82 FR 31942 - Sugar From Mexico: Amendment to the Agreement Suspending the Countervailing Duty Investigation

DEPARTMENT OF COMMERCE
International Trade Administration

Federal Register Volume 82, Issue 131 (July 11, 2017)

The Department of Commerce (the Department) and a representative of the Government of Mexico (GOM) have signed an amendment to the Agreement Suspending the Countervailing Duty Investigation on Sugar from Mexico (CVD Suspension Agreement). The amendment to the CVD Suspension Agreement modifies the definitions for sugar from Mexico, modifies the restrictions of the volume of direct or indirect exports to the United States of sugar from all Mexican producers/exporters, and provides for enhanced monitoring and enforcement mechanisms.

[Federal Register Volume 82, Number 131 (Tuesday, July 11, 2017)]
[Notices]
[Pages 31942-31945]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-14283]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-201-846]


Sugar From Mexico: Amendment to the Agreement Suspending the 
Countervailing Duty Investigation

AGENCY: Enforcement and Compliance, International Trade Administration, 
Department of Commerce.

DATES: Effective June 30, 2017.

SUMMARY: The Department of Commerce (the Department) and a 
representative of the Government of Mexico (GOM) have signed an 
amendment to the Agreement Suspending the Countervailing Duty 
Investigation on Sugar from Mexico (CVD Suspension Agreement). The 
amendment to the CVD Suspension Agreement modifies the definitions for 
sugar from Mexico, modifies the restrictions of the volume of direct or 
indirect exports to the United States of sugar from all Mexican 
producers/exporters, and provides for enhanced monitoring and 
enforcement mechanisms.

FOR FURTHER INFORMATION CONTACT: Sally Craig Gannon or David Cordell at 
(202) 482-0162 or (202) 482-0408, respectively; Bilateral Agreements 
Unit, Office of Policy, Enforcement and Compliance, International Trade 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On April 17, 2014, the Department initiated a countervailing duty 
investigation under section 702 of the Tariff Act of 1930, as amended 
(the Act), to determine whether manufacturers, producers, or exporters 
of sugar from Mexico receive subsidies.\1\ On August 25, 2014, the 
Department preliminarily determined that countervailable subsidies are 
being provided to producers and exporters of sugar from Mexico and 
aligned the final countervailing duty determination with the final 
antidumping duty determination.\2\
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    \1\ See Sugar from Mexico: Initiation of Countervailing Duty 
Investigation, 79 FR 22790 (April 24, 2014).
    \2\ See Sugar from Mexico: Preliminary Affirmative 
Countervailing Determination and Alignment of Final Countervailing 
Determination with Final Antidumping Duty Determination, 79 FR 51956 
(September 2, 2014).
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    The Department and the GOM signed the CVD Suspension Agreement on 
December 19, 2014.\3\
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    \3\ See Sugar From Mexico: Suspension of Countervailing 
Investigation, 79 FR 78044 (December 29, 2014).
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    On January 8, 2015, Imperial Sugar Company (Imperial) and AmCane 
Sugar LLC (AmCane) each notified the Department that they had 
petitioned the International Trade Commission (ITC) to conduct a review 
of the CVD Suspension Agreement under section 704(h) of the Act to 
determine whether the injurious effects of the imports of the subject 
merchandise are eliminated completely by the CVD Suspension Agreement. 
On March 19, 2015, in a unanimous vote, the ITC found that the CVD 
Suspension Agreement eliminated completely the injurious effects of 
imports of sugar from Mexico.\4\ As a result of the ITC's 
determination, the CVD Suspension Agreement remained in effect, and on 
March 27, 2015, the Department, in accordance with section 704(h)(3) of 
the Act, instructed U.S. Customs and Border Protection (CBP) to 
terminate the suspension of liquidation of all entries of sugar from 
Mexico and refund all cash deposits.
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    \4\ See Sugar from Mexico; Determinations, 80 FR 16426 (March 
27, 2015).
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    Notwithstanding issuance of the CVD Suspension Agreement, pursuant 
to requests by domestic interested parties, the Department continued 
its investigation and made an affirmative final determination that 
countervailable subsidies were being provided to exporters and 
producers of sugar from Mexico.\5\ In its Final Determination, the 
Department calculated countervailable subsidy rates of 43.93 percent 
for Fondo de Empresas Expropiadas del Sector Azucarero (FEESA), 5.78 
percent for Ingenio Tala S.A. de C.V. and certain affiliated sugar 
mills of Grupo Azucarero Mexico S.A. de C.V. (collectively, the GAM 
Group), and 38.11 percent for producers and exporters that were not 
individually investigated. The Department stated, in its Final 
Determination, that it would ``not instruct CBP to suspend liquidation 
or collect cash deposits calculated herein unless the {CVD{time}  
Suspension Agreement is terminated.'' \6\ The ITC subsequently made an 
affirmative determination of material injury to an industry in the 
United States by reason of imports of sugar from Mexico.\7\
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    \5\ See Sugar From Mexico: Continuation of Antidumping and 
Countervailing Duty Investigations, 80 FR 25278 (May 4, 2015); Sugar 
From Mexico: Final Affirmative Countervailing Duty Determination, 80 
FR 57337 (September 23, 2015) (Final Determination).
    \6\ Final Determination, 80 FR at 57338.
    \7\ See Sugar From Mexico, 80 FR 70833 (November 16, 2015) 
(Final ITC Determination).
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    Since June 2016, the Department and GOM have held consultations 
regarding the CVD Suspension Agreement to address concerns raised by 
the domestic industry and to ensure that the CVD Suspension Agreement 
meets all of the statutory requirements for a suspension agreement, 
e.g., that suspension of the investigation is in the public interest, 
including the availability of supplies of sugar in the U.S. market, and 
that effective monitoring is practicable. On June 14, 2017, the 
Department and the GOM initialed a draft amendment to the CVD 
Suspension Agreement. The Department invited interested parties to 
provide written comments on the proposed amendment by June 21, 2017, 
and rebuttal comments by June 26, 2017.\8\ On June 17, 2017, the 
Department released a memorandum explaining how the draft amendment, as 
integrated with the CVD Suspension Agreement (the draft amended CVD 
Suspension Agreement) meets the requirements of section 704(c) of the 
Act and invited interested parties to provide written comments by no 
later than the close of business on June 23, 2017, with rebuttal 
comments due no later than the close of business on June 26, 2017.\9\
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    \8\ See Memorandum entitled ``Agreement Suspending the 
Countervailing Duty Investigation on Sugar from Mexico,'' dated June 
14, 2017 and Memorandum entitled ``Placing Press Release on the 
Record of the Proceeding,'' dated June 30, 2017.
    \9\ See Memorandum from P. Lee Smith, Deputy Assistant Secretary 
for Policy and Negotiations, to Ronald K. Lorentzen, Acting 
Assistant Secretary for Enforcement and Compliance, entitled ``Draft 
Amendment to the Agreement Suspending the Countervailing Duty 
Investigation on Sugar from Mexico: U.S. Import Coverage, Existence 
of Extraordinary Circumstances, Public Interest, and Effective 
Monitoring Assessments,'' dated June 16, 2017.
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Scope of Agreement

    See Section I, Product Coverage, of the CVD Suspension Agreement.

[[Page 31943]]

Analysis of Comments Received

    We received comments on the draft amendment from the International 
Sugar Trade Coalition, the Australian Sugar Industry Alliance, CSC 
Sugar LLC, the Corn Refiners Association, the Organic Trade 
Association, Archer Daniels Midland Company, the American Sugar 
Coalition, Imperial Sugar Company, the Government of Canada, the Sugar 
Users Association, and the Governments of Barbados, Belize, Dominican 
Republic, Guyana, and Jamaica. We received rebuttal comments on the 
draft amendment from C[aacute]mara Nacional de Las Industrias Azucarera 
y Alcoholera (Mexican Sugar Chamber), the American Sugar Coalition, the 
Government of Mexico, and Zucarmex, S.A. de C.V. and Zucrum Foods LLC. 
We did not receive comments on the draft statutory memorandum. In 
reaching a final amendment to the CVD Agreement, the Department has 
taken into account all comments and rebuttal comments submitted on the 
record of the suspension agreement proceeding and has made changes, 
where warranted, to the June 14, 2017 draft CVD amendment based upon 
those comments. The Department expects to place its written analysis of 
the changes made and response to comments on the record of the 
suspension agreement proceeding no later than July 14, 2017.

Amendment to CVD Suspension Agreement

    The Department consulted with the GOM and the petitioners \10\ and 
has considered the comments submitted by interested parties with 
respect to the draft amendment to the CVD Suspension Agreement. On June 
30, 2017, after consideration of the interested party comments 
received, Wilbur L. Ross, Jr., Secretary of Commerce, and Juan Carlos 
Baker Pineda, Subsecretario de Comercio Exterior, Secretar[iacute]a de 
Econom[iacute]a, signed a finalized amendment to the CVD Suspension 
Agreement. The amendment, as integrated with the CVD Suspension 
Agreement (the amended CVD Suspension Agreement), allows for exports of 
Mexican sugar to the United States in accordance with the collective 
terms therein.
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    \10\ Petitioners are the American Sugar Coalition and its 
individual members: American Sugar Cane League, American Sugar 
Refining, Inc., American Sugarbeet Growers Association, Florida 
Sugar Cane League, Rio Grande Valley Sugar Growers, Inc., Sugar Cane 
Growers Cooperative of Florida, and United States Beet Sugar 
Association.
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    In accordance with section 704(c) of the Act, we have determined 
that extraordinary circumstances, as defined by section 704(c)(4) of 
the Act, exist with respect to the amended CVD Suspension Agreement. We 
have also determined that the amended CVD Suspension Agreement is in 
the public interest and can be monitored effectively, as required under 
section 704(d) of the Act.
    For the reasons outlined above, we find that the amended CVD 
Suspension Agreement meets the criteria of section 704(c) and (d) of 
the Act.
    The terms and conditions of the amendment to the CVD Suspension 
Agreement, signed on June 30, 2017, are set forth in the Amendment to 
the CVD Suspension Agreement, which is attached in Annex 1 to this 
notice.

Administrative Protective Order Access

    The administrative protective order (APO) the Department granted in 
the suspension agreement segment of this proceeding remains in place 
and effective for the amended CVD Suspension Agreement. All new parties 
requesting access under the APO currently in effect to business 
proprietary information submitted during the administration of the 
amended CVD Suspension Agreement must submit an APO application in 
accordance with the Department's regulations currently in effect.\11\
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    \11\ See section 777(c)(1) of the Act; 19 CFR 351.103, 351.304, 
351.305, and 351.306.
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    We are issuing and publishing this notice in accordance with 
section 704(f)(1)(A) of the Act and 19 CFR 351.208(g)(2).

    Dated: June 30, 2017.
Gary Taverman,
Deputy Assistant Secretary for Antidumping and Countervailing Duty 
Operations.

Annex 1: Amendment to Agreement Suspending the Countervailing Duty 
Investigation on Sugar From Mexico

    The Agreement Suspending the Countervailing Duty Investigation 
on Sugar from Mexico (Agreement) signed by the United States 
Department of Commerce (the Department) and the Government of Mexico 
(GOM) on December 19, 2014, is amended, as set forth below 
(Amendment).
    If a provision of the Agreement conflicts with a provision of 
this Amendment, the provision of the Amendment shall supersede the 
provision of the Agreement to the extent of the conflict. All other 
provisions of the Agreement and their applicability continue with 
full force.
    The Department and the GOM hereby agree as follows:
    Section II (``Definitions'') is amended as follows:
    Section II.D is replaced with:
    ``Effective Date of the Agreement'' means the date on which the 
Department and the GOM signed the Agreement. Additionally, the 
``Effective Date of the Amendment'' means the date on which the 
Department issues its next calculation pursuant to Section V.B of 
the Agreement and, as such, means that the Amendment applies to all 
contracts for Sugar from Mexico for the October 1, 2017 through 
September 30, 2018 Export Limit Period, and to all contracts for 
Sugar from Mexico (regardless of Export Limit Period) exported from 
Mexico on or after October 1, 2017.
    Section II.K is replaced with:
    ``Other Sugar'' means
    a. Sugar at a polarity of less than 99.2, as produced and 
measured on a dry basis;
    b. Where such Sugar is Additional U.S. Needs Sugar, as defined 
in Section II.U, Sugar at a polarity of less than 99.5, as produced 
and measured on a dry basis; and,
    c. In the event that Section V.B.4.d is exercised, Sugar at a 
polarity specified by USDA that is below 99.5, as produced and 
measured on a dry basis.
    Such Other Sugar must be exported to the United States loaded in 
bulk and freely flowing (i.e., not in a container, tote, bag or 
otherwise packaged) into the hold(s) of an ocean-going vessel. To be 
considered as Other Sugar, if Sugar leaves the Mexican mill in a 
container, tote, bag or other package (i.e., is not freely flowing), 
it must be emptied from the container, tote, bag or other package 
into the hold of the ocean-going vessel for exportation. All other 
exports of Sugar from Mexico that are not transported in bulk and 
freely flowing in the hold(s) of an ocean-going vessel will be 
considered to be Refined Sugar for purposes of the Export Limit or 
Additional U.S. Needs Sugar, regardless of the polarity of that 
Sugar.
    Section II.L is replaced with:
    ``Refined Sugar'' means
    a. Sugar at a polarity of 99.2 and above, as produced and 
measured on a dry basis;
    b. Sugar considered to be Refined Sugar under Section II.K;
    c. Where such Sugar is Additional U.S. Needs Sugar as defined in 
Section II.U, Sugar at a polarity of 99.5 and above, as produced and 
measured on a dry basis; and
    d. In the event that Section V.B.4.d is exercised, Sugar at a 
polarity specified by USDA that is 99.5 or above, as produced and 
measured on a dry basis.
    New Section II.U is added as follows:
    ``Additional U.S. Needs Sugar'' means the quantity of Sugar 
allowed to be exported, over and above the Export Limit calculated 
under Section V.B.3, to fill a need identified by USDA in the U.S. 
market for a particular type and quantity of Sugar, and offered to 
Mexico pursuant to Section V.B.4.c.
    Section V (``Export Limits'') is amended as follows:
    Section V.B--the first sentence of the first paragraph is 
amended as follows (changes in italics):
    The Export Limit for each Subsequent Export Limit Period will be 
fifty (50) percent of the Target Quantity of U.S. Needs as 
calculated based on the July WASDE preceding the beginning of the 
Export Limit Period.
    Section V.B.4 is replaced with the following:
    4. Increases to the Export Limit.

[[Page 31944]]

    a. Prior to April 1 of any Export Limit Period, if USDA notifies 
the Department, in writing, of any additional need for Sugar, the 
Department shall, consistent with 704(c) of the Act, increase the 
Export Limit to address potential shortages in the U.S. market based 
on USDA's request.
    b. Starting in March, within 10 days following the publication 
of each WASDE report during a given Export Limit Period, the 
Department agrees that it shall consult with USDA and the GOM 
regarding any potential increase in the Export Limit on or after 
April 1. Following each consultation with the GOM, the GOM will 
notify the Department within 10 days of (1) the extent to which the 
GOM has issued export licenses for Other Sugar and Refined Sugar to 
fulfill 100 percent of the Target Quantity of U.S. Needs; (2) the 
quantity of Other Sugar and Refined Sugar that has been exported 
under such licenses, and (3) the nature and quantity of the Sugar 
that Mexico can supply, with supporting documentation for the 
foregoing, and the Department shall notify USDA.
    c. Pursuant to such consultations, and upon receiving notice 
from USDA in writing of a need in the U.S. market for a particular 
type and quantity of additional Sugar that Mexico has indicated it 
can supply, the Department shall: (1) Request written confirmation 
from the GOM that Mexico can and will supply 100 percent of the 
Target Quantity of U.S. Needs (as calculated pursuant to Section 
V.B.3 based on the March WASDE); and (2) upon receiving such 
confirmation, increase the Export Limit, consistent with 704(c) of 
the Act, by an amount equal to 100 percent of such particular type 
and quantity of sugar identified by USDA (hereinafter ``Additional 
U.S. Needs Sugar''). When such Additional U.S. Needs Sugar is 
requested by USDA, and in turn offered to Mexico by the Department, 
the definitions for Other Sugar and Refined Sugar in Section II.K.a 
and Section II.L.a, respectively, shall apply prior to May 1 of any 
Export Limit Period, and, on or after such date, the definition in 
Section II.K.b and Section II.L.c, respectively, shall apply. Such 
Additional U.S. Needs Sugar shall comply with the applicable 
definitions and requirements in the Agreement, for Other Sugar and 
Refined Sugar, respectively.
    d. In the event of an extraordinary and unforeseen circumstance 
that seriously threatens the economic viability of the U.S. sugar 
refining industry, USDA may specify the polarity of the amount of 
additional Sugar specifically needed to rectify such extraordinary 
and unforeseen circumstance. To the extent possible under the 
circumstances, USDA will consult with the GOM and other interested 
parties. When such additional Sugar is requested by USDA under this 
Section V.B.4.d, and in turn offered to Mexico by the Department, 
the definitions for Other Sugar and Refined Sugar in Section II.K.c 
and Section II.L.d, respectively, shall apply.
    e. If the Department has imposed penalties for polarity non-
compliance under Section VIII.B.4 in a given Export Limit Period, 
Mexico may not be eligible for Additional Needs U.S. Sugar.
    f. Any additional Sugar may be limited to Other Sugar or Refined 
Sugar, or any combination thereof, as specified by USDA. For greater 
certainty, Section V.C does not apply to any additional Sugar 
exported by Mexico pursuant to this Section V.B.4.
    Section V.C is amended as follows:
    Section V.C.2 is amended as follows (changes in italics):
    No more than 55 percent of U.S. Needs calculated in each 
September and effective January 1 may be exported to the United 
States during the period October 1 through March 31, unless that 
amount is less than or equal to the amount calculated under Section 
V.C.1, in which case the amount calculated under Section V.C.1 will 
continue to apply until March 31.
    Section V.C.3 is amended as follows (changes in italics):
    Refined Sugar may account for no more than 30 percent of the 
exports during any given Export Limit Period.
    Section VI (``Implementation'') is amended as follows:
    Section VI.A--the following sentences are added at the end of 
the paragraph:
    On the Effective Date of the Amendment, presentation of an 
Export License is required as a condition for entry of Sugar from 
Mexico into the United States. The GOM will issue amended 
regulations to implement the Amendment.
    Section VI.B--the first sentence is amended as follows (changes 
in italics) and a new sentence is inserted after the first sentence 
(in italics):
    Export Licenses will be contract-specific and must contain the 
information identified in Appendix I. Export Licenses issued by the 
GOM must, in addition to specifying whether or not exported Other 
Sugar is for further-processing, also specify the identity of the 
entity that is further processing the Other Sugar, if known.
    Section VIII.B (``Compliance Monitoring'') is amended as 
follows:
    Section VIII.B.4 is added as follows:
    4. Penalties for Polarity Non-Compliance of this Agreement and/
or Price Non-Compliance of the Agreement Suspending the Antidumping 
Duty Investigation on Sugar from Mexico (AD Agreement): The 
Department will review documentation regarding polarity testing that 
is placed on the record of this Agreement, in accordance with 
Section VII.C.6 of the AD Agreement, to determine whether there have 
been imports that are inconsistent with the provisions of this 
Agreement and Sections II.F, II.H, VII.C.6 and Appendix I of the AD 
Agreement. Where the Department finds that polarity test results of 
an entry of Sugar are not compliant with the Agreement's or AD 
Agreement's applicable definition of Other Sugar or Sugar was sold 
at prices that are less than the Reference Prices established in 
Appendix I of the AD Agreement: (1) The Department shall deduct two 
(2) times the quantity of that entry from Mexico's Export Limit, and 
(2) the GOM will, in turn, deduct that same quantity from the 
specific producer's/exporter's Export Limit allocation.
    a. The penalty will be applied on the date the Department 
notifies the GOM in writing of such non-compliance.
    b. If Other Sugar that enters during the period from October 1 
through the day before the publication of the July WASDE tests at or 
above 99.2 polarity (or at or above 99.5 or other polarity in the 
case of Additional U.S. Needs Sugar), then the Department will 
reduce Mexico's current Export Limit by two (2) times the quantity 
of that entry. The Export Limit determined under Section V.B.2 and 
V.B.3 will be correspondingly reduced by the same amount. At the 
time of the March WASDE when the Target Quantity of U.S. Needs is 
determined, and up to the day before the publication of the July 
WASDE, USDA may exercise its authority to seek to fill from other 
countries the particular type and quantity of sugar needed in the 
U.S. market to address the penalty amount by which Mexico's current-
year Export Limit was reduced.
    c. If Other Sugar that enters during the period from the day of 
the publication of the July WASDE through September 30 tests at or 
above 99.2 polarity (or at or above 99.5 or other polarity in the 
case of Additional U.S. Needs Sugar), then the Department will 
reduce the Export Limit for the next Export Limit Period by two (2) 
times the quantity of that entry. That reduction will be applied to 
each revision of the Export Limit under Section V.B.1, V.B.2 and 
V.B.3. If Mexico's next fiscal year Export Limit is reduced, USDA 
may exercise its authority to seek to fill from other countries the 
particular type and quantity of sugar needed in the U.S. market to 
address the penalty amount by which Mexico's Export Limit was 
reduced.
    d. If the Department finds that issues with meeting the 
polarity, testing or compliance requirements of this Agreement 
continue to arise, the Department can at any time terminate the 
Agreement under Section XI.B. Apart from termination, the Department 
may take additional steps to ensure compliance with the terms of 
this Agreement and the AD Agreement as appropriate, including 
reducing the Export Limit up to three (3) times the quantity of 
entries that do not comply with this Agreement or the AD Agreement.
    Appendix I is amended as follows (changes in italics):
    The GOM will issue contract-specific Export Licenses to Mexican 
entities that shall contain the following fields:
    At Appendix I, the following will be added to the Export 
License:
    12. Contract Identification Information: Indicate the contract 
identification information with which the license is associated.
    At Appendix II, the following will be added to the information 
reported to the Department:
    12. Contract Identification Information: Indicate the contract 
identification information with which the license is associated.
    13. Date of Export: Indicate the date of export of the Sugar 
from Mexico to the United States.
    It is acknowledged that reported information may need to be 
updated from time to time to reflect corrected information from 
customs authorities.

    Signed in Washington, DC, on June 30, 2017.

    For the U.S. Department of Commerce:


[[Page 31945]]


Wilbur L. Ross, Jr.,

Secretary of Commerce, U.S. Department of Commerce.

    For the Government of Mexico:

Juan Carlos Baker Pineda,

Subsecretario de Comercio Exterior, Secretar[iacute]a de 
Econom[iacute]a.

[FR Doc. 2017-14283 Filed 7-10-17; 8:45 am]
 BILLING CODE 3510-DS-P