2024-14458. Vanillin From the People's Republic of China: Initiation of Countervailing Duty Investigation

AGENCY:

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

DATES:

Applicable June 25, 2024.

FOR FURTHER INFORMATION CONTACT:

Jeff Pedersen, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: [phone].

SUPPLEMENTARY INFORMATION:

The Petition

On June 5, 2024, the U.S. Department of Commerce (Commerce) received a countervailing duty (CVD) petition concerning imports of vanillin from the People's Republic of China (China) filed in proper form on behalf of Solvay USA LLC (the petitioner), a domestic producer of vanillin.^[1] The Petition was accompanied by an antidumping duty (AD) petition concerning imports of vanillin from China.^[2]

On June 7, 14, and 18, 2024, Commerce requested supplemental information from the petitioner regarding the Petition, to which the petitioner responded on June 11, 18, and 21, 2024, respectively.^[3]

In accordance with section 702(b)(1) of the Tariff Act of 1930, as amended (the Act), the petitioner alleges that the Government of China (GOC) is providing countervailable subsidies, within the meaning of sections 701 and 771(5) of the Act, to Chinese producers of vanillin, and that such imports are materially injuring, or threatening material injury to, the industry producing vanillin in the United States. Consistent with section 702(b)(1) of the Act and 19 CFR 351.202(b), the alleged programs for which we are initiating this CVD investigation are supported by information in the Petition that is reasonably available to the petitioner.

Commerce finds that the petitioner filed the Petition on behalf of the domestic industry because the petitioner is an interested party as defined in section 771(9)(C) of the Act. Commerce also finds that the petitioner demonstrated sufficient industry support with respect to the initiation of the requested CVD investigation.^[4]

Period of Investigation

Because the Petition was filed on June 5, 2024, the period of investigation (POI) is January 1, 2023, through December 31, 2023.^[5]

Scope of the Investigation

The merchandise covered by this investigation is vanillin from China. For a full description of the scope of this investigation, see the appendix to this notice.

Comments on Scope of the Investigation

Between June 7 and June 17, 2024, Commerce requested information and clarification from the petitioner regarding the proposed scope to ensure that the scope language in the Petition is an accurate reflection of the products for which the domestic industry is seeking relief.^[6] Between June 11 and 18, 2024, the petitioner provided clarifications and revised the scope language.^[7] The description of merchandise covered by this investigation, as described in the appendix to this notice, reflects these clarifications.

As discussed in the Preamble to Commerce's regulations, we are setting aside a period for parties to raise issues regarding product coverage ( i.e., scope).^[8] Commerce will consider all scope comments received from interested parties and, if necessary, will consult with interested parties prior to the issuance of the preliminary determination. If scope comments include factual information, all such factual information should be limited to public information.^[9] To facilitate preparation of its questionnaires, Commerce requests that scope comments be submitted by 5:00 p.m. Eastern Time (ET) on July 15, 2024, which is 20 calendar days from the signature date of this notice. Any rebuttal scope comments, which may include factual information, must be filed by 5:00 p.m. ET on July 25, 2024, which is 10 calendar days from the initial comment deadline.

Commerce requests that any factual information that the parties consider relevant to the scope of the investigation be submitted during the time period identified above. However, if a party subsequently finds that additional factual information pertaining to the scope of the investigation may be relevant, the party may contact Commerce and request permission to submit the additional information. All scope comments must also be filed on the records of the concurrent AD and CVD investigations.

Filing Requirements

All submissions to Commerce must be filed electronically via Enforcement and Compliance's Antidumping Duty and Countervailing Duty Centralized Electronic Service System (ACCESS), unless an exception applies.^[10] An electronically filed document must be received successfully in its entirety by the time and date it is due.

Consultations

Pursuant to sections 702(b)(4)(A)(i) and (ii) of the Act, Commerce notified the GOC of the receipt of the Petition and provided an opportunity for consultations with respect to the Petition.^[11] The GOC did not request consultations.

Determination of Industry Support for the Petition

Section 702(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 702(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (i) at least 25 percent of the total production of the domestic like product; and (ii) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of the Act provides that, if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, Commerce shall: (i) poll the industry or rely on other information in order to determine if there is support for the petition, as required by subparagraph (A); or (ii) determine industry support using a statistically valid sampling method to poll the “industry.”

Section 771(4)(A) of the Act defines the “industry” as the producers as a whole of a domestic like product. Thus, to determine whether a petition has the requisite industry support, the statute directs Commerce to look to producers and workers who produce the domestic like product. The U.S. International Trade Commission (ITC), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both Commerce and the ITC must apply the same statutory definition regarding the domestic like product,^[12] they do so for different purposes and pursuant to a separate and distinct authority. In addition, Commerce's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to law.^[13]

Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation” ( i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition).

With regard to the domestic like product, the petitioner does not offer a definition of the domestic like product distinct from the scope of the investigation.^[14] Based on our analysis of the information submitted on the record, we have determined that vanillin, as defined in the scope, constitutes a single domestic like product, and we have analyzed industry support in terms of that domestic like product.^[15]

In determining whether the petitioner has standing under section 702(c)(4)(A) of the Act, we considered the industry support data contained in the Petition with reference to the domestic like product as defined in the “Scope of the Investigation,” in the appendix to this notice. To establish industry support, the petitioner provided its 2023 production of the domestic like product.^[16] The petitioner estimated the production of the domestic like product for the remaining U.S. producers of vanillin based on its knowledge of the industry.^[17] We relied on data provided by the petitioner for purposes of measuring industry support.^[18]

Our review of the data provided in the Petition, the First General Issues Supplement, the Second General Issues Supplement, and other information readily available to Commerce indicates that the petitioner has established industry support for the Petition.^[19] First, the Petition established support from domestic producers (or workers) accounting for more than 50 percent of the total production of the domestic like product and, as such, Commerce is not required to take further action in order to evaluate industry support ( e.g., polling).^[20] Second, the domestic producers (or workers) have met the statutory criteria for industry support under section 702(c)(4)(A)(i) of the Act because the domestic producers (or workers) who support the Petition account for at least 25 percent of the total production of the domestic like product.^[21] Finally, the domestic producers (or workers) have met the statutory criteria for industry support under section 702(c)(4)(A)(ii) of the Act because the domestic producers (or workers) who support the Petition account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the Petition.^[22] Accordingly, Commerce determines that the Petition was filed on behalf of the domestic industry within the meaning of section 702(b)(1) of the Act.^[23]

Injury Test

Because China is a “Subsidies Agreement Country” within the meaning of section 701(b) of the Act, section 701(a)(2) of the Act applies to this investigation. Accordingly, the ITC must determine whether imports of the subject merchandise from China materially injure, or threaten material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

The petitioner alleges that imports of the subject merchandise are benefitting from countervailable subsidies and that such imports are causing, or threaten to cause, material injury to the U.S. industry producing the domestic like product. In addition, the petitioner alleges that subject imports exceed the negligibility threshold provided for under section 771(24)(A) of the Act.^[24]

The petitioner contends that the industry's injured condition is illustrated by a significant volume of subject imports; significant market share of subject imports; underselling and price depression and/or suppression; decline in financial performance and operating income; declines in production, shipments, capacity utilization, and employment variables; and lost sales and revenues.^[25] We assessed the allegations and supporting evidence regarding material injury, threat of material injury, causation, as well as negligibility, and we have determined that these allegations are properly supported by adequate evidence, and meet the statutory requirements for initiation.^[26]

Initiation of CVD Investigation

Based upon our examination of the Petition and supplemental responses, we find that they meet the requirements of section 702 of the Act. Therefore, we are initiating a CVD investigation to determine whether imports of vanillin from China benefit from countervailable subsidies conferred by the GOC. In accordance with section 703(b)(1) of the Act and 19 CFR 351.205(b)(1), unless postponed, we will make our preliminary determination no later than 65 days after the date of this initiation.

Based on our review of the Petition, we find that there is sufficient information to initiate a CVD investigation on all 56 programs alleged by the petitioner. For a full discussion of the basis for our decision to initiate an investigation of each program, see the CVD Initiation Checklist. A public version of the initiation checklist for this investigation is available in ACCESS.

Respondent Selection

The petitioner identified 42 companies in China as producers and/or exporters of vanillin.^[27] Commerce intends to follow its standard practice in CVD investigations and calculate company-specific subsidy rates in this investigation. In the event that Commerce determines that the number of companies identified is large, and it cannot individually examine each company based upon Commerce's resources, Commerce intends to select mandatory respondents based on U.S. Customs and Border Protection (CBP) data for U.S. imports of vanillin from China during the POI under the appropriate Harmonized Tariff Schedule of the United States subheading(s) listed in the “Scope of the Investigation” in the appendix.

On June 20, 2024, Commerce released CBP data on imports of vanillin from China under administrative protective order (APO) to all parties with access to information protected by APO and indicated that interested parties wishing to comment on CBP data and/or respondent selection must do so within three business days of the date of publication of this notice in the Federal Register .^[28] Comments must be filed electronically using ACCESS. An electronically filed document must be received successfully in its entirety via ACCESS by 5:00 p.m. ET on the specified deadline. Commerce will not accept rebuttal comments regarding the CBP data or respondent selection.

Interested parties must submit applications for disclosure under APO in accordance with 19 CFR 351.305(b). Instructions for filing such applications may be found on Commerce's website at https://www.trade.gov/​administrative-protective-orders.

Distribution of Copies of the Petition

In accordance with section 702(b)(4)(A)(i) of the Act and 19 CFR 351.202(f), a copy of the public version of the Petition has been provided to the GOC via ACCESS. Furthermore, to the extent practicable, Commerce will attempt to provide a copy of the public version of the Petition to each exporter named in the Petition, as provided under 19 CFR 351.203(c)(2).

ITC Notification

Commerce will notify the ITC of its initiation, as required by section 702(d) of the Act.

Preliminary Determination by the ITC

The ITC will preliminarily determine, within 45 days after the date on which the Petition was filed, whether there is a reasonable indication that subject imports are materially injuring, or threatening material injury to, a U.S. industry.^[29] A negative ITC determination will result in the investigation being terminated.^[30] Otherwise, this CVD investigation will proceed according to statutory and regulatory time limits.

Submission of Factual Information

Factual information is defined in 19 CFR 351.102(b)(21) as: (i) evidence submitted in response to questionnaires; (ii) evidence submitted in support of allegations; (iii) publicly available information to value factors of production under 19 CFR 351.408(c) or to measure the adequacy of remuneration under 19 CFR 351.511(a)(2); (iv) evidence placed on the record by Commerce; and (v) evidence other than factual information described in (i)-(iv). Section 351.301(b) of Commerce's regulations requires any party, when submitting factual information, to specify under which subsection of 19 CFR 351.102(b)(21) the information is being submitted ^[31] and, if the information is submitted to rebut, clarify, or correct factual information already on the record, to provide an explanation identifying the information already on the record that the factual information seeks to rebut, clarify, or correct.^[32] Time limits for the submission of factual information are addressed in 19 CFR 351.301, which provides specific time limits based on the type of factual information being submitted. Interested parties should review the regulations prior to submitting factual information in this investigation.

Extensions of Time Limits

Parties may request an extension of time limits before the expiration of a time limit established under 19 CFR 351.301(c), or as otherwise specified by Commerce. In general, an extension request will be considered untimely if it is filed after the expiration of the time limit established under 19 CFR 351.301.^[33] For submissions that are due from multiple parties simultaneously, an extension request will be considered untimely if it is filed after 10:00 a.m. ET on the due date. Under certain circumstances, Commerce may elect to specify a different time limit by which extension requests will be considered untimely for submissions which are due from multiple parties simultaneously. In such a case, Commerce will inform parties in a letter or memorandum of the deadline (including a specified time) by which extension requests must be filed to be considered timely. An extension request must be made in a separate, standalone submission; Commerce will grant untimely filed requests for the extension of time limits only in limited cases where we determine, based on 19 CFR 351.302(c), that extraordinary circumstances exist. Parties should review Commerce's regulations concerning time limits for submission of factual information prior to submitting factual information in this investigation.^[34]

Certification Requirements

Any party submitting factual information in an AD or CVD proceeding must certify to the accuracy and completeness of that information.^[35] Parties must use the certification formats provided in 19 CFR 351.303(g).^[36] Commerce intends to reject factual submissions if the submitting party does not comply with the applicable certification requirements.

Notification to Interested Parties

Interested parties must submit applications for disclosure under administrative protective order in accordance with 19 CFR 351.305. Parties wishing to participate in this investigation should ensure that they meet the requirements of 19 CFR 351.103(d) ( e.g., by filing the required letters of appearance). Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f).^[37]

This notice is issued and published pursuant to sections 702 and 777(i) of the Act, and 19 CFR 351.203(c).

Dated: June 25, 2024.

Ryan Majerus,

Deputy Assistant Secretary for Policy and Negotiations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance.

Appendix—Scope of the Investigation

The merchandise covered by the investigation is vanillin, with the molecular formula C₈ H₈ O₃ or C₉ H₁₀ O₃. For purposes of this investigation, vanillin consists of natural vanillin, synthetic vanillin, bio-sourced synthetic vanillin (biovanillin) (each also known as 4-Hydroxy-3-methoxybenzaldehyde), and ethylvanillin (also known as 3-Ethoxy-4-hydroxybenzaldehyde). Vanillin covered by this investigation is a chemical compound with the Chemical Abstracts Service (CAS) number 121-33-5 or 121-32-4. Vanillin is covered by the investigation regardless of whether it is in a crystalline powder or crystal form. Vanillin is covered by the scope of the investigation, irrespective of purity, particle size, or physical form.

Merchandise subject to the investigation is specified within the Harmonized Tariff Schedule of the United States (HTSUS) under subheading 2912.41.0000 and 2912.42.0000. The HTSUS subheadings and CAS registry numbers are provided for convenience and customs purposes only. The written description of the merchandise covered by the investigation is dispositive.

Footnotes

1.   See Petitioner's Letter, “Petitions for the Imposition of Antidumping and Countervailing Duties” dated June 5, 2024 (Petition).

2.   Id.

3.   See Commerce's Letters, “Supplemental Questions,” dated June 7, 2024 (First General Issues Questionnaire); “Supplemental Questions,” dated June 14, 2024, and “Supplemental Questions,” dated June 18, 2024; see also Memorandum, “Phone Call with Counsel to the Petitioner,” dated June 17, 2024 (June 17 Memorandum); see also Petitioner's Letters, “Petitioner's Response to Supplemental Questions Regarding Common Issues and Injury Volume I of the Petitions,” dated June 11, 2024 (First General Issues Supplement); “Petitioner's Response to Supplemental Questions Regarding Common Issues and Injury Volume I of the Petitions” dated June 18, 2024 (Second General Issues Supplement); and “Petitioner's Response to Supplemental Questions Regarding Countervailing Duties Allegations Volume III of the Petitions,” dated June 21, 2024.

4.   See section on “Determination of Industry Support for the Petition,” infra.

5.   See19 CFR 351.204(b)(2).

6.   See First General Issues Questionnaire; see also June 17 Memorandum.

7.   See First General Issues Supplement at 2-4 and Exhibits I-Supp-2 and I-Supp-3; see also Second General Issues Supplement at 2-3.

8.   See Antidumping Duties; Countervailing Duties,62 FR 27296, 27323 (May 19, 1997) ( Preamble); see also19 CFR 351.312.

9.   See19 CFR 351.102(b)(21) (defining “factual information”).

10.   See Antidumping and Countervailing Duty Proceedings: Electronic Filing Procedures; Administrative Protective Order Procedures,76 FR 39263 (July 6, 2011); see also Enforcement and Compliance; Change of Electronic Filing System Name,79 FR 69046 (November 20, 2014), for details of Commerce's electronic filing requirements, effective August 5, 2011. Information on using ACCESS can be found at: https://access.trade.gov/​help.aspx and https://access.trade.gov/​help/​Handbook_​on_​Electronic_​Filing_​Procedures.pdf.

11.   See Commerce's Letter “Invitation for Consultations to Discuss the Countervailing Duty Petition on Vanillin from the People's Republic of China,” dated June 12, 2024.

12.   See section 771(10) of the Act.

13.   See USEC, Inc. v. United States, 132 F. Supp. 2d 1, 8 (CIT 2001) (citing Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 639, 644 (CIT 1988), aff'd 865 F. 2d 240 (Fed. Cir. 1989)).

14.   See Petition at Volume I (pages 7-9 and Exhibit I-8); see also First General Issues Supplement at 7-8 and Exhibits I-Supp-3.

15.  For a discussion of the domestic like product analysis as applied to this case and information regarding industry support, see Checklist, “Vanillin from the People's Republic of China,” dated concurrently with, and hereby adopted by, this notice (China CVD Initiation Checklist), at Attachment II, Analysis of Industry Support for the Antidumping and Countervailing Duty Petitions Covering Vanillin from the People's Republic of China. This checklist is on file electronically via ACCESS.

16.   See Petition at Volume I (Exhibits I-2 and I-11); see also First General Issues Supplement at 5, 8, and Exhibits I-Supp-4 and I-Supp-7.

17.   See Petition at Volume I (page 2 and Exhibit I-2); see also First General Issues Supplement at 5-7 and Exhibits I-Supp-4, I-Supp-5, I-Supp-8 and I-Supp-9; and Second General Issues Supplement at 1-2.

18.   See Petition at Volume I (page 2 and Exhibits I-2 and I-11); see also First General Issues Supplement at 5-8 and Exhibits I-Supp-4 and I-Supp-7; and Second General Issues Supplement at 1-2.

19.   See Attachment II of the China CVD Initiation Checklist.

20.   Id.; see also section 702(c)(4)(D) of the Act.

21.   See Attachment II of the China CVD Initiation Checklist.

22.   Id.

23.   Id.

24.   See Petition at Volume I (pages 11-12 and Exhibit I-10).

25.   Id. at 10-21 and Exhibits I-5 and I-9 through I-15.

26.   See China CVD Initiation Checklist at Attachment III, Analysis of Allegations and Evidence of Material Injury and Causation for the Antidumping and Countervailing Duty Petitions Covering Vanillin from the People's Republic of China.

27.   See Petition at Exhibit I-7.

28.   See Memorandum, “Release of U.S. Customs and Border Protection Entry Data,” dated June 20, 2024.

29.   See section 703(a)(1) of the Act.

30.   Id.

31.   See19 CFR 351.301(b).

32.   See19 CFR 351.301(b)(2).

33.   See19 CFR 351.302.

34.   See19 CFR 351.301; see also Extension of Time Limits; Final Rule,78 FR 57790 (September 20, 2013), and Regulations Improving and Strengthening the Enforcement of Trade Remedies Through the Administration of the Antidumping and Countervailing Duty Laws,89 FR 20766 (March 25, 2024).

35.   See section 782(b) of the Act.

36.   See Certification of Factual Information to Import Administration During Antidumping and Countervailing Duty Proceedings,78 FR 42678 (July 17, 2013) ( Final Rule); see also frequently asked questions regarding the Final Rule, available at: https://enforcement.trade.gov/​tlei/​notices/​factual_​info_​final_​rule_​FAQ_​07172013.pdf.

37.   See Administrative Protective Order, Service, and Other Procedures in Antidumping and Countervailing Duty Proceedings,88 FR 67069 (September 29, 2023).