FTC Pre-Hearing Brief in Escape Clause Investigation of Apple Juice Concerning the Economic Effect of Imported Apple Juice

",... '-.
' .. '.':-
,
.,
. 	'.~
"" .\
". ~:"
RIEF 	BY TBI
rill
PUIIBAJlI
FEDDAL TRADE 	1881
BBPalB TBI UNITED 8TATBS
INTBIUfATI~ 	TJW))E 	1881
Appl 	Julc
Iny•• tl,.tlon 	No. 	TA-IOl-5
'",:.;'.. '

TABLE OF a:>NTENTS
Page
I NTROOOC'r I ON' ANI> 	S~Y."""""""""""""""."" 	1
AR.GUM.ENT 	•••••••••••••••••••••••••••••••••••••••••••••••••• 2
I. 	The 	apple 	juice 	sector 	comprises
apple 	growers, 	apple 	crushers, 	and
reconst i tutors ...••..........•••.•.••.•.....•..... 2
II. 	When 	the 	existence 	of 	injury 	or 	the
threat 	of 	injury 	depends 	substantially
upon 	whether 	output 	declines, 	it 	does
not 	appear 	that 	reconstitutors, 	crushers,
and 	apple 	growers 	have 	suffered 	any 	present
injury; 	it 	is 	unclear 	whether 	crushers
are 	threatened 	with 	serious 	injury ••••••••.•.••.•• 3
A. 	Substantial 	importance 	should 	be
accorded 	to 	whether 	there 	has 	been
a 	~ecline 	in 	the 	domestic 	industry's
output 	in 	determining 	whether 	there
is 	injury •.•..........•.............•.......... 3
B. 	Reconstitutors, 	crushers, 	and 	apple
growers 	do 	not 	appear 	to 	suffer 	any
present 	injury; 	it 	is 	unclear 	whether
crushers 	are 	threatened 	with 	serious
injury 	5
III. 	Section 	201 	relief 	should 	be 	available
only 	if 	an 	increase 	in 	foreign 	supply
is 	responsible 	for 	the 	industry's
deteriorating 	domestic 	position 	to 	at
least 	as 	great 	an 	extent 	as 	rising
domestic 	costs 	or 	shifts 	in 	domestic
dema nd 	6
A. 	A framework 	for 	analysis 	of 	causation ••••.•..•• 6
B. 	Analysis 	of 	the 	economic 	cause 	for
the 	decline 	in 	the 	price 	for 	apple 	juice .•••••• 8
a:>NCLUS ION ......................................•.......... 9
APPENDIX: 	The 	Effects 	of 	Apple 	Juice
Concentrate 	Imports 	on 	Domestic
Producers

Prehearing 	Brief 	of 	the 	Federal 	Trade 	Commission
in 	the 	Escape 	Clause 	Investigation 	of 	Apple 	Juice
Introduction and Sum mary
On December 27, 1985, at the request of the United States Trade Representative,
the International Trade Commission ("ITC") initiated a proceeding pursuant to section
201 of the Trade Act of 1974 ("the Act"), 19 U.S.C. 55 2251 et seg., as amended (the
"escape clause"), concerning imported apple juice. 1 	51 	Fed. Reg. 3266 (January 24,
1986).
The escape clause provides for the granting of relief when increasing imports are
found to be a substantial cause of serious injury, or threat thereot, to a United States
industry. 	It the ITC makes an affirmative injury determination, it must recommend a
remedy and report both its findings and recommendations to the President. 	19 U.S.C. 5
225I(d)(l). 	The President, in determining what import relief, it any, to grant, "shall take
into account ••• the effect ot import relief on consumers ••• and on competition in the
domestic markets •••• " 	19 U.S.C. 52252(c)(4). 	Section 334 of the Tariff Act of 1930, as
amended, 	provides that the Federal Trade Commission ("FTC") "shall cooperate fully
with the [International Trade] Commission for the purposes of aiding and assisting in its
work." 	19 	U.S.C. 	S 1334. 	The 	FTC enforces various statutes aimed at promoting
competition 	in 	United States commerce to 	the 	benefit of United States consumers.
Consistent 	with section 334 and 	the FTC's experience in promoting competition and
protecting United States consumers, we are filing this prehearing brief.
1 	As noted below, imported apple juice actually arrives in this country in the form
ot a concentrate which is reconstituted to single strength apple juice tor sale to
consumers.
i
\
,I

In Section I, we suggest that imports ot apple juice may affect domestic apple
growers, crushers, and reconstitutors. 	In Section II, we present an analysis suggesting
that neither reconstitutors, apple growers, nor crushers are Buttering any present injury
but 	that 	crushers 	may 	face 	a 	threat 	of injury. 	Section ill describes a 	conceptual
framework to aid the lTC, it it determines that a domestic industry is being injured, in
deciding whether increased imports are a substantial cause ot this injury. 2 	Under this
framework, an injured domestic industry is entitled to escape clause relief only when the
injury is substantially caused by a downward shift ot the foreign supply curve, caused,
~ by increased productivity abroad. 	The domestic industry is not, however, entitled to
reliet when the injury is substantially caused by changes in domestic demand or supply -
!:i:. a decline in domestic demand for the product resulting from changes in consumer
tastes, 	for 	example, 	or 	higher 	production 	costs 	- 	even 	though 	there 	may 	be 	an
accompanying 	rise 	in 	imports. 	Such a 	rise 	may itself be a 	response 	to changes in
domestic demand or domestic costs.
Argument
I. 	The apple juice sector comprises apple growers, apple crushers, and
reconstitutors.
The 	statute 	directs 	the 	ITC 	to 	ascertain 	whether 	increased 	imports 	are 	a
substantial cause of serious injury to "the domestic industry producing an article like or
directly competitive with the imported article." 	19 U.S.C. S 225l(b)(l). 	In the present
proceeding, an issue may be whether apple growers, crushers, and reconstitutors are in
the same domestic industry or whether they are separate domestic industries. 	As the
names suggest, crushers squeeze raw apples to produce either concentrate or single
2 	Vice Chairman Liebeler has adopted this framework on several occasions. 	See,
~ Carbon and'Certain Alloy Steel Products, TA-201-S1, ITC No. lS53 (1984) at
T3'r-142; Nonrubber Foot"Near, TA-201-ss, ITC No. 1717 (1985) at 206-210.
-2-

strength apple juice to be sold to ultimate consumers, and reconstitutors dilute imported
or domestically produced concentrate to produce single strength apple juice.
We take no position on the question whether domestic apple growers, crushers, and
reconstitutors are separate industries or segments of' a single domestic industry for
purposes of this proceeding. 	However, because the Act directs the ITC to examine the
"economic effect" of the imports in deciding this question, 19 U.S.C. S 2481(5), we direct
the lTC's attention to the conclusion of Dr. Lorenzo Brown of our Bureau of Economics,
as set forth in detail in the Appendix, that: (1) imported apple juice concentrate has no
adverse economic effect on reconstitutors; (2) the economic effect of imported apple
juice concentrate on crushers depends on whether the quantity of apples supplied to apple
crushers is dependent upon the price paid for those apples - 	that is, whether the supply
of juice apples is very inelastic and upon efficiencies achieved by crushers; and (3) the
economic effect, if any, of imported apple juice concentrate on apple growers depends on
the effects of imports on the output and price of domestic apples.
ll. 	When the existence of injury or the threat of injury depends SUbstantially upon
whether output declines, 	it does not appear that 	reconstitutors, crushers, and
apple growers have suffered any present injury; it is unclear whether crushers are
threatened with serious injury.
A. 	Substantial importance should be accorded to whether there has been a
decline in the domestic industry's output in determining whether there is
injUry.
In determining whether rising imports have caused injury, or the threat of injury,
to a domestic industry, 	the 	Act directs the ITC to "take into account all economic
factors which it considers relevant, including (but not limited to)" domestic production
levels, sales, profit and employment. 	19 U.S.C. S 225I(b)(2). 	In weighing the various
factors enumerated by the statute, as well as other factors which the ITC is allowed to
consider, we suggest that substantial importance should be accorded to whether there has
been a decline in output by the domestic industry. 	In the overwhelming majority of cases
declining sales will be associated with increasing inventories, declining output, declining
-3-

employment, and declining profits. 	In such cases, a finding that sales or ou.tput have
declined is tantamount to a finding that other factors enumerated by the statute have
also changed in ways that support a finding of injury. 	Thus, in assessing injury it would
seem appropriate to consider whether there has been a decline in domestic sales before
considering the other enumerated factors.
This conclusion is not likely to be problematic even in the relatively unusual
category of cases in which sales and output are stable and employment and profit are
observed to decline. 	When sales and output are stable, declining employment is probably
a response to technological advances that substitute other productive factors for labor,
and protection under section 201 is not merited. 	It is unlikely that Congress enacted
section 201 in order to guarantee an unchanging capital/labor ratio in every industry.
When 	sales and 	output 	are 	stable and 	profit 	declines 	there 	are 	two possible
explanations. 	First, 	costs 	may 	have 	increased. 	When 	revenue 	is stable and 	costs
increase, !:i:1 through productivity declines, profit necessarily must decrease. 	We lack
the necessary cost information to address this possibility in the present case. 	We note
however 	that such cost 	increases are unlikely to be the result of increased imports.
Second, prices may have fallen. 	To the extent that economic profit is reduced because
prices have fallen, 	there 	may still be no injury because productive resources are not
necessarily idled in response to such a reduction in economic profit. 	However, when such
a decline in prices causes profits to decline to unreasonable levels, there will be injury
because output will also decline as firms leave the market.
-4-

B. 	Reconstitutors, crushers, and apple growers do not appear to sutter any
present injury; it is unclear whether crushers are threatened with serious
injury.
The reconstitutors are not seriously injured, according to Dr. Lorenzo Brown ot
our 	Bureau ot 	Economics, 	because it 	is Immaterial to them 	whether 	they purchase
imported or domestic concentrate, and a lower price for imported concentrate simply
means that their costs are lower (see Appendix).
Growers are also unlikely to have been injured. 	This is so for two reasons. 	First,
the levels of production during the period in question are not consistent with either
serious injury or a threat thereof. 	Apple production remained stable throughout the
period 	1981 	to 	1985. 	Because 	changes in 	domestic 	output 	are 	probably 	positively
correlated with changes in employment, it is unlikely that employment changed during
the period. 	Consequently, it seems unlikely that domestic apple growers could establish
that they have been or will be seriously injured on the basis of changes in the levels of
output and employment. 	Second, 	the price trend of apples is also inconsistent with
serious injury. 	Prices did not fall between 1981 and 1985. 	Because the output of apples
did not change over that period either, apple grower profits could have declined only if
their costs increased by more than the rate of inflation.
Finally, with regard to domestic crushers, Dr. Brown concludes that their output
has not declined during the relevant period. 	Accordingly, using the approach to injury
described above, it does not appear that domestic crushers have suCCered any present
injury. 	Dr. Brown also examined price trends to evaluate whether there is a threat of
serious future injury. 	Dr. Brown's examination of trends in prices reveals that during the
relevant period the price of apple juice declined while the price of apples remained
essentially unchanged. 	In such circumstances, the level of domestic· production of apple
juice could remain constant only if domestic crushers became more efficient. 	Given such
increased efficiency, domestic crushers' profit could have remained constant, increased,
or decreased during the period of analysis. 	There is, however, insufficient information
-5-

available to Dr. Brown to project which of these outcom~ will be most likely to prevail
in th, future.
Thus, on the basis of the information available to us, including (I) the stability ot
domestic apple and domestic apple juice production during the period in question, (2) the
positive correlation between the level of production and the level ot employment, and (3)
the stability of apple prices during this period, we believe that domestic apple juice
crushers and apple growers have not been seriously injured. 	If, however, domestic apple
juice crusher profits are likely to decline to such levels that resources used in that
activity eventually will be displaced, then there could be a threat of serious injury to
domestic apple crushers.
1lI. 	Section 20 I relief should be available only if an increase in foreign supply is
responsible tor the industry's deterioratitw domestic raEition to at least as great
an extent as rising domestic costs or shit s in dOmestic 	emand. 	.
A. 	A framework tor analysis of causation
Section 201 	requires the ITC - 	it it finds the domestic industry is injured or
threatened with injury - 	to determine whether rising imports are a "substantial cause" of
the injury. 	19 U.S.C. S 225l(bXI). 	A "substantial cause" is one which is "important and
not less than any other cause." 	19 U.S.C. S 225l(bX4).
The legislative history recognizes that the indicia of injury - 	declining sales,
production, 	profits, 	and 	employment 	- 	can 	result 	from 	"conditions 	unrelated 	to
imports. 	Such conditions could arise from a variety ot other causes, such as changes in
technology or in consumer tastes, domestic competition from substitute products, plant
obsolescence, or poor management." S. Rep. No. 1298, 93d Cong., 2d Sess. (1974) at 121.
-6-

Our approach 	to the issue of causation is consistent with the language of the
statute and the legislative intent. 	The output or any domestic industry is subject to a
variety of infiuences, such as wages and the price or competing products. 	There are
additional innuences when the domestic industry has significant import competition, such
as foreign wages and international transportation costs. 	In theory, adverse changes in
anyone or more of these innuencing factors can cause injury. 	The innuencing factors
that cause injury can be divided into three groups on the basis of who is affected. 	Some
factors, such as technology and domestic labor costs, affect the costs domestic producers
incur 	in 	supplying 	the 	product. 	Other 	factors, 	like 	the 	availability and 	prices 	of
substitutes, 	affect 	the 	demand 	for 	the 	product. 	Still 	others, 	such as international
transportation 	charges 	and 	foreign 	production 	costs, 	atrect 	the 	ability 	of 	foreign
producers to sell in this country.
Under this approach, it is important to understand that imports themselves are not
causal or innuencing factors. 	Imports, like domestic consumption and production, are
caused by more fundamental supply and demand factors. 	Thus, imports may change for a
variety of reasons unrelated to changes in foreign supply factors, such as changes in
domestic energy costs or shifts in domestic incomes.
This framework focuses on those cases in which import competition is a cause or
injury, not on those in which rising imports are merely another effect of some other
•
cause.3 For example, either an increase in domestic costs or a decrease in foreign wages
can result in a reduction of sales of the domestically produced good and an increase in
imports. 	If the domestic industry's distress and the increase in imports are caused by the
higher costs of domestic industry, import relief would not be appropriate because no
3 	We 	suggest 	that 	our 	proposed 	analytical 	framework 	is 	consistent 	with 	the
fundamental 	purpose 	of the 	Act. 	The 	Act 	lists among its primary goals to
"strengthen economic relations between the United States and foreign countries
through open and nondiscriminatory world trade" and "to assist industries, firm
[sic], 	workers, 	and 	communities 	to 	adjust 	to 	changes 	in 	international 	trade
flows." 	19 U.S.C. S 2102(1) and (4).
-7-

changes attecting the supply of imports have occured. 4 In the case of a decrease in
foreign wages, on the other hand, the problems of the domestic industry may be caused
by increased import competition, and relief may therefore be appropriate.
In many cases, there will be simultaneous changes in both domestic and foreign
factors, and it will be necessary to determine the relative importance of the changes.
Relief is appropriate only 	when the foreign changes are not less important than the
changes in either domestic supply or domestic demand.
B. 	Analysis oC the economic cause tor the decline in the price Cor apple juice
Available evidence indicates that the price for apple juice has fallen even though
the domestic output has not declined. 	As discussed above, 	we do not think that an
industry has suffered any present injury unless its output has fallen. 	Nevertheless, the
argument may be made that apple crushers are, or may be, injured because the price of
apple juice has fallen. 	Accordingly, we turn to this question of the economic causes of
the price decline.
In the Appendix to this brief, Dr. Brown addresses the reasons for the decline in
the price tor apple juice. 	He notes the available evidence suggests that the supply curve
tor domestic crushers has shifted outward, presumably because domestic crushers have
become more efficient in recent years.5
To the extent that the price for apple juice has fallen because domestic crushers
have become more efficient, such a price decline provides no basis for import relief. 	A
price decline caused by increased efficiency cannot be caused by increased imports. 	We
note that if the increase in crusher efficiency has not been spread equally among all
4 	In this example, 	the increase in imports is not caused by a change in factors
affecting foreign supply, and the import supply curve has not shifted downward.
5 	That is, the supply curve of crushing services has shifted outward so that for any
price of apple juice and price of juice apples, the quantity of apples converted into
juice has increased.
-8-

crushers and that some have had larger cost savings than others, some crushers may have
been 	made 	worse 	oft 	by 	this general 	increase 	in 	industry 	efficiency. 	Once again,
however, any such decline in profits is a domestic change and should not provide a basis
for import relief.
Conclusion
For 	the 	reasons 	stated above, 	the 	impact 	of 	imported 	apple 	juice should be
analyzed in terms of domestic apple growers, crushers, and reconstitutors. 	Output and
price data indicate that reconstitutors are certainly not and growers are probably not
experiencing serious injury or being threatened by serious injury as a result of imports;
crushers may be experiencing the threat of serious injury. 	If the ITC makes an
-9-

affirmative injury determination, we suggest that rising imports may not be a substantial
cause of this threatened injury.
Respectfully submitted
on behalf of
the Federal Trade Commission,
David 	T. 	Scheffman
Acting 	Director
Bureau 	of 	Economics
Richard 	S. 	Higgins
Deputy 	Director 	for
Regulatory 	Analysis/
Industry
Bureau 	of 	Economics
Keith 	B. 	Anderson
Assistant 	Director 	Cor
Regulatory 	Analysis
Bureau 	of 	Economics
Lorenzo 	Brown
Economist
Bureau 	of 	Economics
Amanda 	B. 	Pederson
Acting 	Director
Bureau 	of 	Consumer
Protection
J. 	Howard 	Beales
Acting 	Deputy
Director
Bureau 	oC 	Consumer
Protection
April 	11,1986
-10-
Walter 	T. 	Winslow
Act ing 	Di rector
Bureau 	of 	Competition
Edward 	F. 	Glynn, 	Jr.
Assistant 	Director
(International 	Antitrust)
Bureau 	of 	Competition
Benjamin 	Cohen
Attorney
Bureau 	of 	Competition
Tho~s F. 	Hancock
Attorney
Bureau 	of 	Competition

Appendix
The Effects of Apple Juice Concentrate Imports
on Domestic Producers
by
Dr. Lorenzo Brown l
In 	previous 	section 	201 	cases, 	the 	Federal 	Trade 	Commission 	has
presented a 	method 	of 	analyzing claims that a domestic 	industry 	has been
injured by imports and of determining whether any 	injury is the result of
increased import competition -- i.e. a downward shift in the import supply
function -- or is the result of changes in domestic supply or demand. 2 	This
approach has also been adopted by Vice Chairman Liebeler. 3 	However, any
attempt 	to 	apply 	this 	approach 	to 	the 	present 	case 	is 	complicated 	by 	the
fact that it appears that more than one type of producer may be injured by
a 	decline 	in 	the 	price 	of 	imports 	of 	apple 	juice. 	In 	this 	appendix, 	we
consider 	theoretical 	and 	empirical 	indications 	that 	firms 	performing 	these
various functions mayor may not have been injured as a result of a lower
price of imported apple juice.
. 	Producers of Apple Juice
There are two types of processes that are involved in the production of
apple 	juice. 	The 	first 	process 	involves 	the 	crushing of 	raw 	apples. 	The
output 	of 	this 	process 	can 	be 	either 	apple 	juice 	for 	sale 	to 	the 	ultimate
consumer or concentrated juice that is then shipped to other locations where
water 	is added 	to 	produce 	final 	strength apple juice. 	This first 	group of
producers 	uses 	raw 	apples 	as 	an 	input 	and 	produces 	either 	finished 	apple
juice 	or 	concentrate 	as 	an 	output.' 	The 	second 	process 	involves
reconstituting concentrated apple juice produced 	by some other firm 	or by
1 Lorenzo 	Brown 	is 	an 	economist 	in 	the 	Federal 	Trade 	Commission's
Bureau of Economics. 	He 	received 	the PhD degree in economics from 	the
University of Stockholm in 1980.
2 See Briefs of 	the 	Federal Trade Commission 	in 	Carbon and Certain
Alloy Steel Products, TA-201-51, Unwrought Copper, TA-201-52, Canned Tuna
Fish, T A-20 I-53, 	Potassium 	Permanganate, 	T A-20 I-54, 	Nonrubber 	Footwear,
TA-201-55, and Electric Shavers, TA-201-57.
3 See, e.g., Carbon and 	Certain 	Alloy Steel 	Products, TA-20 I-51 	(1984)
at 137-142; Nonrubber Footwear, TA-201-55 (1985), Appendix A at 201-210.

the same firm in some other location to produce finished apple juice.· 	The
input used by these producers is concentrated apple juice and their output is
finished 	apple 	juice. 	In 	examining 	the 	effects 	of 	imports 	of 	apple 	juice
concentrate on the domestic industry or industries involved in the production
of apple juice, it is useful to consider how the firms involved with each of
these production processes, as well as growers of the apples utilized by the
apple crushers, could be affected. s
Consider first 	the producers who reconstitute concentrated apple juice
in order to produce single strength juice for 	final consumption. 	It is easy
to 	see 	why 	these 	producers 	are 	not 	likely 	to 	be 	injured 	if 	the 	price 	of
imported 	apple 	juice 	concentrate 	declines. 	What 	these 	processors 	do 	is 	to
add 	water 	to 	apple 	juice 	concentrate 	in 	order 	to 	produce 	finished 	apple
juice. 	A key 	input 	they use is apple juice concentrate •• the product that
is being imported. 	It would appear that reconstitutors should be able to use
either 	imported or domestically produced concentrate. 	Therefore, 	increased
competition 	from 	imported 	concentrate 	should 	lower 	the 	price 	these
producers 	need 	to 	pay 	for 	a 	key 	input 	into 	their 	production 	process.
Producers are not likely to be injured if the prices of their inputs decline.
While 	it 	is 	relatively 	easy 	to 	demonstrate 	that 	the 	reconstitutors 	of
apple juice concentrate are not likely to be injured by increased imports of
apple 	juice 	concentrate, 	determining 	whether 	the 	domestic 	producers 	who
produce 	either 	concentrate 	or 	finished 	apple 	juice 	from 	raw 	apples 	are
injured 	is 	more 	difficult. 	In 	considering 	whether 	the 	domestic 	processors
ha ve 	been 	injured 	it 	is 	useful 	to 	recall 	what 	the 	major sources of 	injury
would be: lower. prices which would cause processors to earn 	lower profits,
lower quantity of apple juice sold, or lower employment. 	Apparently, sales
of 	concentrate 	and 	juice 	from 	domestically 	grown 	apples 	have 	not 	fallen.
The 	quantity 	of 	apples 	going 	into 	juice 	production 	has 	not 	declined. 6 	We
infer from the fact that output has not fallen, that employment probably has
not 	fallen 	either. 	Therefore, 	it 	would 	appear 	that 	the 	sole 	source 	of
potential injury is a fall in the price of concentrate and juice. 	If output of
domestic 	concentrate 	and 	juice 	producers 	has 	not 	fallen, 	but 	the 	price 	of
• Even. producers who crush fresh apples may use some concentrate in
order 	to 	obtain 	a 	blend 	of apple 	juices that 	produces 	the 	taste 	that 	they
wish to have in their product. 	To the extent that firms engaged in crushing
apples can 	increase 	the 	amount of 	concentrate 	they 	utilize and 	reduce 	the
amount 	of 	crushing 	in 	which 	they 	engage 	if 	the 	price 	of 	concentrate
declines, 	then 	the 	analysis 	of 	reconstitutors 	may 	apply 	to 	these 	firms 	as
well.
5 In 	some 	cases 	a 	single 	firm 	may 	grow 	apples, 	produce 	concentrate,
and produce apple juice. 	However, it is still useful to consider the effect on
each production stage separately.
6 The quantity of apples used in JUice production increased from 1,798.4
million 	pounds 	in 	1981 	to 	1,816.4 	million 	pounds 	in 	1984. 	(See 	U.S.
Department of Agriculture, Fruit Outlook and Situation Yearbook, TFS-236,
October 1985, p. 22)
2

their 	output 	has 	fallen, 	the 	supply 	curye 	of 	the 	service! 	of 	domestic
concentrate 	and 	juice 	producers 	must 	have 	sbifted 	out. 	That 	is, 	for 	any
liven 	price of apple 	juice and 	for 	any 	given 	price that 	must be paid for
juice apples, the quantity of juice tbat 	processors would choose to 	produce
has increased. 	This deduction derives from the fact that economics tells us
that 	short-run 	industry 	supply 	curves 	are 	upward 	slopins, 	Le., 	a 	ceteris
paribus raU in industry price will result in a Call in industry output, unless
the supply curve of the 	industry 	is perfectly inelastic. 	It 	is unlikely tbat
the domestic supply curve for processing apples into concentrate and juice is
perfectly inelastic.
Therefore, from tbe fact that domestic output of concentrate and juice
has not fallen but the price bas fallen, we conclude that the domestic supply
curve for concentrate and juice processing services has shifted out. 	If tbe
domestic supply curve for concentrate and juice bas shifted out, that change
in the domestic industry alone, ceteris oaribus. would' result in a decline in
the 	domestic 	price 	of 	concentrate 	and 	juice. 	Therefore, 	if 	the 	source 	of
potential injury 	to domestic processors 	is a 	reduction 	in 	the price of their
output, one cause of this reduction in price is some change in the domestic
industry that caused the domestic supply curve for concentrate and 	juice to
shift 	out. 	This 	change 	is 	a 	domestic 	change 	and 	to 	the 	extent 	that 	this
shift 	is 	responsible 	for 	any 	injury 	suffered 	by 	the 	domestic 	industry, 	it
should not be the basis for granting relief.
We will now consider, given the facts available to us, what the possible
causes of an outward shift in the domestic processors' supply curve could be.
As 	we discussed above, domestic proc~ssors who 	use 	foreign concentrate 	to
convert into juice have seen a reduction in their costs, and so their supply
curve 	would 	have shifted out. 	Consider 	now 	the domestic 	processors 	who
use 	domestic 	apples 	or 	concentrate. 	An 	important component of costs for
domestic 	processors 	is 	the 	price of apples. 	If 	the decline 	in 	the 	price of
concentrate and of apple juice is offset by an equivalent decline in the price
the producer pays for apples, a producer will 	not be injured. 	If the price
received 	for 	concentrate 	(or 	juice) 	and 	the 	cost 	of 	the 	apples 	used 	to
produce 	the 	concentrate 	(or 	juice) 	fall 	by 	the 	same 	amount, 	the 	producer
will ceteris paribus find it profitable to produce the same quantity after the
price 	decline 	as 	before. 7 	In 	such a situation, 	there 	will 	be 	no decline 	in
7 To see 	this, 	consider 	the 	quantity of apple juice concentrate 	that a
competitive concentrate 	maker 	would 	produce. 	As with any 	producer 	in a
competitive 	industry, 	such 	a 	competitive 	producer 	would 	expand 	his
production of concentrate until the marginal cost of producing another unit
of concentrate is just equal to the price for 	which he can sell the product.
Since the marginal cost of producing concentrate is equal to the cost of the
apples used to produce the concentrate plus the marginal cost of processing
the additional apples, another way to state the firm's equilibrium condition is
that the price of concentrate less the cost of the apples used to produce the
concentrate must be equal to the marginal cost of processing. 	That is
3

employment or 	in 	capacity 	utilization, 	and, 	because 	the 	cost 	of 	the 	input
(apples) 	has 	declined 	by 	an 	amount 	equal 	to 	the 	decline 	in 	the 	price 	of
output, processor profits will not be adversely affected. s
A 	reduction 	in 	the 	price 	of apple 	juice 	and 	concentrate 	will, 	ceteris
paribus. 	reduce 	the 	demand 	for 	domestic 	juice 	apples. 	In 	one 	set 	of
circumstances, 	all 	of 	the 	changes 	in 	the 	market 	due 	to 	changes 	in 	the
competitiveness 	of 	imports 	would 	occur 	in 	the 	market 	for 	domestic 	juice
apples. 	In this case, for example, a ceteris paribus reduction in the demand
for juice made from domestic apples would result in a fall in the price of
apples, 	but 	no 	change 	in 	the 	profits, 	output, 	or 	employment 	of 	the 	juice
producers. 	This 	would 	occur 	if 	the 	supply 	curve 	for 	juice 	apples 	was
perfectly 	inelastic. 	If 	the 	supply 	curve 	for 	juice 	apples 	is 	perfectly
inelastic, domestic processors will not be injured by changes in the level of
imports 	because 	the 	impact 	of 	changes 	in 	import 	competitiveness 	will 	be
borne in the apple markets.
Several 	characteristics 	of 	apple 	growing 	and 	of 	juice 	apples 	suggest
that 	it would 	not be surprising to find 	that, at least in the short run, the
supply 	of 	juice 	apples 	is 	completely 	inelastic.. 	First, apple 	trees 	are 	long
lived. 	Once a group of apple trees are planted and have grown to maturity,
they will produce apples for 	many years. 	Even if the price for which the
apples can be sold declines precipitously, the apples will continue to grow. 9
Second, juice apples are not apples grown 	for 	juice production. 	They
grow on the same trees as apples that will be put to higher valued uses such
as sale as 	fresh 	fruit 	or 	use 	in canning. 	Juice apples are 	the apples 	that
are 	so small, so 	damaged, or so deformed 	that 	no 	one 	will 	buy 	them 	for
other 	uses. 	Further, 	when 	picking apples, all 	of 	the 	apples 	on a 	tree are
picked. 	The use 	to which particular apples are put is determined later, at
the packing house, where the apples are graded and sorted. 	Thus, the apple
where Pc 	• the price of apple juice concentrate,
Pja • 	the price for 	the quantity of juice apples required to produce
one unit of concentrate, and
MC p ,. the marginal cost of processing apples into concentrate.
If a decline in the price of concentrate is matChed by an equivalent decline
in 	the 	price 	of 	juice 	apples, 	the 	left 	side 	of 	this 	relationship 	will 	be
unchanged. 	Therefore, 	in 	equilibrium 	the 	right 	side 	Olust 	be 	unchanged.
Assuming an 	upward sloping 	marginal cost of processing, 	this 	will 	be 	true
only if the quantity of concentrate produced is unchanged.
8 	While 	the 	producer 	has 	not 	been 	injured 	in 	this 	case, 	the 	apple
grower may have been -- the price he receives for his product has declined.
9 Of course, the quality of the apples may decline if the trees are not
fertilized 	and 	otherwise 	maintained. 	However, 	because 	apples 	used 	to
produce 	juice are 	those 	apples 	that 	cannot 	be 	used 	for 	any 	other 	purpose,
such a neglect might increase the supply of juice apples.
4

grower in deciding whether to pick the apples from his trees must consider
whether 	the 	total 	revenue 	received 	for 	all 	of 	the 	apples 	on 	the 	tree 	will
exceed the cost of picking the apples. 	In addition, the costs of picking and
sorting the apples must be incurred in order to sell the better apples for use
as fresh fruit or in higher-valued processing uses _. e.g. as canned apples or
as apple sauce.
In 	recent 	years, 	the 	growers 	have 	received 	approximately 	10 	or 	11
cents 	per 	pound 	for 	their 	apples. 10 	The 	cost 	of 	harvesting 	apples 	and
transporting them to 	the 	packing house 	has 	been estimated 	to 	be less 	than
1.5 cents 	per 	pound. 11 	Thus, 	it appears 	very 	unlikely 	that 	growers 	would
not find it profitable to harvest apples at current prices.
Once 	the 	apples 	are 	picked 	and 	sorted, 	there 	is 	effectively 	no 	cost
avoided by throwing the juice apples away rather than selling them for juice
production. 	Thus, 	the 	price 	paid 	for 	juice apples can 	fall 	almost 	to 	zero
before 	the costs that are avoided 	by 	not 	using apples 	for 	juice production
are greater than 	the avoidable costs of putting them to such a 	use. 	Until
the price reaches this level, the quantity of apples supplied for use in juice
production will not vary with the price received. 	It appears that the supply
of juice apples will be completely inelastic. 12
If 	our 	argument 	is 	correct 	and 	the 	supply 	of 	juice 	apples 	does 	not
respond 	to the price 	paid, there 	will 	be 	no 	injury 	to juice processors as a
result of any 	increase 	in 	the 	competitiveness of 	imports. 	Any 	increase 	in
competitiveness 	will 	be 	reflected 	in 	changes 	in 	the 	price 	of 	apples, 	not
changes in conditions in the processing industry.
While, 	as 	we 	argued 	above, 	an 	inelastic supply 	curve should 	imply a
drop in the price of apples in response to a drop in the price of apple juice,
the available public data do not indicate that the price of juice apples has
in fact fallen. 	In 1981, the price of juice apples was 4.40 cents per pound.
10 	Fruit Outlook and Situation Yearbook, p. 22.
11 Telephone conversation with Dr. Charles Safley, North Carolina State
University, April 7, 1986.
12 We 	are 	aware 	of one exception 	to 	this conclusion. 	When 	an 	apple
crop 	is 	severely 	damaged 	by 	hail, 	the 	grower 	may 	know 	that 	the 	apples
cannot be put to any use other than juice production. 	In that case, it will
be profitable to pick the apples only if the price of juice apples exceeds the
harvesting costs. 	However, 	harvesting appears profitable even 	in 	this case.
The 	price of juice apples has 	never been below 4.4 cents per pound in the
1981-1984 	period 	(See 	Fruit 	Outlook 	and 	Situation 	Yearbook, 	p. 	22) 	If
harvesting costs are 	less 	than 	1.5 cents, 	there is still 	money to be 	made 	if
the only possible use of the apples is juice production.
5

In 	1984, 	the 	price, 	expressed 	in 	1981 	dollars, 	was 	4.61 	cents 	per 	pound. u
Therefore, it does not appear from the data available to us that the outward
shift in the supply of domestic apple juice and concentrate that we earlier
discussed could be the result of a reduction in the price of apples. 	Perhaps
the 	price 	of apples 	did 	not 	fall 	because 	the 	supply 	curve 	is 	not, 	in 	fact,
inelastic.
On 	the 	other 	hand, 	however, .the 	prediction 	of 	a 	decreased 	price 	of
apples 	in 	response 	to 	a 	decrease 	in 	the 	price 	of 	inputs 	assumed 	that 	no
other 	changes 	occurred 	in 	apple 	processing 	in 	the 	recent 	past. 	In 	fact,
there may have 	been other changes affecting the costs of processing apples
during 	the 	period 	1981 	to 	1985. 	As 	we discussed 	above, 	there 	is evidence
that 	the 	domestic 	supply 	curve 	of 	processors 	of 	apples 	into 	juice 	or
concentrate shifted out during this period. 	While we have no information on
specifically 	what 	caused 	these 	shifts, 	it 	appears 	that 	processors 	may 	have
become more efficient. 	Such an increase in efficiency would lead to lower
processing costs 	and 	without 	any 	reduction 	in 	the 	price 	of 	apples, 	ceteris
paribus. 	Such a change would, however, not change our conclusion that one
of 	the causes 	of 	the decline 	in 	the 	price 	of apple 	juice must 	be 	that 	the
domestic supply curve has shifted out. 	Whatever the causes of this outward
shift, they are independent of the increase in the competitiveness of imports
and 	relief 	should 	not 	be 	granted 	in 	response 	to any 	injury 	resulting 	from
them. 1•
Apple Growers
We 	now 	turn 	to 	an 	examination 	of 	whether 	the 	publicly 	available
evidence indicates that apple growers have been injured by the lower price
of 	imported apple 	juice concentrate. 	In conducting 	this analysis, we shall
focus 	on 	changes 	in 	the 	quantity 	and 	price 	of 	apples. 	We 	follow 	ITC
practice and focus on a period of the last five years -- 1981 through 1985.
By focusing on changes in price and output, we can reacl) conclusions
about 	the 	various 	indicators 	of 	injury 	that 	the 	International 	Trade
Commission is called 	upon to examine. 1S 	These 	include declines in output,
13 Fruit 	Outlook 	and 	Situation 	Yearbook, 	p. 	22. 	The 	price 	data 	are
expressed 	in 	constant 	1981 	dollars 	and 	are derived 	from 	current 	prices 	by
use of the producer price index for farm products and processed foods and
feeds as reported in the 1986 Economic Report of the President, p. 324.
14 It is possible that this increase in efficiency among juice processors
would be accompanied by the exit of some firms from the industry. 	That is,
more efficient processors could 	be expanding while less efficient processors
were forced from the industry. 	However, this effect on domestic processors
is independent of the state of competition from imports.
15 	As 	suggested 	in 	footnote 	2 	on 	page 	6 	of 	the 	FTC 	brief 	in 	this
matter, we suggest that the ITC hesitate to find injury without a decline in
output 	and 	sales. 	regardless 	of 	the 	levels 	of 	other 	factors. 	This 	issue 	of
interpretation 	need 	not 	be 	reached 	here, 	however, 	since 	our 	analysis 	of
6

declines in employment, and declines in profits. 16 	Our understanding of the
legal 	precedent 	is 	that 	the 	ITC 	has 	never 	found 	that 	a 	domestic 	industry
has been injured by imports unless it has suffered an adverse change in one
or 	more of 	these 	indicators.1f 	However, 	we do not 	need 	to consider each
indicator of injury separately, because they are in fact not independent.
For example, consider the loss of employment as an ·indicator of injury.
If one found 	that a lower price of imports had caused domestic production
to 	decline, 	it 	would 	not 	be 	surprising 	to 	find 	that 	employment 	in 	the
domestic 	industry 	had 	declined. 	However, 	if 	import 	competition 	has 	not
resulted 	in 	a 	decline 	in 	output, 	any 	declines 	in 	employment 	cannot 	be
attributed 	to imports. 	If fewer 	workers are needed to maintain a constant
level of production, the decline in employment would appear to be the result
of 	more 	efficient 	production 	techniques 	and 	not 	the 	result 	of 	increased
competition from imports. 	Accordingly, if production does not decline, we
can conclude that imports have not caused injury in the form 	of decreased
output or employment. 18
In 	considering 	the effect of a decline 	in 	the price of imports on 	the
profitability of domestic apple growers, it 	is 	useful 	to recall 	that a 	firm's
profits are equal 	to the difference 	between 	its revenues and 	its costs. 	We
see 	no 	reason 	to 	believe 	that 	cheaper 	imports 	of 	concentrated 	apple 	juice
will affect the costs of apple growers. 	Imported concentrate is a substitute
for apples grown in this country, and as such, its effects on profits should
occur through an effect on the price of apples and on the quantity of apples
sold. 	Therefore, 	we can 	investigate 	the effects of 	imports on apple prices
and output and 	draw some conclusions about 	profits. 	In 	particular, 	if 	we
find that competition from imports has not caused either the price of apples
or 	the quantity of apples 	produced 	to decline, then 	it 	is 	unlikely 	that the
apple growers have suffered injury.
An 	additional 	issue 	that 	needs 	to 	be 	resolved 	is 	whether 	one should
consider the price and quantity of all apples produced or whether attention
should 	be 	restricted 	to 	apples 	used 	for 	juice 	production. 	It 	is 	our
understanding that there are no apples grown exclusively for use in making
output and price lead us to tentatively conclude that there is no evidence of
injury under any of the indicia suggested by the statute.
16 	The 	statute 	also 	directs 	the 	ITC 	to 	consider 	declines 	in 	capacity
utilization. 	We 	do 	not 	focus 	on 	that 	measure of 	injury 	here because it 	is
not clear 	what capacity 	utilization 	means 	in 	the context of an agricultural
commodity such as apples.
11 See 19 U.S.c. 2251(b)(2).
18 Similar 	conclusions 	would 	follow 	concerning capacity 	utilization 	in
industries 	where 	an 	analysis 	of 	capacity 	utilization 	is 	appropriate. 	If
capacity 	utilization 	declines 	while 	the 	level 	of 	production 	is 	constant, 	it
would 	appear 	that 	capacity 	has 	been 	added 	or, 	again, 	more 	efficient
production techniques may have been placed in operation.
7

apple 	juice. 	Rather, 	some 	apples 	from 	a 	tree 	may 	be 	used 	for 	fresh
consumption 	and 	others 	used 	to 	produce 	canned 	apples 	while 	other 	apples
from 	the 	same 	tree 	may 	be 	used 	to 	produce 	apple 	juice. 	Therefore, 	the
grower 	in 	deciding 	whether 	to 	plant 	apples 	will 	be 	considering 	the 	total
output of his trees; and it is that total output that should 	be examined 	in
determining whether or not he has been injured.
Table 1 provides price and output figures f()r all apples for the period
1981 	through 	1985. 1g 	These figures, 	which are based on 	publicly available
data, should provide some preliminary indications of whether apple growers
are 	suffering injury. 	Apple 	production 	rose from 7,739 	million 	pounds in
1981 to 8,373 million pounds in 1983, after which it declined to 7,809 million
pounds 	in 	1985. 	Examining 	the 	full 	five 	year 	period 	there 	is 	no 	trend
toward 	a 	decline 	in 	output. 20 	A similar 	pattern 	is 	found 	in 	the 	price 	of
apples. 	The real price of a pound of apples fell from 11.10 cents in 1981 to
10.12 cents 	in 	1982. 	After 	this, 	price 	rose steadily 	to 	10.95 cents in 	1985.
There does not appear to be a trend toward lower prices.21
19 For 	1981-84, the data are from 	the U.S. Department of Agriculture,
Fruit Outlook and 	Situation 	Yearbook, TFS-236, October 	1985, p. 22. 	The
1985 data come from U.S. Department of Agriculture, Noncitrus Fruits and
Nuts: 1985 Summary, FrNt 1-3(86), January 1986, pp. 8-9.
20 	A 	regression 	of 	output 	on 	time 	generates 	the 	following
rela tionship
Q • 5556.7 + 30.23 TIME
(lO1.49)
where Q 	• total.apple production in millions of pounds and
TIME. the last two digits in the year -- i.e. 81 for 1981.
Figures in parentheses are standard errors.
The 	presence 	of 	a 	positive 	coefficient on 	th.e 	TIME 	variable 	is 	consistent
with an overall increase in apple production over the five 	year period, not
with a decrease.
21 A time trend regression of real price (P) again supports this finding.
The results of the analysis are
P = 8.03 + 0.0317 TIME
(0.147)
During this period, there have been significant increases in 	imports of
apple juice concentrate. 	Table 2 shows that imports of apple juice increased
from 81.6 million gallons in 1981 to an estimated 223 million gallons in 1985.
This 	represents 	a 	substantial 	rate 	of 	increase 	in 	the 	quantity 	of 	imports.
(U.S. 	Department 	of 	Commerce, 	Bureau 	of 	the 	Census, 	TSUSA 	Annual
Reports, 	Schedule 	165.15. 	These 	figures 	include 	imports 	of 	pear 	juice.
However, 	pear 	juice 	is 	a 	very 	small 	percentage of 	the 	total. 	While 	apple
8

TABLE 1
Apple 	Prices 	and 	Production
Year
1981
1982
1983
1984
1985
price 1
(cents 	per 	pound)
11.10
10.12
10.42
10.75
10.95
Quantity 	produced
(millions 	of 	pounds)
7739.6
8122.0
8373.0
8285.5
7809.0
1 	Prices 	are 	all 	expressed 	in 	1981 	dollars 	by 	deflating 	by 	the
producer 	price 	index 	for 	farm 	products 	and 	processed 	foods 	and
feeds.
Source: 	See 	text 	and 	sources 	cited 	there.

TABLE 	2
prices 	and 	Quantities 	of 	Imported 	Apple 	Juicel
Quanti ty 	of 	Imports
fill 	Price 	Per 	Gallon 	(Thousands 	of 	Gallons)
1981 	$0.74 	81,603
1982 	0.91 	103,760
1983 	0.76 	149,290
1984 	0.70 	167,860
1985 	0.63* 	222,980*
1 	While 	apple 	juice 	is 	imported 	in 	the form 	of 	concentrate,
quantities 	are 	measured 	in 	terms 	of 	the quantity 	of 	juice 	that
can 	be 	produced 	from 	that 	concentrate. 	The 	price 	is 	measured 	in
constant 	1981 	dollars 	per 	gallon 	of 	finished 	juice. 	Prices 	were
converted 	to 	constant 	1981 	dollars 	by 	using 	the 	producer 	price
index.
* 	Estimates 	based 	on 	data 	for 	January 	through 	October.
Source: 	See 	text 	and 	sources 	listed 	there.

Thus, we find no evidence to suggest that prices or quantities of apples
produced have declined over the relevant five 	year period. 	The failure of
output to decline suggests 	that 	there can 	be 	no 	injury due 	to lost sales or
declines 	in 	employment. 	The combination of no decline in output and 	no
decline in price is suggestive of no decline 	in 	profits. 	Thus, 	the data 	we
have available to us suggests that apple growers may not have been injured
by the increased imports of apple juice concentrate. 	.
JUice is generally imported in a concentrated form, the quantity of imports is
measured in terms of 	the quantity of finished or single strength juice that
would be produced from that concentrate.)
Table 	2 also 	provides data on 	the 	real 	price of 	imported apple 	juice
during this five 	year period. 	(Again nominal prices were converted to real
prices 	by 	using 	the 	producer price 	index.) 	While 	real 	prices 	rose 	between
1981 	and 	1982, they 	declined 	thereafter; and there appears to 	ha ve 	been a
downward 	trend 	in 	the 	price of 	imports over 	the entire 	period. 	A simple
time trend regression confirms this impression. 	We find 	that the real price
of imports over the period 1981 to 1985 is explained by the relationship
Pm "" 4.17 - 0.041 TIME
(0.027)
where Pm 	"" 	the 	real 	price, measured in 	1981 	dollars, of the quantity of
imported concentrate needed to produce a gallon of finished
apple juice, and
TIME"" 	a 	time 	counter 	equal 	to 	the 	last 	two 	years 	of 	the 	year-·
e.g. 	1981 equals 81.
9

CERTIFICATE OF 	SERVICE
I 	hereby 	certify 	that 	on 	this I\~day of 	April 	1986, 	I 	have
served 	the 	foregoing 	prehearing 	brier by 	causing 	the 	original 	and
14 	copies 	to 	be 	hand-delivered 	to 	the 	Secretary 	of 	the 	Commission
and 	by 	mailing 	a 	copy, 	first 	class, 	postage 	prepaid 	to 	counsel
for 	all 	parties 	to 	this 	proceeding, 	as 	follows:
20009
GesmbH
et 	al.
--
Clayton 	Yeutter
The 	United 	States 	Trade
Representative
Washington, 	D.C. 	20506
Petitioner
Herbert 	E. 	Harris, 	II, 	Esq.·
Cheryl 	Ellsworth, 	Esq.
Harris 	& Berg
Suite 	103
1101 	30th 	Street, 	N.W.
Washington, 	D.C. 	20007
Apple 	Juice 	Group
Eliot 	B. 	Schreiber
Vice 	President
International 	Beverages 	Inc.
924 	24th 	Street
Suite 	9
P.O. 	Box 	1598
Ogden, 	Utah 	84402
International 	Beverages 	Inc.
Eugene 	I. 	Lambert, 	Esq.
Harvey 	M. 	Applebaum, 	Esq.
David 	P. 	Grace, 	Esq.
Covington 	& Burling
1201 	Pennsylvania 	Ave., 	N.W.
P.O. 	Box 	7566
Washington, 	D.C. 	20044
Processed 	Apples 	Institute, 	Inc.
Walter 	Mayr
Trade 	Commissioner
The 	Austrian 	Trade 	Commissioner
in 	Wash i ngton
1875 	Connecticut 	Ave., 	N.W.
Suite 	1114
Washington, 	D.C.
Gruenwald 	Ernst
Obstverwertung,
David 	F. 	Rowse
President
New 	England 	Apple 	Products
Co., 	Inc.
P.O. 	Box 	2425 	Harwood 	Station
Littleton, 	Massachusetts 	01460
New 	England 	Apple 	Products
Dr. 	Endre 	Juhasz
Commercial 	Attache
Embassy 	of 	the 	Hungarian 	People's
Republic
2400 	Calvert 	Street, 	N.W.
Washington, 	D.C. 	20008
Hungarian 	~pple Juice 	Exporters
Albrecht 	Korth
Konstantinstr.3
0-5300 	Bonn 	2
Federal 	Republic 	of 	Germany
Amtsgericht 	Bonn 	19 	VR 	2312

Thomas 	R. 	Graham, 	Esq.
Shirley 	A. 	Coffield, 	Esq.
William J. 	Guzick, 	Esq.
William P. 	Ingram, 	Esq.
Skadden, 	Arps, 	Slate, 	Meagher
c5c Flom
919 	18th 	Street, 	N.W.
Washington, 	D.C. 	20006
American 	Farm Bureau
Federation, 	et !l.
Herber't 	E. 	Harris, 	II, 	Esq.
Cheryl 	Ellsworth, 	Esq.
Harris 	c5c Berg
Suite 	103
1101 	30th 	Street, 	N.W.
Washington, 	D.C. 	20006
CINEX
Patrick 	F.J. 	Macrory, 	Esq.
Arnold 	c5c Porter
1200 	New Hampshire 	Ave., 	N.W.
Washington, 	D.C. 	20036
Mangal 	Upper 	Galilee
Juice 	LTC
J.P. 	Roclure
President, 	The 	Fruit 	c5c Vegetable
Juice 	Assoc. 	ot 	the 	EEC
Avenue 	De 	Cortenbergh, 	172 	-B6
B-I040Brussels, 	Belgium
Fruit 	c5c Vegetable 	Juice
Assoc. 	or 	the 	EEC
Roberto 	Jorge 	Frasisti
Minister 	Counselor
Economic 	c5c Commercial
Embassy 	ot 	the 	Argentine 	Republic
1667 	K Street, 	N.W.
Suite 	610
Washington, 	D.C. 	20006
Embassy 	ot 	the 	Argentine
Repub 1i c
William 	J. 	Phelan, 	Esq.
Russell 	W. 	MacKechnie, 	Jr., 	Esq.
Donohue 	& Donohue
26 	Broadway
New 	York, 	New 	York 	10004
Cadbury 	Schweppes 	Inc.
Thomas 	F. 	Hancock
Attorney
Bureau 	of 	Competition
Federal 	Trade 	Commission
Washington, 	D.C. 	20580
( 202) 	634 - 6 9'7 7

~:.'
.,.. ;
~-"
~.'