Vienna, Va. – The U.S. Apple Association (USApple) criticized the Department of Commerce's (DOC) announcement late last week dealing a blow to the industry's antidumping case against below-cost imports of Chinese apple juice concentrate, and today announced its intent to vigorously pursue other options to keep dumped concentrate from further harming the already-beleagured U.S. apple industry.

"Commerce's decision to change the surrogate country for China's non-market economy deals a major blow to our antidumping case, and will allow unfairly priced imports into the U.S. market," said USApple President and CEO Nancy E. Foster. "We don't agree with the department's decision and will be actively examining other means, including U.S. government initiatives, to protect U.S. apple growers and processors from further harm caused by these imports."

DOC announced final plans late on Nov. 15 to change a key element of its original decision in the industry's antidumping case that will likely result in removal of some tariffs currently imposed on Chinese exporters of concentrate shipped to the United States, while maintaining tariffs on all other firms. DOC has recommended to the U.S. Court of International Trade (CIT) that the United States change the surrogate market-economy country used to calculate China's costs of production, on which the agency based its original finding that Chinese concentrate was being illegally dumped here.

The decision would eliminate duties for five of the nine Chinese concentrate exporters under evaluation by Commerce, and impose import duties of 28.33 percent on four others. All other Chinese concentrate export companies would continue to be subject to 51.72 percent import tariffs.

DOC's review of surrogate countries was the result of an appeal filed in the CIT by Chinese concentrate exporters in June 2000. In considering the Chinese appeal, in June of this year CIT remanded elements of DOC's original decision back to the department for reconsideration, including the department's choice of India as a surrogate market economy to estimate China's costs of production. Choice of surrogate market economy is a crucial factor in determining whether dumping has occurred, and what tariff rates the U.S. government should impose to level the playing field. U.S. statute requires that a surrogate country be a significant producer of the product that is the subject of the suit, and be economically comparable to the exporting economy involved.

"Commerce's decision to choose Turkey as the surrogate market economy country is likely to tilt the playing field back in favor of Chinese producers, and probably take money out of the pockets of U.S. apple growers," said Foster.

As part of its review, DOC accepted arguments from both parties this fall on its proposal of Poland or Turkey as possible alternate surrogates. The Coalition for Fair Apple Juice Concentrate Trade (FACT), the U.S. apple industry trade group administered by USApple that brought the antidumping case, had argued that Poland was the better choice because it is a more significant producer of apple juice concentrate. The U.S. apple industry argued that Turkey and Poland are economically comparable, since both have a similar per capita Gross National Product to China. Nevertheless, DOC chose Turkey as the surrogate economy.

CIT is expected to review DOC's remand decision and decide in approximately 30 days whether to accept DOC's final determination.

Duties Have Provided Some Relief to Injured U.S. Apple Industry
A flood of imports of below-cost Chinese concentrate on the U.S. market has caused significant economic damage to the U.S. apple industry in recent years. Chinese concentrate imports increased by more than 1,200 percent between 1995 and 1998, before the U.S. industry filed its antidumping case against below-cost Chinese imports in 1999. During that same period, the average price of Chinese concentrate imports declined by 53 percent, from $7.65 per gallon in 1995 to $3.57 per gallon in 1998. U.S. concentrate producers consequently were forced to slash their prices, and to drastically reduce the price they paid for U.S. juice apples. The average price received by U.S. growers for juice apples fell from $153 per ton in 1995 to $55 per ton in 1998. U.S. apple growers lost more than $135 million in revenue from the decline in juice apple prices during those three years, according to U.S. Department of Agriculture data.

Imports of Chinese concentrate dropped 31 percent after the industry filed its antidumping complaint in June 1999, from 53.8 million single strength equivalent (SSE) gallons in 1998 to 37.3 million SSE gallons in 1999. While the volume of imported Chinese concentrate rebounded to 53.4 million SSE gallons in 2002, antidumping duties imposed on Chinese exporters caused the average value of Chinese apple juice concentrate imports to rise to $4.60 per gallon, a nearly 30 percent increase since 1998. Recently, Chinese concentrate prices have ranged from $4.25 to $4.75 per gallon, a 19 to 33 percent increase over 1998 prices.

This increase in concentrate prices has aided U.S. apple growers by allowing apple juice processors to pay growers more for juice apples. U.S. apple growers received an additional $112 million in juice apple revenue since 1998 as a result of antidumping duties, according to a USApple estimate.

FACT, an industry-wide coalition of apple associations, processors and concentrators administered by USApple, oversees the apple industry's antidumping initiative. The antidumping suit was brought on behalf of the following domestic concentrate producers: Coloma Frozen Foods, Inc., Coloma, Mich.; Green Valley Packers, Arvin, Calif.; Knouse Foods Cooperative, Inc., Peach Glen, Pa.; Mason County Fruit Packers Cooperative, Inc., Ludington, Mich.; and Tree Top, Inc., Selah, Wash.

Note: The text of this release can be downloaded from the News Room section of USApple's Web site, at http://www.usapple.org/media/newsreleases/index.cfm.

The U.S. Apple Association (USApple) is the national trade association representing all segments of the apple industry. Members include 40 state and regional apple associations representing the 8,000 apple growers throughout the country, as well as more than 400 individual firms involved in the apple business. The U.S. Apple Association's mission is to provide the means for all segments of the U.S. apple industry to join in appropriate collective efforts to profitably produce and market apples and apple products.