S. industry. A negative ITC determination will result in the investigation being terminated; otherwise, the investigation will proceed according to statutory and regulatory time limits.
Submission of Factual Information
On April 10, 2013, the Department published Definition of Factual Information and Time Limits for Submission of Factual Information: Final Rule, 78 FR 21246 (April 10, 2013) (Factual Information Final Rule), which modified two regulations related to AD and CVD proceedings: the definition of factual information (19 CFR 351.102(b)(21)), and the time limits for the submission of factual information (19 CFR 351.301). The final rule identifies five categories of factual information in 19 CFR 351.102(b)(21), which are summarized as follows: (i) Evidence submitted in response to questionnaires; (ii) evidence submitted in support of allegations; (iii) publicly available information to value factors under 19 CFR 351.408(c) or to measure the adequacy of remuneration under 19 CFR 351.511(a)(2); (iv) evidence placed on the record by the Department; and (v) evidence other than factual information described in (i)-(iv). The final rule requires any party, when submitting factual information, to specify under which subsection of 19 CFR 351.102(b)(21) the information is being submitted and, if the information is submitted to rebut, clarify, or correct factual information already on the record, to provide an explanation identifying the information already on the record that the factual information seeks to rebut, clarify, or correct. The final rule also modified 19 CFR 351.301 so that, rather than providing general time limits, there are specific time limits based on the type of factual information being submitted. These modifications are effective for all proceeding segments initiated on or after May 10, 2013, and thus are applicable to this investigation. Please review the Factual Information Final Rule, available at http://enforcement.trade.gov/frn/2013/1304frn/2013-08227.txt prior to submitting factual information in these investigations.Start Printed Page 22800
Notification to Interested Parties
Interested parties must submit applications for disclosure under administrative protective order in accordance with 19 CFR 351.305. On January 22, 2008, the Department published Antidumping and Countervailing Duty Proceedings: Documents Submission Procedures; APO Procedures, 73 FR 3634 (January 22, 2008). Parties wishing to participate in these investigations should ensure that they meet the requirements of these procedures (e.g., the filing of letters of appearance as discussed at 19 CFR 351.103(d)).
Any party submitting factual information in an AD or CVD proceeding must certify to the accuracy and completeness of that information.
Parties are hereby reminded that the Department issued a final rule with respect to certification requirements, effective August 16, 2013. Parties are hereby reminded that revised certification requirements are in effect for company/government officials as well as their representatives. All segments of any AD or CVD proceedings initiated on or after August 16, 2013, should use the formats for the revised certifications provided at the end of the Certifications Final Rule.
The Department intends to reject factual submissions if the submitting party does not comply with the applicable revised certification requirements.
This notice is issued and published pursuant to section 777(i) of the Act and 19 CFR 351.203(c).
Dated: April 17, 2014.
Assistant Secretary for Enforcement and Compliance.
Scope of the Investigation
The product covered by this investigation is sugar derived from sugar cane or sugar beets. Sucrose gives sugar its essential character. Sucrose is a nonreducing disaccharide composed of glucose and fructose linked via their anomeric carbons. The molecular formula for sucrose is C12 H22 011, the International Union of Pure and Applied Chemistry (IUPAC) International Chemical Identifier (InChl) for sucrose is 1S/C12H22O11/c13-l-4-6(16)8(18)9(19)11(21-4)23-12(3-15)10(20)7(17)5(2-14)22-12/h4-11,13-20H,1-3H2/t4-,5-,6-,7-,8+,9-,10+,11-,12+/m1/s1, the InChl Key for sucrose is CZMRCDWAGMRECN-UGDNZRGBSA-N, the U.S. National Institutes of Health PubChem Compound Identifier (CID) for sucrose is 5988, and the Chemical Abstracts Service (CAS) Number of sucrose is 57-50-1.
Sugar within the scope of this investigation includes raw sugar (sugar with a sucrose content by weight in a dry state that corresponds to a polarimeter reading of less than 99.5 degrees) and estandar or standard sugar which is sometimes referred to as “high polarity” or “semi-refined” sugar (sugar with a sucrose content by weight in a dry state that corresponds to a polarimeter reading of 99.2 to 99.6 degrees). Sugar within the scope of this investigation includes refined sugar with a sucrose content by weight in a dry state that corresponds to a polarimeter reading of at least 99.9 degrees. Sugar within the scope of this investigation includes brown sugar, liquid sugar (sugar dissolved in water), organic raw sugar and organic refined sugar.
Inedible molasses is not within the scope of this investigation. Specialty sugars, e.g., rock candy, fondant, sugar decorations, are not within the scope of this investigation. Processed food products that contain sugar, e.g., beverages, candy, cereals, are not within the scope of this investigation.
Merchandise covered by this investigation is typically imported under the following headings of the Harmonized Tariff Schedule of the United States (HTSUS): 1701.12.1000, 1701.12.5000, 1701.13.1000, 1701.13.5000, 1701.14.1000, 1701.14.5000, 1701.91.1000, 1701.91.3000, 1701.99.1025, 1701.99.1050, 1701.99.5025, 1701.99.5050, and 1702.90.4000. The tariff classification is provided for convenience and customs purposes; however, the written description of the scope of this investigation is dispositive.
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[FR Doc. 2014-09363 Filed 4-23-14; 8:45 am]
BILLING CODE 3510-DS-P