70 FR 7233, February 11, 2005

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.

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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).
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    \1\ Peace River Citrus Products, Inc. withdrew as a petitioner 
in this proceeding on January 31, 2005.
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    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

[[Page 7234]]

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\
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    \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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[[Page 7235]]

    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).

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    \3\ On February 3, 2005, we received an additional challenge to 
industry support.
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    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

[[Page 7236]]

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

[[Page 7237]]

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]