RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/IG/W/31
21 March 2001
(01-1376)
Committee on Anti-Dumping Practices
Informal Group on Anti-Dumping CircumventionOriginal:  Spanish
TOPIC 2 – WHAT IS BEING DONE BY MEMBERS CONFRONTED
BY WHAT THEY CONSIDER TO BE CIRCUMVENTION?
Paper by Mexico
The following communication, dated 16 March 2001, has been received from the Permanent
Mission of Mexico.
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Introduction
In previous communications, various Members ha ve considered the need to adopt measures
against the circumvention of an order imposing an anti-dumping duty, have even suggested somecriteria or rules to be used in determining whether or not circumvention exists, and have submitted
several hypothetical examples of circumvention.
Since the Informal Group agreed that, as no common interpretation had been reached on what
circumvention consisted of, it was appropriate to move on to the second topic of discussion, i.e. what
was being done by Members confronted by what they considered to be circumvention.  Mexico is
submitting this paper with a brief account of its experience in an anti-circumvention investigation.This paper is simply an illustration and does not prejudge Mexico's position on this topic.
Anti-circumvention proceeding concerning high fructose corn syrup (HFCS)
The " Resolution accepting the request of the National Chamber of the Sugar and Alcohol
Industries and declaring the initiation of an anti-dumpi ng investigation into imports of fructose syrup,
known commercially as high fructose corn sy rup, grades 42 and 55 (HFCS-42 and HFCS-55) from
the United States of America, irrespective of the country of consignment, merchandise classified in
tariff headings 1702.40.99 and 1702.60.01 of the General Import Tariff, respectively " was published
in the Official Journal of the Federation on 27 February 1997.
The preliminary resolution of the investigatio n with an affirmative determination of the
application of provisional anti-dumping duties was published on 25 June 1997.
The final resolution of the investigation, imposing final anti-dumping duties, was published
on 23 January 1998.  Also published was the " Resolution declaring ex officio the initiation of an
investigation into circumvention of the payment of countervailing duties imposed on imports of
grade 55 high fructose corn syrup, merchandise classified in heading 1702.60.01 of the General
Import Tariff, from the United States of Americ a, irrespective of the country of consignment".
The initiation of the anti-circumvention invest igation was based on information from the list
of import licences in the Mexican Trade Information System (SIC-MEX), customs agents, theG/ADP/IG/W/31
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Ministry of Finance and Public Credit and other information contained in the administrative record of
the investigation, all of which provided sufficient evidence that, on the basis of the analysis of import
trends, the increase in HFCS imports higher than  grade 55 could be circumventing payment of the
countervailing duty imposed on HFCS-55 imports, for the following reasons:
(i) As from the establishment of the provisional countervailing duties imposed
on HFCS-55, imports of HFCS-90 by Almidones Mexicanos, S.A. de C.V.
(hereafter referred to as ALMEX) showed a signficant increase in July 1997
compared with the monthly average observed in the period March-June of the
same year;
(ii) ALMEX imports of HFCS-55 and HF CS-90 were from A.E. Staley
Manufacturing Company (hereafter referred to as Staley) and Archer DanielsMidland Company (hereafter referred to as ADM), companies with which
ALMEX is affiliated, and
(iii) it was learned that the importer was using a process of mixing HFCS-42 with
imported HFCS-90 in order to obtain HFCS-55.
The investigating authority proceeded to not ify the initiation of investigation to the
Government of the United States of America, production companies, importers and exporters known
to it, and gave them a period of time to submit arguments and evidence.  Subsequently, invitations
were extended to producers, importers, exporters, the Government of the United States of America
and anyone who considered that he had a legal in terest in the investigation, to appear in the
proceeding and state what they deemed appropriate.  In addition, greater information was requested
from some of the companies that appeared.
Similarly, for the purpose of analysing the information, the investigating authority took
account of the description of the product (tariff regime, physical and chemical characteristics), theproduction process, and certain additional factors:
• Description of the product:  its composition and the concentration of fructose, glucose
and other saccharides were analysed.  It was determined that the process used by the
importer for mixing with HFCS-42 in making HFCS-55 was not confined to the
HFCS-95 exported by one of the affiliated companies (ADM), for which reason theinvestigation had to include imports of HFCS containing in the dry state more than
55 per cent by weight of fructose (enriched HFCS) from the United States of
America, classified in headings 1702.50.01, 1702.60.01, 1702.60.02 and 1702.60.99.
• Tariff regime:  the tariff headings in whic h the product investigated was entering the
country were analysed.  HFCS-55 is classified in tariff heading 1702.60.01 (Other
fructose and fructose syrup, containing in the dry state more than 50 per cent but not
more than 60 per cent by weight of fructose).  Enriched HFCS, depending on thefructose content, may enter under headings 1702.60.11, 1702.60.02 (Other fructose
and fructose syrup, containing in the dry state more than 60 per cent but not more
than 80 per cent by weight of fructose) and 1702.60.99 (Other fructose and fructose
syrup, other).  These tariff headings are subject to a 15 per cent ad valorem  duty for
most countries and the unit of measure is the kilogramme.  Furthermore, imports offructose syrup containing 100 per cent of fructose (crystalline fructose) enter under
tariff heading 1702.50.01.G/ADP/IG/W/31
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• Physical and chemical characteristics:  the typical physical and chemical properties,
similarity, essential properties and storage, among others, were analysed.  It was
concluded that all high fructose corn syrups belonged to the same product family and
only showed differences in particular physical properties, attributable to the fructose
content of each product.
• Production process:  in view of the fact that importers and exporters were affiliated,
as well as the elements mentioned above, it was decided to assess the production
process in Mexico by a quantitative analysis of the value of the operations carried out
on Mexican territory and in the exporting country, as well as a qualitative analysis of
the nature of the process.  Since the companies refused to provide information on the
manufacturing costs of HFCS-55 and enriched  HFCS, or the amount of investment in
each stage of the production process carried out in Mexico and the United States, the
various stages in the production process were analysed on the basis of specializedliterature provided by three compan ies appearing in the investigation.
From the findings concerning the physical and chemical characteristics of the
products and the production process it was determined that enriched HFCS, because
of its physical and chemical properties, can be easily changed, by mixing with HFCS-42, into HFCS-55, a product subject to anti-dumping duties.  As for the amount of
investment, the investigating authority adde d together the investment in machinery
and equipment as well as the research and development costs of all stages of the
production process and obtained the total investment required to install the continuous
process of producing HFCS-55.  This, combined with the results of the analysis intothe characteristics of  the products and the nature of the production process,
confirmed for the investigating authority its determination that the mixing process
carried out in Mexico by the importing company to obtain HFCS-55 from imported
enriched HFCS constitutes a negligible part of the overall production process of the
product subject to anti-dumping duties.
• Other factors:  the investigating authority considered that practices to circumvent
anti-dumping measures should be assessed on a case-by-case basis and in the light of
various considerations.  In this case, among other things, an analysis was conducted
of the conditions for the importer and the specificity of the finishing process carried
out in Mexico, the affiliation between importers and exporters (by operating as anintegrated business) and producers and exporters, as well as the importing company's
business plan and its availability.
On 8 September 1998 the investigating authority concluded that there were sufficient
elements to determine that imports of enriched HFCS from the United States were circumventing
payment of the final anti-dumping duties imposed on HFCS-55, since they were components intended
for processing operations on Mexican territory.
Conclusion
In the absence of regulation of anti-dumping circumvention investigations within the World
Trade Organization, in Mexico the investigating authority conducts such investigations in keepingwith its own legislation, so that it generally has a re medy to cope with the practice.  The investigating
authority also pays special care to ensure legal certainty and security, for which reason it affords the
parties a full and ample opportunity for defence during the proceedings.  Mexico hopes that this
summary will contribute to the discussions of the Informal Group on Circumvention.
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