Five Custom Xanthan 'Powders' Covered by AD/CVD on Xanthan Gum From China
Certain types of gum produced by Gum Products International are covered by an antidumping duty order on xanthan gum from China because they haven’t been substantially transformed by further processing in Canada, the Commerce Department found in two May 22 scope rulings.
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One scope ruling considered the products Purexan 80AN, Purexan 200AN and Quickxan 70. The other looked at the products Xantech DF40 and Xantech DF40-D.
Xanthan gum is a thickening agent used in various foods, such as sauces, and in products such as toothpaste.
More particularly, it is “a polysaccharide produced by aerobic fermentation of Xanthomonas campestris,” the rulings said. “The chemical structure of the repeating pentasaccharide monomer unit consists of a backbone of two P-1,4-D-Glucose monosaccharide units, the second with a trisaccharide side chain consisting of P-D-Mannose-(1,4)- P-DGlucuronic acid-(1,2) - a-D-Mannose monosaccharide units. The terminal mannose may be pyruvylated and the internal mannose unit may be acetylated.”
The AD order covers the product in a variety of dry forms, including blended into dry or wet mixtures so long as the mixtures are at least 15% xanthan gum.
First, all five products were of the same class and kind as the subject merchandise and shared important physical characteristics with it, the ruling said.
Gum Products International argued that it customized its Purexan 80AN, Purexan 200AN and Quickxan 70 products for its customers by removing the amylase enzyme from them and blending them with other ingredients. But Commerce found that removing the one enzyme wasn’t enough, as they still shared the same underlying chemical structure as merchandise described by the order. And the fact they were blended with other ingredients is an explicit consideration under the order, the scope ruling said.
Meanwhile, Xantech DF40 and Xantech DF40-D were also chemically altered to be “superior to generic xanthan gum,” but they “continue to include the chemical structure explicitly described by the scope of the Order,” the ruling said.
It also held that Gum Products International’s goods didn’t have substantially transformed end uses compared with subject merchandise. It agreed that the International Trade Commission’s report didn’t reference the products “by name,” but said that wasn’t necessary. The producer’s gum was used in the same industry, for the same qualities, as “generic” xanthan gum, it said. Nor did it matter, regarding specifically Xantech DF40 and Xantech DF40-D, that Gum Products International’s gum had been “enhance[d],” as that didn’t change the end use.
It said that further processing in Canada didn’t add sufficient value to Gum Products International’s products for a substantial transformation finding. And it reached a similar conclusion regarding the investment levels for, and nature and sophistication of, that Canadian processing, also noting that the producer failed to provide adequate information on its Canadian production intensity compared with the production intensity of upstream xanthan gum.
The essential component of Gum Products International’s merchandise is also still xanthan gum, it said, even if the producer refers to it as “superior xanthan powder.”
Finally, Commerce said that the scope language of the order was dispositive for its ruling. The plain language of the order lays out a chemical structure into which the products fit, it said, meaning it doesn’t even have to look to (k)(2) factors to make its determination.