On March 20, 2023, the U.S. Commerce Department announced that an agreement had been reached in the antidumping and countervailing duty (AD/CVD) investigation on imports of white grape juice concentrate (WGJC) from Argentina,¹ narrowly avoiding a pending final ruling by the U.S. International Trade Commission (USITC) that would have imposed significant tariffs.² At first glance, that announcement might make you think, ‘So what? It’s just grape juice.’ But as is often the case, there is more to the story than it may seem.

How It All Began

On March 31, 2022, a cooperative of grape growers from the Delano, California area, Delano Growers Grape Products, LLC, filed a petition with USITC claiming material injury due to underselling and price suppression (i.e., dumping) by white grape juice concentrate producers in Argentina. Delano Growers also claimed that countervailable subsidies from the Government of Argentina promoted and facilitated the Argentinian WGJC producers in dumping their product in the U.S., resulting in declining revenues and rising production costs, making it impossible for U.S. growers and producers to compete fairly in the marketplace. In some cases, U.S. growers were removing white grape vines from vineyard acreage and attempting to repurpose the land to a different grape variety, a costly and time-consuming endeavor. At the time of the petition filing, only three domestic producers of WGJC remained, including Delano Growers. Essentially, U.S. WGJC producers were being forced out of the market by Argentina’s unfair trade practices.

That’s a lot of Juice!

Over the past decade, the use of white grape juice concentrate as a natural sweetener in food and beverage manufacturing has increased significantly. At the time of the filing of the claim in 2022, Delano Growers supplied import data from the prior year indicating that Argentinian WGJC accounted for over 80% of total imports of WGJC into the U.S., 36 million gallons annually on average. And, according to Delano, Argentina was pricing their WGJC imports at $2/gallon cheaper, on average, than U.S.-origin WGJC. Delano reported that U.S. WGJC production plummeted from almost 66 tons of grapes in 2016, to only 19 tons in 2020, a 71% decrease that Delano claimed is a direct result of US producers being unfairly undercut by Argentina.³

Delano claimed the significant price difference is not because it is just cheaper to produce WGJC in Argentina; but rather that the underselling into the U.S. was directly attributable to a quota system instituted by the Argentine Government directing white grapes away from their highest valued use in winemaking. In its petition, Delano Growers provided documentation indicating the Government of Argentina instituted a grape “diversification” program requiring 26% of the 2019-2020 grape harvest from Mendoza and San Juan, the largest grape-producing provinces, to be used for grape products other than wine, such as grape musts (crushed grape juice containing the skins, seeds, and stems of the fruit), raisins, vinegar, etc., for in-country use. Delano further claimed that the Government of Argentina would then purchase the diverted grapes from Argentine growers, process the grapes into grape musts, and then sell the grape musts back to the growers at prices significantly lower than normal grape musts production costs creating a ‘subsidy’ to compensate the growers for diverting from wine production.⁴

The Other Side

The Government of Argentina, in their opening remarks to USITC, stressed their “overwhelming concern with the string of trade defense investigations initiated in the last few years” against the country.⁵ That’s because this is not the first time Argentina has been under investigation by U.S. regulators for unfair trade practices.

• As far back as 2006, U.S. companies lodged complaints with USITC alleging material injury from Argentina dumping imports of lemon juice at below fair market pricing. The U.S. Department of Commerce ultimately made an agreement with the Argentina exporters to set minimum pricing standards to eliminate undervalued imports and USITC suspended the investigation.

• In 2017, USITC issued an affirmative determination that U.S. industry was being materially injured by imports of biodiesel from Argentina (and Indonesia) resulting in issuance of antidumping and countervailing duties on imports of Argentinian soy-based biodiesel. USITC is currently conducting a standard five-year (sunset) review to decide if the AD/CVD tariffs will remain in place.

• In April 2022, USITC made an affirmative finding against Argentina for antidumping of raw honey and instituted import duties up to 49%.⁶ And in September 2022, USITC entered a final determination against Argentina for antidumping duties of oil country tubular goods at a dumping rate of 78.30%.⁷

• World Trade Organization dispute records show trade disputes among the U.S., Argentina, and other countries as far back as 1994, for items ranging from footwear and textiles to bovine products.

In the WGJC dispute, the Government of Argentina firmly denied the allegations of injury to the U.S. WGJC industry, claiming U.S. imports of WGJC were declining due to decreasing U.S. consumption demands and the rise of U.S. use of substitute products, such as apple juice concentrate imported from China. Argentina further argued that the subsidy claims associated with Argentina’s grape diversification program are “measures aimed at preventing the accumulation of stocks of wine and its consequent drop in price” and have no bearing on the WGJC matter.

The Final Squeeze

After USITC’s initiation of an antidumping and countervailing duty investigation in April 2022, the Commission made a positive preliminary determination in September 2022, finding that Argentine exporters did engage in less than fair market value dumping of WGJC imports into the U.S., and the Government of Argentina did provide the WGJC producers and exporters with countervailable subsidies that supported the below market value dumping. As a result of the preliminary findings, USITC instituted a countervailable subsidy import duty rate on of 7.16% on WGJC imports and dumping import rates on Argentine WGJC producers/exporters of up to 27.17%.

After USITC’s preliminary finding, the Argentina WGJC producer/exporters and the Government of Argentina decided it would be in their best interest to try and come to a more palatable understanding with the U.S. on WGJC imports. And thus, on March 24, 2023, the Department of Commerce announced that both the antidumping and countervailing duty investigations against Argentina would be suspended as the parties had reached agreements on future trade terms. Specifically, in the Federal Register Notice published on March 31, 2023,⁸ USITC stated the Argentine producers/exporters have “agreed to revise its prices to eliminate completely the injurious effects of exports of WGJC to the United States” and the Government of Argentina “has agreed not to provide any new or additional export or import substitution subsidies on the subject merchandise and has agreed to restrict the volume of direct or indirect exports to the United States of WGJC from all Argentine producers/exporters in order to eliminate completely the injurious effects of exports of this merchandise to the United States.”

In a press release about the suspension agreements, the Commerce Department described the agreements as “a critical win for the domestic industry, as it will provide certainty and relief to U.S. domestic producers facing unfair trade practices, including unfair foreign pricing and subsidization.” Also in the press release, Assistant Secretary of Commerce for Enforcement and Compliance, Lisa Wang, stated “Our investigators work hard to protect U.S. industries and workers against the harm imposed by unfair foreign trade practices by rigorously enforcing U.S. trade law” and that “These agreements will provide an effective remedy for grape farmers and processors of white grape juice concentrate alike, while establishing certainty for fair competition in the years ahead.”⁹

A David versus Goliath Moment

Perhaps the outcome of the events is best summed up by Chairman of the Board of Directors for Delano Growers, Kent Stenderup, stating “The industry calls us 'Little Delano,’ and people in the industry are astonished by what we were able to do. There was no blood, but Little Delano prevailed.”

Following the announcement of the suspension agreements, Rick Lord, General Manager of Delano Growers Grape Products, said in a press release, “This is a big milestone for a small co-op,” and he’s right about that. The Department of Commerce has only eight suspension agreements in effect, and two of those agreements are with the Argentina Government and Argentine commodity exporters: interestingly, both pertaining to fruit (lemon juice and white grape juice concentrate). Mr. Lord went further to say, “We greatly appreciate the efforts of the Department of Commerce’s Compliance and Enforcement division for facilitating these agreements and their dedication to enforcing U.S. trade law,” and that Delano Growers “acknowledge the good faith negotiations during the agreement process by the Argentine industry and the Government of Argentina.”

The Future Looks Bright …. Or Not

And what does these actions mean for the future of U.S. trade with Argentina? It is hard to predict. In a 2022 Investment Climate Statement on Argentina, the U.S. Department of State stated in an executive summary that “Argentina presents investment and trade opportunities, particularly in agriculture, energy, health, infrastructure, information technology, and mining. However, economic uncertainty, interventionist policies, high inflation, and persistent economic stagnation have prevented the country from maximizing its potential.”¹⁰

However, the U.S. and Argentina continue to strive for mutually beneficial trade equilibrium. In 2016, the Governments of the U.S. and Argentina signed the Trade and Investment Framework Agreement (TIFA) committing to cooperation to expand and strengthen trade relations between both countries and expressing a desire to “reinforce the multilateral trading system” by entering into additional trading arrangements with the help and support of the World Trade Organization. In December 2022, the U.S. – Argentina Council on Trade and Investment, established under the TIFA, issued a joint statement after concluding its third meeting stating that both the U.S. and Argentina “agreed to work together on a roadmap to resolve these concerns and improve our trade relationship” and that the parties intend to explore “emerging investment opportunities and areas for engagement, including energy transition and digital economy, as well as development finance.”

Only time will tell if the trade efforts between the U.S. and Argentina will be successful.