[Federal Register Volume 77, Number 120 (Thursday, June 21, 2012)]
[Notices]
[Pages 37378-37384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-15219]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-863]
Honey From the People's Republic of China: Affirmative
Preliminary Determination of Circumvention of the Antidumping Duty
Order
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Affirmative Preliminary Determination of
Circumvention of Antidumping Duty Order.
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SUMMARY: In response to a request from the American Honey Producers
Association and the Sioux Honey Association (collectively
``Petitioners''), the Department of Commerce (``Department'') initiated
an anticircumvention inquiry pursuant to section 781(d) of the Tariff
Act of 1930, as amended (``the Act'') to determine whether blends of
honey and rice syrup should be considered subject to the antidumping
duty order on honey from the People's Republic of China (``PRC'') \1\
under the later-developed merchandise provision.
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\1\ See Notice of Amended Final Determination of Sales at Less
Than Fair Value and Antidumping Duty Order; Honey From the People's
Republic of China, 66 FR 63670 (December 10, 2001) (``Order'').
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DATES: Effective Date: June 21, 2012.
FOR FURTHER INFORMATION CONTACT: Catherine Bertrand, telephone: (202)
482-3207, or Josh Startup, telephone: (202) 482-5260; AD/CVD
Operations, Office 9, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue NW., Washington, DC 20230.
SUPPLEMENTARY INFORMATION:
Background
On December 7, 2011, the Department initiated this
anticircumvention inquiry regarding blends of honey and rice syrup from
the PRC.\2\ On February 3, 2012, the Department issued a questionnaire
to all parties on the comprehensive service list for this Order, and
Anhui Hundred Health Foods Co., Ltd. (``Anhui Hundred'').\3\ On March
9, 2012, Petitioners submitted a timely response. No other parties
submitted questionnaire responses. On May 4, 2012, Petitioners filed a
submission arguing that the Department does not need to notify the
International Trade Commission (``ITC'') regarding this inquiry.
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\2\ See Honey From the People's Republic of China: Initiation of
Anticircumvention Inquiry, 76 FR 239 (December 13, 2011)
(``Initiation Notice'').
\3\ Anhui Hundred, a PRC producer of blends of honey and rice
syrup, was not on the comprehensive scope service list, but filed a
submission opposing the initiation of this inquiry on November 1,
2011 (``Anhui Hundred Opposition''). Previously, Anhui Hundred filed
a scope ruling request on its blend of honey and rice syrup on April
4, 2011, which was placed on the record of this inquiry by the
Department on August 8, 2011 (``Anhui Scope Request''). The
Department declined to initiate Anhui Hundred's scope inquiry on
June 27, 2011.
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[[Page 37379]]
Scope of the Order
The products covered by the order are natural honey, artificial
honey containing more than 50 percent natural honey by weight,
preparations of natural honey containing more than 50 percent natural
honey by weight and flavored honey. The subject merchandise includes
all grades and colors of honey whether in liquid, creamed, comb, cut
comb, or chunk form, and whether packaged for retail or in bulk form.
The merchandise subject to the order is currently classifiable
under subheadings 0409.00.00, 1702.90.90, 2106.90.99, 0409.00.0010,
0409.00.0035, 0409.00.0005, 0409.00.0045, 0409.00.0056, and
0409.00.0065 of the Harmonized Tariff Schedule of the United States
(``HTSUS''). Although the HTSUS subheadings are provided for
convenience and customs purposes, the Department's written description
of the merchandise under order is dispositive.
Merchandise Subject to the Anticircumvention Request
The merchandise subject to the anticircumvention request is blends
of honey and rice syrup, regardless of the percentage of honey they
contain, from the PRC.
Preliminary Determination
We preliminarily determine that blends of honey and rice syrup,
regardless of the percentage of honey contained, are therein
circumventing the antidumping duty order on honey from the PRC, as
provided in section 781(d) of the Act. In determining whether blends of
honey and rice syrup are appropriately considered a later-developed
product under section 781(d) of the Act, the Department evaluated the
arguments raised by the interested parties in light of the statute,
regulations, and the applicable legislative history.
Legal Framework
Section 781(d) of the Act provides that the Department may find
circumvention of an antidumping duty order when merchandise is
developed after a less-than-fair-value (``LTFV'') investigation is
initiated (``later-developed merchandise''). In conducting
anticircumvention inquiries under section 781(d)(1) of the Act, the
Department shall consider the following criteria: (A) Whether the
later-developed merchandise has the same general physical
characteristics as the merchandise with respect to which the order was
originally issued (``earlier product''); (B) whether the expectations
of the ultimate purchasers of the later-developed merchandise are the
same as for the earlier product; (C) whether the ultimate use of the
earlier product and the later-developed merchandise is the same; (D)
whether the later-developed merchandise is sold through the same
channels of trade as the earlier product; and (E) whether the later-
developed merchandise is advertised and displayed in a manner similar
to the earlier product.
In addition, section 781(d)(2) of the Act also states that the
administering authority may not exclude later-developed merchandise
from a countervailing or antidumping duty order merely because the
merchandise (A) is classified under a tariff classification other than
that identified in the petition or the administering authority's prior
notices during the proceeding, or (B) permits the purchaser to perform
additional functions, unless such additional functions constitute the
primary use of the merchandise, and the cost of the additional
functions constitute more than a significant proportion of the total
cost of production of the merchandise.
The statute does not provide further guidance in defining the
meaning of later development. The only other source of guidance
available is the brief discussion of later-developed products in the
legislative history for section 781(e) of the Act, which, although
addressing later-developed products with respect to the ITC's injury
analysis, we find is also relevant to the Department's analysis. The
Conference Report on H.R. 3, Omnibus Trade and Competitiveness Act of
1988 suggests that a later-developed product may be one which has been
produced as a result of a ``significant technological advancement or a
significant alteration of the merchandise involving commercially
significant changes.'' \4\ While this provision of the legislative
history does not exclusively limit the meaning of later developed to
only those instances involving a significant technological advancement
or significant alteration of subject merchandise, it provides guidance
by defining certain types of later-developed merchandise. In addition,
in the first section 781(d) determination involving portable electric
typewriters, the Department also cited a U.S. Senate report:
``{s{time} ection 781(d) was designed to prevent circumvention of an
existing order through the sale of later developed products or of
products with minor alterations that contain features or technologies
not in use in the class or kind of merchandise imported into the United
States at the time of the original investigation.'' \5\
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\4\ The legislative history for this provision provides that,
``With respect to later-developed products, a significant injury
issue can arise if there is a significant technological development
or a significant alteration of the merchandise involving
commercially significant changes in the characteristics and uses of
the product * * * Thus, a later-developed product incorporating a
new technology that provides additional capability, speed, or
functions would be covered by the order as long as it has the same
basic characteristics and uses.'' See H.R. Conf. Rep No. 576, 100th
Cong., 2d Sess., at 603 (1988), reprinted in 1988 U.S.C.C.A.A.N.
1547, 1636. The CIT has subsequently held that neither the
legislative history nor the ITC consultation provision at 781(e)
``define or limit the meaning of later-developed merchandise.''
Target Corp. v. United States, 32 C.I.T. 1016, 1025 (Ct. Int'l Trade
2008).
\5\ See S. Rep No. 40., 100th Cong., 1st Sess. 101 (1987).
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In addition to the statute, prior later-developed merchandise cases
also provide further guidance, foremost of which is that the Department
has considered ``commercial availability'' in some form in its prior
later-developed merchandise anticircumvention inquiries.\6\ In each
case, the Department addressed the ``commercial availability'' of the
later-developed merchandise in some capacity, such as the product's
presence in the commercial market or whether the product was fully
``developed,'' i.e., tested and ready for commercial production. The
Court of International Trade and the Court of Appeals for the Federal
Circuit have affirmed this test holding that a ``product's actual
presence in the market at the time of the {antidumping{time}
investigation is a necessary predicate of its inclusion or exclusion
from the scope of an antidumping order.'' \7\ Additionally, in Candles,
the Department considered whether the merchandise at issue in that
inquiry was later developed as a result of a significant technological
development or a significant alteration of the merchandise involving
commercially significant changes.\8\
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\6\ See PET Final; EMD Final; and EPROMs Final. See Portable
Electric Typewriters from Japan: Final Scope Ruling, 55 FR 47358
(November 13, 1990) (``PET Final''); Electrolytic Manganese Dioxide
from Japan: Final Scope Ruling, 57 FR 395 (January 6, 1992) (``EMD
Final''); and Erasable Programmable Read Only Memories from Japan:
Final Scope Ruling, 57 FR 11599 (April 6, 1992) (``EPROMS Final'');
Later-Developed Merchandise Anticircumvention Inquiry of the
Antidumping Duty Order on Petroleum Wax Candles from the People's
Republic of China: Affirmative Final Determination of Circumvention
of the Antidumping Duty Order 71 FR 59075 (October 6, 2006)
(``Candles'').
\7\ See Target Corp. v. United States, 578 F. Supp. 2d 1369,
1375-1376 (Ct. Int'l Trade 2008) (citations omitted); Target Corp.
v. United States, 609 F.3d 1352, 1360 (Fed. Cir. 2010).
\8\ See Candles, 71 FR at 59,077.
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Based upon the legislative history of the anticircumvention
provision and prior later-developed merchandise
[[Page 37380]]
inquiries, the Department continues to include a ``commercial
availability'' standard in its analysis of this proceeding, as was
indicated in the Initiation Notice. As noted above, both the
legislative history and prior later-developed merchandise inquiries
place emphasis on evaluating the ``commercial availability'' of the
specific product to determine whether that product is later-developed,
pursuant to section 781(d) of the Act. Accordingly, the Department will
evaluate whether blends of honey and rice syrup were not ``commercially
available'' at the time of the LTFV investigation in order to be
properly considered later-developed merchandise. Additionally, similar
to the Department's analysis in Candles,\9\ the Department will examine
whether blends of honey and rice syrup are materially different from
those under consideration at the time of the investigation, while
allowing them to have ``the same basic characteristics and uses.'' \10\
Through this analysis, the Department ensures that the merchandise
which is the subject of this scope inquiry is not the same as the
merchandise explicitly excluded under the scope of the Order.
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\9\ As discussed in the immediately preceding paragraph, in
Candles, the Department considered whether the merchandise at issue
was materially different from the merchandise contemplated by the
order in so far as the later-developed merchandise was the result of
a significant technological development or a significant alteration
of the merchandise involving commercially significant changes.
\10\ See H.R. Conf. Rep No. 576, 100th Cong., 2d Sess., at 603
(1988), reprinted in 1988 U.S.C.C.A.A.N. 1547, 1636.
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We have analyzed the information and comments of interested parties
in this anticircumvention inquiry. Based on all of the information on
the record, the Department considered whether the merchandise subject
to this anticircumvention inquiry constitutes ``later-developed
merchandise'' within the meaning of section 781(d) of the Act.
Whether Blends of Honey and Rice Syrup Are Later-Developed Merchandise
Commercial Availability
First, we address whether blends of honey and rice syrup constitute
later-developed merchandise by determining whether this merchandise was
commercially available at the time of the LTFV investigation. As
evidence that blends of honey and rice syrup were not commercially
available at the time of the investigation, Petitioners note that the
ITC Report \11\ specifically identifies ``refined sugar, high-fructose
corn syrup, and the like'' \12\ as being used to make artificial honey.
They note that rice syrup was not included in this illustrative list,
because only refined sugar and high-fructose corn syrup were readily
available in the U.S. market, with corn syrup being the most common
sweetener mixed with honey.\13\ Further, according to Petitioners, at
the time of the original investigation honey blended with any other
non-honey sweeteners was rare in the U.S. market due to economic
adulteration.\14\ The Department specifically requested from the
parties any evidence that blends of honey and rice syrup were
commercially available prior to November 2, 2000, when the
investigation was initiated.\15\ No parties submitted any evidence to
the Department demonstrating that blends of honey and rice syrup were
available prior to the initiation of the investigation. Additionally,
evidence on the record shows that the first imports of blends of honey
and rice syrup to the United States from the PRC did not occur until
August 2004.\16\
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\11\ See Honey from Argentina and China, Inv. Nos. 701-TA-402
and 731-TA-892-893 (Final), USITC Pub. 3470 (``ITC Report'') at I-6.
\12\ See id.
\13\ See Petitioners' Supplemental Questionnaire Response dated,
November 21, 2011, (``Petitioners' Supp. QR'') at 6, and Exhibit 4.
\14\ Economic adulteration is the practice of dishonestly
diluting pure honey with a less expensive substitute and then
reselling the blend to unknowing consumers as pure honey. See
Petitioners' Questionnaire Response dated March 9, 2012,
(``Petitioners' QR'') at 18-20, explaining the history of the honey
market and economic adulteration. See also Petitioners' Request for
Scope/Circumvention Inquiry on Honey Syrup from China and Opposition
to Anhui Hundred Scope Request on Honey Syrup from China submitted
June 8, 2011, at 7-8, stating that ``it is illegal under federal and
most states' law to sell, as ``honey,'' honey that has been blended
with any other type of sweetener,'' and citing 21 U.S.C. section
381(a).
\15\ See Questionnaire from the Department To ALL PARTIES, RE:
Anti-Circumvention Inquiry of Honey-Rice Syrup Blends from the
People's Republic of China (``PRC''), dated February 3, 2012, at 4.
\16\ See Petitioners' Supp. Response at 11-12.
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Petitioners argue that blends of honey and rice syrup were neither
commercially developed nor commercially available when the antidumping
investigation was initiated on November 2, 2000.\17\ As discussed in
the Initiation FR, Petitioners note that none of the three U.S. trade
investigations between 1993 and 2001 discussed blends of honey and rice
syrup,\18\ and therefore they provide no evidence of blends of honey
and rice syrup being available at the time the investigation was
initiated.\19\ Petitioners also point to the Port Import Export
Reporting Service (``PIERS'') ship manifest summaries which show that
the first shipments of blends of honey and rice syrup from the PRC did
not enter the United States until almost four years after the
investigation was initiated.\20\ Petitioners also submitted an
affidavit from an industry expert stating that prior to the
investigation the domestic industry did not produce blends of honey and
rice syrup, and had no knowledge of any imports of such a product.\21\
Petitioners also note that several studies on honey adulteration
published from 1991 through 2002 do not mention rice syrup as an
adulterant, including the National Honey Board's (which is overseen by
the U.S. Department of Agriculture and conducts market research) 2002
Honey Attitude and Usage Study, which does not refer to any blend of
honey with any non-honey sweeteners being available at the time of the
investigation.\22\
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\17\ See id. at 5.
\18\ See ITC Report, the ITC's 1993-94 ``safeguard''
investigation, Honey from China, Inv. No. TA-406-13, USITC Pub. 2715
(Jan. 1994) (``1994 ITC Report''), and the 1994-95 AD investigation,
Honey from the People's Republic of China, Inv. No. 731-TA-722
(Preliminary), USITC Pub. 2832 (Nov. 1994) (``ITC AD Report'').
\19\ See Petitioners' QR at 6-7, and Initiation FR at 77482-3.
\20\ See Petitioners' QR at 8.
\21\ See id. at 8, citing Petitioners' Supp. QR at Exhibit 3.
\22\ See Petitioners' QR at 8-9, and Initiation FR at 77483.
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Anhui Hundred argues that ``honey syrup'' (blends of honey and rice
syrup) is not a newly developed product designed to circumvent the
Order as demonstrated by the fact that both honey and honey
preparations existed before the investigation and that both the
Petitioners and the Department knew of their existence.\23\ Further,
Anhui Hundred contends that despite this knowledge, Petitioners chose
to include in the scope only preparations containing over 50 percent
honey.\24\ However, as discussed above, there is no evidence on the
record that honey and rice syrup was blended together or commercially
available at the time of the investigation, and as discussed further
below, the blends of honey and rice syrup under consideration in this
inquiry are a materially different product than other honey blends.
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\23\ See Anhui Hundred Opposition at 2-3.
\24\ See id. at 3.
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Anhui Hundred also notes that Petitioners did not bring an
anticircumvention request prior to this proceeding in 2011, even
though, according to PIERS data, blends of honey and rice syrup have
been imported since as early as 2003.\25\ Similarly, Anhui Hundred
argues that two rulings by Customs and Border Protection (``CBP'')
demonstrate that
[[Page 37381]]
blends of honey and rice syrup were identified as early as 2005, and,
therefore, cannot be considered a newly-developed product.\26\ However,
there is no prescribed time limit for a party to bring a later-
developed merchandise claim. Additionally, as explained above, the
relevant question is whether the product in question was developed
after the start of the investigation, not at what time the product was
developed in relation to the anticircumvention inquiry itself.
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\25\ See id.
\26\ See id. at 4, and Exhibit 1.
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Petitioners argue that the evidence highlighted by Anhui Hundred
(e.g. the PIERS data) in fact shows that blends of honey and rice syrup
did not arrive on the U.S. market until four years after the initiation
of the investigation.\27\ Additionally, Petitioners contend that the
CBP challenges made in 2005 and 2009 placed on the record by Anhui
Hundred only show that blends of honey and rice syrup were present in
those years, but do not show that they were commercially available when
the investigation initiated.\28\
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\27\ See id.
\28\ See id. at 10.
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Based on the three U.S. trade investigations,\29\ several honey
adulteration studies which do not mention the existence of blends of
honey and rice syrup at all,\30\ a National Honey Board Survey,\31\
PIERS data,\32\ and the affidavit of an industry expert,\33\ the
Department determines that blends of honey and rice syrup were not
commercially available at the time the investigation was initiated.
Instead, the PIERS data demonstrates blends of honey and rice syrup
first became commercially available in the United States in August of
2004.\34\
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\29\ See the ITC Report, 1994 ITC Report, and the ITC AD Report.
\30\ See Petitioners' Supp. QR. at 14-16, and Exhibits 5-9.
\31\ See Petitioners' QR at 8-9.
\32\ See Anhui Hundred Opposition at 2-3.
\33\ See Petitioners QR at Exhibit 3.
\34\ See Petitioners' Supp. Response at 11-12.
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Materially Different Merchandise
Next, the Department analyzed whether blends of honey and rice
syrup are materially different from those under consideration at the
time of the investigation. We begin our analysis by noting that the
scope specifically addresses ``artificial honey,'' and includes
artificial honeys ``containing more than 50 percent natural honey by
weight.'' According to the ITC Report, artificial honeys are ``mixtures
based on sucrose, glucose, or invert sugar, generally flavored or
colored and prepared to imitate natural honey.'' \35\ Based on this
description, blends of honey and rice syrup comprised of over 50
percent honey qualify as artificial honey because they are composed of
sucrose, glucose and water, and imitate honey as discussed below in the
Physical Characteristics section, and therefore fall within the scope
of this Order.
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\35\ See ITC Report at I-6.
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However, Petitioners argue that the Department's analysis should
not end there because blends of honey and rice syrup did not exist at
the time of the Order, and they are materially different from the
artificial honey contemplated by the scope because they are not
susceptible to current testing methods, as are other honey blends.\36\
Petitioners explain that at the time the Order was written, scientific
testing existed which could detect the amount of cane or corn syrup in
a honey blend, because honey is a C-3 sugar which is different from
corn syrup and cane syrup which are C-4 sugars, and this difference was
detectable via testing.\37\ These tests were developed to prevent pure
honey from being diluted by cheaper non-honey sweeteners (e.g. cane and
corn syrup) which existed prior to the initiation of the investigation,
and being resold as pure honey to unwitting consumers (a process known
as honey adulteration).\38\ However, these testing methods, according
to Petitioners, cannot distinguish the amount of rice syrup in a honey
and rice syrup blend, because rice syrup and honey are both C-3
sugars.\39\ As a result, Petitioners' argue this evidence demonstrates
that neither the ITC nor Petitioners considered excluding blends of
honey and C-3 sugars containing 50 percent or less by weight when there
was no way to determine if such products fall within the scope's 50
percent threshold.\40\
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\36\ Petitioners' Supp. Response at 11.
\37\ See id. at 7-8.
\38\ See Petitioners' QR at 18-9.
\39\ See id.
\40\ See Petitioners' Supp. Response at 11.
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The Department preliminarily determines that, while honey blends
are contemplated by the Order, blends of honey and rice syrup are
materially different from those blends because they are not made of C-4
sugars. This difference is important because the percentages present in
the Order are premised on honey-sugar blends for which the percentage
of honey and sugar are determinate. However, as demonstrated by
Petitioners, the percentage of sugar in blends of honey and rice syrup
is not determinate because one cannot identify the percentage of C-3
sugars blended with honey.\41\ Put differently, without the ability to
test for the relative amount of honey present in a blend of rice-syrup
and honey, the ``50 percent natural honey by weight'' threshold in the
scope is without meaning for blends of honey and rice syrup.
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\41\ See Petitioners' QR at 18-23.
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In conclusion, the Department finds that honey and rice syrup
blends constitute later-developed merchandise, that is, merchandise
developed after the honey investigation and this merchandise is
materially different from the merchandise under consideration at the
time of the investigation and, in particular, different from the honey
blends specifically excluded under the Order.
Whether Blends of Honey and Rice Syrup Should Be Included Within the
Scope of the Order
As noted above, section 781(d)(1) provides that in determining
whether merchandise developed after an investigation is within the
scope of an antidumping duty order, the Department shall consider
whether blends of honey and rice syrup, regardless of the percentage of
honey they contain, have the same general physical characteristics,
same ultimate user expectations, same ultimate use, uses the same
channels of trade, and same advertisement and display as the products
covered by the scope.
(1) Physical Characteristics
With regard to whether blends of honey and rice syrup comprised of
any percentage of honey share the same physical characteristics as
honey products covered by the language of the Order, Petitioners have
presented information indicating that there is no substantial
difference in physical characteristics. Petitioners argue that the test
report submitted by Anhui Hundred shows that blends of honey and rice
syrup are indistinguishable from in-scope blends of honey and rice
syrup in terms of sugar and water content.\42\ Additionally, in
appearance, Anhui Hundred's test report describes the 90 percent rice
syrup, ten percent honey blend as ``a translucent, straw colored, thick
liquid with no visible foreign substances,'' which according to
Petitioners is a description which applies equally to in-scope blends
of honey and rice syrup and pure natural honey.\43\
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\42\ See id. at 13.
\43\ See id. at 14-15.
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Secondly, Petitioners note that Anhui Hundred (doing business as
``Anhui
[[Page 37382]]
Freedom Foods'') uses the same six descriptions to market blends of
honey and rice syrup regardless of whether the blends are in-scope or
out-of-scope, meaning the products must have the same physical
characteristics.\44\ Additionally, Petitioners provided evidence from
the Web sites of other PRC producers of blends of honey and rice syrup,
showing that they too market blends of honey and rice syrup using the
identical descriptions, for their blends of honey and rice syrup
ranging from ten percent honey to 90 percent honey.\45\
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\44\ See id. at Exhibit 17. Petitioners explain that Anhui
markets both in-scope and out of scope blends of rice syrup using
the same six descriptions: ``Appearance: white~yellow, no visible
impurities by naked eyes''; ``Smell: mildly sweet, with the flavor
of honey''; ``Taste'' similar to honey very much;'' ``Moisture 18.5%
max.''; ``Fructose/reducing sugar 48% min.''; and Color is
``30min.''
\45\ See id. at 16-18. For example, Wuhu Tongli Foods markets
both its 90 percent honey to rice syrup blend and its 10 percent
honey to rice syrup blend the same, stating ``regardless of the
honey-to-rice syrup ratio selected for the blend, ``it taste similar
to honey very much.'' See id. at Exhibit 20.
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Thirdly, Petitioners state no scientific test exists to effectively
distinguish between in-scope and out-of-scope blends of honey and rice
syrup based on differences in those products' physical
characteristics.\46\ Therefore, Petitioners argue, because all blends
of honey and rice syrup produce the same test results, where a tester
can determine a mixture of honey and rice syrup is present, but not in
what ratio, for purposes of the analysis above, the Department must
find that blends of honey and rice syrup have identical physical
characteristics to in-scope blends and honey.\47\ Based on all of the
above evidence, the Department finds Petitioners have demonstrated
honey and rice syrup blends, regardless of the percentage of honey they
contain, have the same physical characteristics as honey.
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\46\ See id. at 18-25.
\47\ See id. at 23.
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(2) Expectations of the Ultimate Users
Petitioners argue that the ultimate users of blends of honey and
rice syrup have the same expectations as users of honey. Based on the
affidavit of an industry expert, Petitioners argue that because blends
of honey and rice syrup contain the word ``honey,'' the ultimate
consumers expect ``a honey based sweetener that looks, smells, and
tastes like honey'' regardless of the relative percentage of honey they
contain.\48\ Petitioners also placed evidence on the record from
various producers of blends of honey and rice syrup, showing that they
advertise and market blends of honey and rice syrup as having the same
physical characteristics, therefore, consumers cannot have any
differing expectations for these products, other than price.\49\
Additionally, Petitioners put National Honey Board surveys on the
record showing consumers often mistake honey blends with honey, and
there is no evidence in the reports to suggest consumers can
distinguish between in-scope and out-of scope blends.\50\ Based on this
evidence, the Department finds that the Petitioners have demonstrated
through National Honey Board surveys and advertising language on
multiple PRC exporter Web sites, and an affidavit by an industry expert
that consumers have similar expectations for blends of honey and rice
syrup regardless of the percentage of honey they contain, as well as
for pure honey.
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\48\ See id. at 26.
\49\ See id. at 31.
\50\ See Petitioners' Supp. Response at 18-19, and Exhibits 13-
15.
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(3) Ultimate Use of Merchandise
Petitioners state that all blends of honey and rice syrup have the
same ultimate uses as in-scope honey, and cite to a National Honey
Board survey which shows that all blends of honey and rice syrup are
consumed for baking, and on/in breads, pancakes and cereal.\51\
Petitioners also placed a series of advertisements on the record,
showing both in-scope and out-of-scope blends having identical uses
(e.g. toppings for pancakes, bread, etc.).\52\
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\51\ See id. at 32.
\52\ See id. at 32-34.
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Anhui Hundred argues that blends of honey and rice syrup are not
substitutes for pure honey, because blends of honey and rice are only
sold to commercial bakeries and manufacturers, and are not for retail
sale.\53\ However, the Department notes that the Order is not limited
to pure honey. Furthermore, commercial bakeries and manufacturers also
use pure honey,\54\ other in-scope artificial honey blends,\55\ and
both in-scope and out-of-scope blends of honey and rice syrup.\56\
Additionally, as discussed below in the Channels of Trade and
Advertising sections, there is evidence on the record that blends of
honey and rice syrup are in fact sold for retail uses, in contrast to
Anhui Hundred's contention that such blends are not for retail
sale.\57\ Further, the Department finds that even if blends of honey
and rice syrup were not sold for retail use that would not mean that
they do not have similar uses, since they both are used for commercial
baking. Based on this evidence, the Department finds that blends of
honey and rice syrup have the same ultimate uses as honey.
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\53\ See Anhui Hundred Opposition at 5.
\54\ See, e.g., ITC Report at I-5 stating, ``honey appears in a
variety of products such as bread and other baked goods, cereal,
condiments, candy, medicine, and even shampoo.''
\55\ See id. at I-6, stating in-scope artificial honey is used
as a ``direct substitute for natural honey.''
\56\ See Anhui Scope Request at 3, stating ``the vast majority
of honey syrup consumed world-wide is used by bakeries and
commercial food processors as a sweetener * * *''; see also
Petitioners' Supp. QR, at Exhibit 14, the National Honey Board 2006
Survey indicating honey and rice syrup blends would be used for
baking and as spreads for bread and pancakes.
\57\ See, e.g., Petitioners' Supp. QR at Exhibits 17, 20-22,
showing Web sites selling blends of honey and rice syrup from PRC
producers in jars and traditional honey bears for individual use and
sale.
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(4) Channels of Trade
Petitioners contend that blends of honey and rice syrup, regardless
of the honey content, are used by industrial bakers, or sold in health
food stores, or grocery stores in honey bear bottles.\58\ Anhui Hundred
similarly contends that blends of honey and rice syrup are sold to
``bakeries, and commercial food processors as a sweetener, while small
quantities may be repackaged for retail sale to individual consumers.''
\59\ Petitioners state that producers of blends of honey and rice
syrup, including Anhui Hundred, market blends of honey and rice syrup
in honey bear bottles and other retail containers on Internet Web
sites, as well as steel drums.\60\ Further, Petitioners argue, even if
blends of honey and rice syrup were only sold to commercial bakeries
and processed food manufacturers, both less than- and greater than-50
percent blends still travel through the same channels of trade to reach
those consumers because they are marketed the same on Web sites and in
the same containers.\61\ Finally, Petitioners note that Anhui Freedom
Foods sells all of its blends of honey and rice syrup, regardless of
honey content, in any packaging the consumer wishes, from squeeze
bottles, to steel drums.\62\ Based on the evidence on the record,
including multiple Web sites showing blends of honey and rice syrup
being sold in the same containers regardless of the percentage of honey
they contain,\63\ and Anhui Hundred's own submission stating that
blends of honey and rice syrup are consumed by bakeries and commercial
food processors,\64\ the
[[Page 37383]]
Department finds that the channels of trade for all ratios of blends of
honey and rice syrup are also similar to those used for honey.
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\58\ See Petitioners' QR at 34-5.
\59\ See Anhui Scope Request at 3.
\60\ See Petitioners' QR at 35-6, and Exhibit 17.
\61\ See id.
\62\ See id. at 36.
\63\ See Petitioners' Supp. QR at Exhibits 19-23, and
Petitioners' Supp. Response at 28-30, and Attachments A, B, D.1,
D.2, and E.
\64\ See Anhui Scope Request at 3.
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(5) Advertising
Petitioners argue that blends of honey and rice syrup, regardless
of the percentage of honey they contain, are advertised and displayed
in the same manner as in-scope honey. For example, Petitioners observe
that Anhui Freedom Foods sells ``syrup honey'' and ``honey blended
syrup'' in blends ranging from ten percent honey to at least 70 percent
honey in containers which are identical in terms of size, listed
applications and uses, advertising used, and channels of trade.\65\
Petitioners note that the same is true for other PRC producers of
blends of honey and rice syrup, which use identical labeling and
advertising for both less than- and greater than-50 percent blends.\66\
Petitioners also note that the packaging almost always prominently
displays the word ``honey'' on the front, and is often in bear bottles
so consumers associate it with pure honey.\67\ Based on this evidence
on the record, the Department finds that honey and rice syrup blends
are advertised in the same or similar manner as honey.
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\65\ See id. at 37.
\66\ See id.
\67\ See id.
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Other Arguments by Anhui Hundred
Anhui Hundred also contends that Petitioners have not put any
evidence on the record to support their claim that blends of honey and
rice syrup have been sold as pure honey. The Department notes that it
is not basing its circumvention finding on the contention that blends
of honey and rice syrup are being fraudulently sold as pure honey, nor
is that an element of the Department's later-developed merchandise
analysis.
Finally, prior to the initiation, Anhui Hundred argued that
initiation of an anticircumvention inquiry based on the lack of an
enforceable test would set a bad precedent for future cases.\68\ Anhui
Hundred argues that including blends of honey and rice syrup would
cause uncertainty about what products are included in the scope of the
Order and which products are likely to be included in the future.\69\
The Department does not find these arguments persuasive. First, Anhui
has not provided any legal basis for these arguments. The Department
has analyzed the statutorily mandated criteria and this is the correct
focus of this anticircumvention inquiry. In addition, if the Department
affirms this preliminary determination and finds all blends of honey
and rice syrup are later-developed merchandise, it will amend the scope
language to that affect in an unambiguous manner. Further, a revised
scope would clear up some of the current uncertainty around the Order,
as demonstrated by the CBP challenges cited above.
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\68\ See Anhui Hundred Opposition at 5-9.
\69\ See id. at 6.
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Anhui Hundred also argues that a lack of a test does not
necessarily make an order unenforceable because the composition of the
merchandise could be verified through manufacturing and shipping
documentation, as well as on-site verifications.\70\ Once again, there
is no legal basis for the Anhui Hundred's argument. The Statute does
not require the Department to make a determination of unenforceability
before making an affirmative circumvention determination. In any event,
the evidence does not support Anhui Hundred's argument because in the
case of the honey Order, CBP's ability to test the composition of the
merchandise has been a tool in the enforcement of the Order.\71\ In
this regard, Petitioners stated that they specifically agreed to the 50
percent threshold in the scope because they thought it would be
enforceable.\72\ CBP's ability to continue to enforce the Order has now
been called into question because of the development of blends of honey
and rice syrup which are not susceptible to current testing methods.
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\70\ See id. at 7.
\71\ See Petitioners' Supp. QR at Exhibit 26.
\72\ See id. at 11.
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Conclusion
Based on the above information, the Department finds that the
blends of honey and rice syrup are later-developed merchandise. The
evidence on the record demonstrates that blends of honey and rice syrup
were not commercially available at the time that the investigation was
initiated and these blends are materially different from the blends
contemplated by the Order. Additionally, all honey rice syrup blends,
regardless of the percentage of honey they contain, meet the criteria
under sections 781(d)(1)(A-E) of the Act.
The evidence on the record of this inquiry, taken as a whole, leads
to our preliminary determination that U.S. imports of blends of honey
and rice syrup are later-developed products of the subject merchandise,
within the meaning of section 781(d) of the Act, and are within the
scope of the Order.
Suspension of Liquidation
Section 351.225(l)(2) of the Department's regulations states: ``If
liquidation has not been suspended, the Secretary will instruct CBP to
suspend liquidation and to require a cash deposit of estimated duties,
at the applicable rate, for each unliquidated entry of the product
entered, or withdrawn from warehouse, for consumption on or after the
date of initiation of the scope inquiry.'' In accordance with section
351.225(l)(2) of the Department's regulations, we will instruct CBP to
suspend liquidation of all entries of blends of honey and rice syrup,
from the PRC that were entered, or withdrawn from warehouse, for
consumption on or after December 7, 2011, the date of initiation of
this anticircumvention inquiry.
The merchandise subject to suspension of liquidation based on this
determination is all blends of honey and rice syrup regardless of the
percentage of honey contained in the blend. In accordance with sections
735(c) and 781(b) of the Act and 19 CFR 225(i)(3), we will direct CBP
to suspend liquidation and require cash deposits of estimated duties,
at the rate applicable to the exporter, on all unliquidated entries of
all honey and rice syrup blends regardless of the percentage of honey
they contain, that were entered, or withdrawn from warehouse, for
consumption on or after December 7, 2011, the date of initiation of the
circumvention inquiry. This suspension of liquidation will remain in
effect until further notice.
International Trade Commission Notification
In accordance with section 781(d) of the Act, we have notified the
ITC of the proposed inclusion of blends of honey and rice syrup in the
antidumping duty order on honey from the PRC.\73\ The ITC has not yet
determined if consultations are not necessary.
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\73\ See the Department's letter to the ITC dated May 14, 2012,
Re: Anticircumvention Inquiry of the Antidumping Duty Order on Honey
from the People's Republic of China.
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Public Comment
Case briefs from interested parties may be submitted no later than
30 days from the publication of this notice. Rebuttal briefs must be
limited to issues raised in such briefs and may be filed no later than
five days after the deadline for filing case briefs.
Additionally, pursuant to 19 CFR 351.310(c), interested parties who
wish to request a hearing, or to participate if one is requested, must
submit a written
[[Page 37384]]
request to the Assistant Secretary for Import Administration, Room
1117, within 30 days of the date of publication of this notice.
Requests should contain: (1) The party's name, address and telephone
number; (2) the number of participants; and (3) a list of issues to be
discussed.\74\ Issues raised in the hearing will be limited to those
raised in the respective case and rebuttal briefs.
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\74\ See Id.
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Final Determination
The Department intends to issue the final determination no later
than October 2, 2012. This determination is issued and published in
accordance with section 781(d) of the Act and section 351.225(j) of the
Department's regulations.
Dated: June 13, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2012-15219 Filed 6-20-12; 8:45 am]
BILLING CODE 3510-DS-P