RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/IG/W/40
18 September 2001
(01-4414)
Committee on Anti-Dumping Practices
Informal Group on Anti-CircumventionOriginal:  Spanish
TOPIC 2 – WHAT IS BEING DONE BY MEMBERS CONFRONTED
BY WHAT THEY CONSIDER TO BE CIRCUMVENTION?
Replies by Mexico to the Questions Posed by HONG KONG, CHINA1
Regarding the Paper by MEXICO2
The following communication, dated 4 September 2001, has been received from the
Permanent Mission of Mexico.
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During the meeting of the Informal Group on Anti-Circumvention of 25 April 2001,
Hong Kong, China posed a number of questions relating to the paper submitted by Mexico on
21 March 2001 (G/ADP/IG/W/31) regarding its experience in an anti-circumvention investigation
concerning high-fructose corn syrup (HFCS).  The questions posed by Hong Kong, China werecirculated in document G/ADP/IG/W/37.  Mexico is submitting its replies to those questions on the
understanding it is doing so for information purposes only and without prejudice to its practices,
legislation or position with regard to the issues of anti-circumvention.
Question 1
How was the AC investigation initiated?  Was it initiated from a circumvention
complaint or was it self-initiated by the Mexic an authorities?  Was th ere any evidence to show
that enriched HFCS was imported at dumped prices in the AC investigation?
The anti-circumvention investigation was initiated ex officio on the basis of information from
the list of import licences in the Mexican Trade In formation System (SIC-MEX), customs agents, the
Ministry of Finance and Public Credit, and other information contained in the administrative record of
the anti-dumping investigation of high-fructose corn syrup (HFCS).  This information was used to
analyse import trends following the imposition of  provisional anti-dumping duties on HFCS-42 and
HFCS-55.
Question 2
2. When the Mexican authorities examined  the injury issue during the original
investigation, did they find injury to the producers of HFCS-42, HFCS-55 and/or enriched
HFCS?  If the Mexican authorities examined in jury only to the producers of HFCS-42 and 55,
how was the imposition of AD duties on enriched  HFCS justified when injury determination, a
requisite condition under the AD Agreement for imposition of AD duties, had not been made on
the product?
                                                     
1 G/ADP/IG/W/37
2 G/ADP/IG/W/31G/ADP/IG/W/40
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The original investigation revealed the existence of a threat of injury to the domestic sugar
industry, the domestic industry producing the like product, as a result of imports of HFCS from the
United States under conditions of price discrimination.
Under Mexican law, circumvention is defined as the introduction into the national territory of
parts or components intended for transformation in that territory of goods subject to provisional or
definitive duties with a view to eluding payment of such duties.  The definition also covers cases in
which parts or components are assembled in a third country and the finished product is introduced
into the national territory, and cases involving the exportation of goods with relatively slight physical
differences in comparison with those subject to provisional or definitive anti-dumping duties, for the
purpose of eluding payment of such duties.
As explained in the paper submitted by Mexico, the investigating authority considered that
there were sufficient elements to determine that imports of enriched HFCS from the United States
were circumventing payment of the provisional and definitive anti-dumping duties imposed on
HFCS-55, since they were components intended for processing operations on Mexican territory.
Question 3
Were HFCS-55 and enriched HFCS targeted at different markets?  Were HFCS-55 and
enriched HFCS made by different domestic produ cers? Did enriched HFCS exist at the time of
the original investigation?  Why hadn't enriched HFCS been included in the original ADpetition and order?  Was the exclusion of en riched HFCS in the AD investigation simply an
omission or a considered decision by the pe titioning industry or the Mexican authorities?
HFCS-55 and enriched HFCS target the same market, but represent different stages of the
production process.  Enriched HFCS is the main i nput in the production of HFCS-55, either through
an integrated continuous flow process or through physical mixture with HFCS-42.  While the
industrial use of enriched HFCS in the state in which it is obtained is limited to highly specialized
applications, when it is diluted with HFCS-42, it produces HFCS-55, whose resemblance to sugar
gives it a great variety of uses and applications.
In Mexico, one of the two domestic producers of HFCS manufactures HFCS-55 and enriched
HFCS.  The enriched HFCS in question did not compete on the market, but was used exclusively asan input.
The other producer of HFCS did not produce enriched HFCS, but imported it in order to mix
it with HFCS-42 to obtain HFCS-55, and did not use it for any purpose other than producing
HFCS-55.
During the investigation period of the original anti-dumping proceeding, imports of enriched
HFCS were minimal, and were used only for mixture tests – a fact which is explained by the imports
of HFCS-55 as an end-product.   Thus, the petitioner in the investigation did not know of the
existence of enriched HFCS as an end-product, nor of its potential use as an input in producingHFCS-55.  The mixing process used to obtain HFCS- 55 was not a process that was used by producers
and exporters in the United States, but was developed in Mexico from the time of the initiation of the
anti-dumping investigation of imports of HFCS-55.
The existence of enriched HFCS and its use in the production of HFCS-55 was not
information that was reasonably available to the petitioner in the anti-dumping investigation, and
consequently, there was no omission or deliberate exclusion of enriched HFCS by the petitioning
industry or the Mexican authorities.G/ADP/IG/W/40
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Question 4
We note that the Mexican authorities have concluded that all HFCS "belonged to the
same family" of products.  That being the ca se, why weren’t all of the HFCS considered as a
single "like product" in the original AD investigation?
As explained in the reply to question 3, the information available to the petitioning industry
and to the investigating authority at the initiation of  the investigation revealed neither the existence of
enriched HFCS as an end-product in the United States industry, nor its subsequent use in producing
HFCS-55 by a mixture process.
Question 5
It was reported that there was a significant in crease in enriched HFCS imports after the
imposition of the provisional duties on HFCS-55.  How was the importation of enriched HFCS
concluded to be circumventing the AD order on HFCS-55?  Did the Mexican authorities
consider or investigate whether factors other than the existence of the AD order might have
contributed to the increase in the imports of enriched HFCS?
Before reaching its conclusion that the increase  in imports of HFCS with a grade higher than
55 reflected circumvention of the anti-dumping duty imposed on imports of HFCS-55, the
investigating authority conducted an anti-circumvention investigation, taking account in its analysis ofthe description of the product (tariff regime, physical and chemical characteristics), the production
process and certain additional factors.
Question 6
Did the Mexican authorities consider th e impact of imports of enriched HFCS
specifically on producers of enriched HFCS?
No.  The purpose of the anti-circumvention procedure was not to examine the impact of such
imports on HFCS producers, but to demonstrate that imports of enriched HFCS aimed to circumvent
payment of anti-dumping duties imposed on HFCS-55 and that consequently, they undermined the
effectiveness of the measure introduced to avoid threat of injury to the domestic sugar industry.
Question 7
It is noted that in determining whether the mixing process in Mexico to obtain HFCS-55
constituted a negligible part of the overall production process, the Mexican authorities used theinvestment in machinery and equipment and th e research and development costs in installing
the mixing operations as the criteria.  What wo uld be the level of investment and research and
development costs that could be considered to be sufficient to reach a finding that the mixing
operation was not negligible?  Did the Mexican  authorities consider any other criteria?
In conducting its quantitative analysis of the significance of the process used to obtain
HFCS-55 in Mexico, the investigating authority as ked the companies for detailed information on the
costs, production facilities and investments necessary to produce HFCS-55.  It should be pointed that
in the anti-circumvention procedure, three companie s chose not to provide the information requested
by the authority, so that the analysis was based on the information contained in the administrativerecord.
No other criteria were considered.  The determination that part of a production process is
negligible in relation to the overall process involved in manufacturing a product requires a causalG/ADP/IG/W/40
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analysis in which it is impossible to establish beforehand a cut-off point for acceptance or rejection,
since the evaluation depends on factors relating to the nature of the product, of the process and of the
specific industry involved.
Question 8
Mexico submits that it has afforded the in terested parties a full and ample opportunity
for defence during the AC proceedings.  In this connection, we would appreciate it if Mexico
could share with us the types of arguments and evidence which were submitted by the parties.
To what extent had the Mexican authoritie s considered the information which purportedly
demonstrated that the increase in imports of  enriched HFCS and the setting up of mixing
operations in Mexico presumed to circumvent the AD measure were legitimate and/or normal
business activities?
The National Chamber of Sugar and Alcohol Industries (CNIAA), the association which
appeared on behalf of the entire domestic industry, submitted documentation relating to its legal
existence, its representatives, the composition of the HFCS, and the balance of materials for theproduction of HFCS-55, and supplied information on imports.  It also complied with the additional
requests of the investigating authorities.
The importing firm Almidones Mexicanos, S.A. de C.V. (Almex) provided certification of its
legal existence and personality and complied with the requests of the authority, supplyingdocumentation concerning the operation, structure and sales of Almex and the HFCS production
process.
The exporting firm A.E. Staley Manufacturing Company provided certification of its legal
existence and personality, and supplied information on the physical and chemical characteristics ofHFCS-55.  We note that it responded belatedly to the second request of the authorities.
The exporting firm Archer Daniels Midland Company provided certification of its legal
existence and personality, and decided not to submit information.
Arancia CPC, S.A. de C.V. provided certification of its legal existence and personality, and
complied with the investigating authority's request for information.  It supplied information relating tothe operation of the company, the HFCS production process, inputs, physical and chemical properties
of the product, imports, the amount of investment and installed capacity.
The investigating authority considered that  while it was true that the Anti-Dumping
Agreement did not contain any specific provisions concerning the circumvention of anti-dumpingmeasures, this did not mean that an importing country could not take measures against imports which
undermined the effectiveness of anti-dumping duties established under that Agreement.
In fact, Mexico repeats that the absence of a specific text on circumvention is the result of the
failure of the Uruguay Round negotiators to reach a consensus on the criteria and disciplines to beapplied in that area, as confirmed in the Ministerial Decision forming part of the Results of the
Uruguay Round.G/ADP/IG/W/40
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Question 9
Mexico considers that “ in the absence of regulation of AD circumvention investigations
within the WTO, in Mexico the investigation authority conducts such investigations in keeping with
its own legislation, so that it generally has a remedy to cope with the practice ”.  We should be
grateful if Mexico could enlighten us as to wh ether it had considered initiating a fresh AD
investigation on enriched HFCS instead of an AC investigation.  If yes, what were the reasons
for rejecting the initiation of a fresh AD investigation as the “remedy”?
Mexico took the view that the purpose of an anti-circumvention investigation was not to
determine whether the goods were sold under conditions of price discrimination or whether they
caused or threatened to cause injury.  As we stated earlier, the purpose of circumvention, among otherthings, is to introduce into the national territory parts or components intended for transformation in
that territory of goods subject to provisional or definitive duties with a view to eluding payment of
such duties.
In this case, Mexico had sufficient evidence that based on the analysis of import trends, the
increase in imports of HFCS-55 was attributable to circumvention of the payment of the provisional
anti-dumping duties imposed on imports of HFCS-55, and accordingly, it considered this to be the
appropriate type of investigation to "remedy" these actions.
Conclusion
Mexico reaffirms the legality and legal certainty and security of its procedures.  It also hopes
that the replies to the questions of Hong Kong, China, will contribute to the work of the Informal
Group on Anti-Circumvention.
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