Lemon Juice from Argentina & Mexico

255 Pages·2013·0.35 MB·English

UNITED STATES
INTERNATIONAL TRADE COMMISSION

In the Matter of: )
) Investigation Nos.:
LEMON JUICE FROM ARGENTINA ) 731-TA-1105-1106 (Review)
AND MEXICO )

Pages: 1 through 254

Place: Washington, D.C.

Date: May 16, 2013

HERITAGE REPORTING CORPORATION
Official Reporters
1220 L Street, N.W., Suite 600
Washington, D.C. 20005
[phone]
[email protected]
1

THE UNITED STATES INTERNATIONAL TRADE COMMISSION

In the Matter of: )
) Investigation Nos.:
LEMON JUICE FROM ARGENTINA ) 731-TA-1105-1106 (Review)
AND MEXICO )

Thursday,
May 16, 2013

Main Hearing Room
U.S. International
Trade Commission
500 E Street, S.W.
Washington, D.C.

The hearing commenced, pursuant to notice, at

9:32 a.m., before the Commissioners of the United States

International Trade Commission, the Honorable IRVING A.

WILLIAMSON, Chairman, presiding.

APPEARANCES:

On behalf of the U.S. International Trade Commission:

Commissioners:

IRVING A. WILLIAMSON, CHAIRMAN
DANIEL R. PEARSON, COMMISSIONER
SHARA L. ARANOFF, COMMISSIONER
DEAN A. PINKERT, COMMISSIONER
DAVID S. JOHANSON, COMMISSIONER
MEREDITH M. BROADBENT, COMMISSIONER

Staff:

BILL BISHOP, Supervisory Hearings and
Information Officer
SHARON BELLAMY, Hearings and Meetings
Assistant
MIKAYLA KELLEY, Intern

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APPEARANCES: (Cont'd)

Staff:

AMY SHERMAN, Investigator
KATHERINE BALDWIN, International Trade Analyst
AMELIA PREECE, Economist
MARY KLIR, Accountant/Auditor
CHARLES ST. CHARLES, Attorney
ELIZABETH HAINES, Supervisory Investigator

In Support of the Continuation of Antidumping Duties:

On behalf of Ventura Coastal, LLC
and Sunkist Growers, Inc. :

WILLIAM BORGERS, Chief Executive Officer,
Ventura Coastal, LLC
BARBARA RATCHFORD, Director, Production
Scheduling and Planning, Ventura Coastal LLC
MICHAEL J. WOOTTON, Senior Vice President,
Sunkist Growers, Inc.
AMY WARLICK, Economist, Barnes, Richardson
& Colburn, LLP

MATTHEW T. MCGRATH, Esquire
STEPHEN W. BROPHY, Esquire
Barnes, Richardson & Colburn, LLP
Washington, D.C.
Of Counsel

In Opposition to the Continuation of
Antidumping Duties :

On behalf of The Coca-Cola Company and
The Coca-Cola Export Corporation,
Mexico Branch ("TCCC") :

JIM HORRISBERGER, North American Director, TCCC
JASON MAXFIELD, Procurement Manager, Odwalla

MATTHEW J. CLARK, Esquire
NANCY A. NOONAN, Esquire
Arent Fox LLP
Washington, D.C.
Of Counsel

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APPEARANCES: (Cont'd)

In Opposition to the Continuation of
Antidumping Duties :

On behalf of Citromax, S.A.C.I., S.A. Miguel,
and Citrusvil S.A. :

SUZY NOLAN, Vice President, Commercial
Operations, Citromax, S.A.C.I.

CHRISTOPHER DUNN, Esquire
Curtis, Mallett-Prevost, Colt & Mosle LLP
Washington, D.C.
Of Counsel

On behalf of Procimart SA de CV and
The Citrus Team Company (collectively, "Procimart"):

FEDERICO MARTINEZ, President and General Manager,
Procimart

MARK P. LUNN, Esquire
DANIEL MORRIS, Esquire
Dentons US LLP
Washington, D.C.
Of Counsel

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I N D E X

PAGE

OPENING STATEMENT OF MATTHEW T. MCGRATH, 6
ESQUIRE, BARNES, RICHARDSON & COLBURN, LLP,
WASHINGTON, D.C., OF COUNSEL

OPENING STATEMENT OF CHRISTOPHER DUNN, 11
ESQUIRE, CURTIS, MALLET-PREVOST, COLT
& MOSLE LLP, WASHINGTON, D.C., OF COUNSEL

TESTIMONY OF MICHAEL J. WOOTTON, 16
SENIOR VICE PRESIDENT, SUNKIST GROWERS, INC.

TESTIMONY OF WILLIAM BORGERS, 22
CHIEF EXECUTIVE OFFICER, VENTURA COASTAL, LLC

TESTIMONY OF AMY WARLICK, ECONOMIST, 30
BARNES, RICHARDSON & COLBURN, LLP,
WASHINGTON, D.C.

TESTIMONY OF JIM HORRISBERGER, 138
NORTH AMERICAN DIRECTOR, TCCC

TESTIMONY OF SUZY NOLAN, VICE PRESIDENT, 147
COMMERCIAL OPERATIONS, CITROMAX, S.A.C.I.

TESTIMONY OF MARK P. LUNN, ESQUIRE, 154
DENTONS US LLP, WASHINGTON, D.C., OF COUNSEL

TESTIMONY OF FEDERICO MARTINEZ, PRESIDENT 155
AND GENERAL MANAGER, PROCIMART

CLOSING STATEMENT OF MATTHEW T. MCGRATH, 237
ESQUIRE, BARNES, RICHARDSON & COLBURN, LLP,
WASHINGTON, D.C., OF COUNSEL

CLOSING STATEMENT OF MARK P. LUNN, ESQUIRE, 249
DENTONS US LLP, WASHINGTON, D.C., OF COUNSEL

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1 P R O C E E D I N G S
2 (9:32 a.m.)
3 CHAIRMAN WILLIAMSON: Good morning. On
4 behalf of the U.S. International Trade Commission, I
5 welcome you to this hearing on Investigation Nos.
6 731-TA-1105-1106 (Review), involving Lemon Juice from
7 Argentina and Mexico.
8 The purpose of these five year review
9 investigations is to determine whether termination of
10 the suspended investigations on lemon juice from
11 Argentina and Mexico would be likely to lead to
12 continuation or recurrence of material injury within a
13 reasonably foreseeable time.
14 Schedules setting forth the presentation of
15 this hearing, notices of investigation and transcript
16 order forms are available at the public distribution
17 table. All prepared testimony should be given to the
18 secretary. Please do not place testimony directly on
19 the public distribution table. All witnesses must be
20 sworn in by the secretary before presenting testimony.
21 I understand that parties are aware of the
22 time allocations. Any questions regarding the time
23 allocations should be directed to the secretary.
24 Speakers are reminded not to refer in their
25 remarks or answers to questions to business

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1 proprietary information.
2 Please speak clearly into the microphone and
3 state your name for the record for the benefit of the
4 court reporter.
5 If you will be submitting documents that
6 contain information you wish classified as business
7 confidential, your request should comply with
8 Commission Rule 201.6.
9 Mr. Secretary, are there any preliminary
10 matters?
11 MR. BISHOP: Mr. Chairman, I would note that
12 all witnesses for today's hearing have been sworn.
13 There are no other preliminary matters.
14 CHAIRMAN WILLIAMSON: Okay. Very well.
15 Let's begin with opening remarks.
16 MR. BISHOP: Opening remarks on behalf of
17 those in support of continuation of the orders will be
18 by Matthew T. McGrath, Barnes, Richardson & Colburn.
19 CHAIRMAN WILLIAMSON: Welcome, Mr. McGrath.
20 You may begin when ready.
21 MR. MCGRATH: Good morning, Mr. Chairman and
22 members of the Commission. It's a pleasure to be here
23 again. I am Matt McGrath of Barnes, Richardson &
24 Colburn appearing on behalf of the Petitioners Sunkist
25 Growers, and its joint venture partner Ventura

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1 Coastal.
2 At the time of the original investigation
3 these two entities were operating separately, Sunkist
4 as a cooperative owned by Lemon Growers, and Ventura
5 Coastal as a corporate entity which was purchasing
6 lemons for processing from independent growers.
7 They're now producing and selling lemon juice and
8 lemon oil as a joint enterprise.
9 In 2006 you reached a preliminary
10 determination of a reasonable indication of injury.
11 The Commerce Department then preliminarily ruled that
12 imports from Argentina and Mexico were sold in the
13 U.S. at margins ranging from 85 to 205 percent.
14 They entered into agreements at that point
15 with exporters from both countries to the U.S.
16 suspending the investigation on the condition that
17 they would submit annual data to calculate their
18 normal values based on their actual cost of production
19 and sales data to confirm that they had been selling
20 above those individual normal values during the
21 period.
22 So at the outset of this review, unlike in
23 many sunset reviews, we're looking not simply at
24 whether high antidumping duties have restrained
25 imports and how -- that is always a question -- we're

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1 also looking at the effects of a different kind of
2 fair value discipline at the outset that does not have
3 the restraining impact of entry deposits up front and
4 potential retrospective additional duties after the
5 fact.
6 We're looking at whether the revocation of
7 that discipline based on normal values is likely to
8 cause injury or result in injury within a reasonably
9 foreseeable period.
10 The positive impact of the suspension
11 agreements is undeniable, even if tenuous. Prices for
12 lemon juice in the U.S. increased substantially,
13 unsurprisingly, by roughly the amounts of the
14 preliminary dumping margins.
15 Now you're asked to project what may happen
16 if the agreements are revoked. We believe that the
17 experience in the underlying period of investigation
18 and in the last two years in this period demonstrates
19 revocation would be harmful.
20 Since the original investigation, lemon
21 juice production in subject countries has increased
22 and inventories in subject countries have reached
23 threatening levels. You noted in 2006 that these
24 inventories can only be held for a very limited time,
25 a year or less. That is still true, and the clock is

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1 now ticking.
2 Subject imports have already increased over
3 the last two years and have increased their market
4 share to more than half of U.S. consumption. This is
5 a very major presence in the market. Your staff finds
6 no material growth in U.S. demand. It's basically
7 flat.
8 In the last six quarters that we're looking
9 at here there was both consistent underselling and
10 declining prices of concentrate, indicating price
11 depression. The probability of negative price effects
12 of revocation is clear, we believe.
13 In 2006 you found that market share was
14 gained by subject imports at the expense of domestic
15 processors and this has occurred again in 2012. You
16 also found that U.S. inventories rose as a share of
17 total imports, or total shipments, and that has risen
18 again in 2012.
19 Importantly, in 2011 and '12 there hasn't
20 been a lot of talk of lost sales, but there will be
21 some today. Sunkist lost a significant amount of
22 volume to lower priced Argentine sales that will cost
23 a great deal to get back at much lower prices.
24 There's no doubt that the industry's
25 financial performance has improved since 2007. That

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